Palmer & Anor v Belan & Anor [1999] NSWSC 187

New South Wales Supreme Court CITATION : Palmer & Anor v Belan & Anor [1999] NSWSC 187 CURRENT JURISDICTION : Common Law FILE NUMBER(S) : 20523/94; 20524/94; 20115/95 HEARING DATE(S) : 1/2/99; 3/2/99; 4/2/99; 5/2/99; 8/2/99; 9/2/99 JUDGMENT DATE : 12 March 1999

Edward Palmer (1 Pl) PARTIES : Denis Boner (2 Pl) Frank Belan (1 Def) Arthur Benjamin Casey (2 Def) JUDGMENT OF : Kirby J

COUNSEL : M Holmes QC (Pls) T Molomby/J B Conomy (Defs) SOLICITORS : W G McNally & Co (Pls) Maurice May & Co (Defs) CATCHWORDS : Defamation; Union election; Qualified privilege; Reply to attack; Malice; Comment ACTS CITED : Defamation Act 1974 Webb v Bloch Lang v Willis Howe v Lees Telegraph Newspapers Co Ltd v Bedford CASES CITED : Penton v Calwell Wright v Australian Broadcasting Commission Morgan v John Fairfax & Sons Ltd R v Kylsant Horrocks v Lowe DECISION : See para 295

THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

KIRBY J

Friday 12 March 1999

020523/94 - EDWARD PALMER v FRANK BELAN 020524/94 - EDWARD PALMER v FRANK BELAN & ANOR 020115/95 - DENIS BONER v FRANK BELAN & ANOR

JUDGMENT

HIS HONOUR: The Litigation 1 Three actions for Defamation were commenced as the result of the publication of a letter (Ex B), and a leaflet (Ex C) in the course of a union election. The union was the National Union of Workers, and the publication was said to have taken place in July 1994. 2 The three actions were heard together, without a jury. The parties to the actions were as follows: · Edward Palmer v Frank Belan · Edward Palmer v Frank Belan and Arthur Benjamin Casey · Denis Boner v Frank Belan and Arthur Benjamin Casey 3 The first action is concerned with the letter signed by Mr Belan (Ex B). The second and third actions are concerned with a leaflet which accompanied that letter (Ex C). 4 Mr Edward Palmer was, at one time, the Secretary of the Federated Millers and Manufacturing Grocers Employees' Association of Australasia, New South Wales Branch ("the Millers' Union"). Mr Denis Boner was the Assistant Secretary of the same union. In 1992, in circumstances which will shortly be described, the Millers' Union amalgamated with a number of other unions to form the National Union of Workers. A party to the amalgamation, and the most significant union in the proposed conglomerate, was the Federated Storemen and Packers' Union of Australia, New South Wales Branch ("the Storemen and Packers' Union"). Mr Frank Belan was the State Secretary of that union. Upon amalgamation he became the State Secretary of the amalgamated union, the National Union of Workers. 5 The National Union of Workers was divided into Divisions, one being known as the Food 1 Division. Former members of the Millers' Union became members of the Food 1 Division. Upon amalgamation, Mr Palmer was made the Secretary of that Division. Mr Boner, his former assistant, was made an Organiser. 6 The National Union of Workers held an election in August 1994, as required by the Rules. Mr Belan stood for the office of State Secretary. He organised a ticket, known as "The Frank Belan Team". Neither Mr Palmer, nor Mr Boner (for reasons which will be explained), was a member of that team. Mr Casey (the second defendant) was, however, part of the team. He stood in opposition to Mr Palmer for the office of Secretary of the Food 1 Division. Mr Boner was a candidate in the same election. He sought the office of organiser. The Frank Belan Team included alternative candidates for that position. Background 7 Before examining the publications which are the subject of these actions, it is convenient to set out the background, and to resolve a number of factual issues which arise in the context of certain defences. I am, of course, conscious that the onus in respect of some matters is upon the plaintiff, and, in respect of others, upon the defendants. Most of the facts, however, were not in doubt. Where, during the hearing, significant controversy attached to a particular matter, I will identify that controversy, and, where relevant to its resolution, refer to the onus of proof. 8 Discussions concerning amalgamation began in 1990. Mr Palmer, in 1993, provided an account of these discussions to the Industrial Court of New South Wales (Hill J). I will later describe the circumstances giving rise to that case. Mr Palmer's evidence included the following: (T 99/100) "Q. Was there specific discussion that you can recall in relation to sick pay or annual leave in relation to the Millers' liabilities? A. Yes, Frank told me that he didn't want them, and we were to get rid of them and that he would only accept four weeks annual leave when we entered or moved over to his building at 1 Bridge Street." 9 In September 1990, the Executive of the Millers' Union approved, in principle, an association with the Storemen and Packers' Union, pending amalgamation. The Minutes of the Executive Meeting for 31 October 1990 included the following: (Ex D, p 415) "The Secretary fully explained how he and the executive saw the future of the union, and what steps we should now start to take to secure the future. Which would include not only forming an association with the NUW, but also the fact we would have to clear our liabilities (financial) which would mean the disposal of our building. …" 10 Authority was given to Mr Palmer to take the steps necessary to bring about the amalgamation. 11 The new union, to be known as the National Union of Workers, was to comprise five amalgamating unions, of which the Millers' Union was one, and the Storemen and Packers' Union another. The smaller unions, including the Millers' Union, would, from a certain date, move into the Storemen and Packers' building. Their membership subscriptions would be paid to the Storemen and Packers' Union, and that union would be responsible, thereafter, for the day to day running costs of the union. Separate accounts would be maintained, identifying each union, until full amalgamation had been achieved. 12 In that context, the auditors for the Millers' Union (A J Williams & Co) furnished the following advice to the Executive on 19 November 1990: (Ex D, p 418) "We refer to our recent telephone conversation when you advised us of certain procedures to apply from 1 January 1991. … Employee Entitlements It is proposed that employee entitlements will be cleared or reduced prior to 1 January 1991. The taxation aspects require consideration. Annual Leave Annual leave and loading paid on termination is taxed in full … Long Service Leave As all leave has accrued after 1978, the tax treatment is the same as for annual leave. …" 13 The letter then dealt with the issue of "Retiring Allowances". It is the payment of these allowances which is dealt with by the publications (Exs B and C) about which complaint is made. The advice of A J Williams & Co said this: (Ex D, p 419) "Retiring Allowance Except for a few days accrual in respect of T Hough, benefits have accrued since 1 July 1983. Where payment is made on termination of employment it is taxed as an 'untaxed eligible termination payment'. The rate of tax is 16.25% where the recipient is aged 55 or more and 31.25% at less than age 55. The payment may be 'rolled' into a superannuation fund or approved deposit fund. Payment made during employment will be taxed as ordinary income. …" 14 The letter also dealt with Sick Leave which had not been taken, and concluded with these words: "It may also be possible to arrange for benefits not to be paid out but to be 'preserved' in the amalgamated union." 15 Mr Palmer, acting on the resolution of the Executive, sought a buyer for the union premises. On 27 November 1990 he reported an offer for the building, and that space within the new premises of the National Union of Workers would be ready for occupation on 1 January 1991. 16 The rule of the Millers' Union dealing with retiring allowances was Rule 54. An issue arose concerning the construction of that rule. Mr Palmer sought advice from the unions' solicitors, W G McNally & Co. The advice was furnished on 5 December 1990, and was in these terms: (Ex D, p 420) "Rule 54 of the union rules provides: 'The General Secretary/Treasurer, Assistant Secretary, Organisers and Permanent clerical staff shall be granted, on retiring or removal from office, three week's holiday at current rate of salary at the time, for each completed year of service; unless such removal be due to any misdemeanour to which they were a party thereto.' I am advised that Rule 54 replaced Rule 53 which provided: 'The General Secretary/treasurer and Organisers shall be granted, on retiring or removal from office, one week's holiday at current rate of salary at the time for each completed year of service; unless such removal be due to any misdemeanour to which they were a party thereto.' I am asked to advise as to whether service before the amendment to the rule attracts holidays at the rate of one week or three weeks. The current rule 54 is capable of only one interpretation. The officials and clerical staff described in the rule are entitled upon retirement or removal from office to holidays at the rate of three weeks per year of service calculated by reference to his total service both before and after the rule amendment." 17 In the proceedings before Hill J, Mr Palmer gave the following evidence concerning his discussions with Mr Belan on the subject of the retiring allowances payable under Rule 54. He said this: (T 100) "Q. What did Mr Belan say, if anything, about these matters, about the retirement? A. Well I do recall mentioning it was a matter that would have to be addressed and Mr Belan's response, as I recall, stated something similar to it was a problem for the Millers and they would have to address it." 18 On 18 December 1990, the Executive of the Millers' Union held a further meeting. The Minutes recorded the following: (Ex D, p 415/416) "The Secretary gave a full report on advice received from our solicitors and auditors re the union's assets and liabilities. The advice being as follows: - once the mortgage is cleared, a term deposit to cover the officials and staffs retirement benefits be purchased, covering this liability. With regards to annual leave and sick pay, the following annual leave - any leave in excess of four weeks be paid out, and the appropriate rate of tax paid. Sick pay - any entitlements to be paid out in accordance with the Federal Milling Industry Award, with the appropriate tax being paid. Moved the report be received and adopted and that the Secretary be authorised to act on the advice received. Moved P Walters, seconded W Price." 19 On 29 January 1991, the Executive held a further meeting. The Minutes included the following: (Ex D, p 416) "Letter from A J Williams re the obligations of the union with regards to the Retirement Benefit to officials and staff on amalgamation with the NUW. Williams advised sufficient funds must be preserved in a term deposit until such time as the union is deregistered (this happens on amalgamation). The benefits can then be transferred to a superannuation plan or paid out. Moved the correspondence be received and noted and that the secretary be authorised to act accordingly (sic) to this advice. Moved E Palmer, seconded P Walters." 20 On the same day (29 January 1991), the Millers' executed an agreement with the Storemen and Packers'. The agreement was expressed to run for a period of six months, the parties being confident that amalgamation could be achieved in that time. No provision was made to carry forward benefits or entitlements existing within the Millers' Union. The agreement made the following provision, referring to the obligations of the Storemen and Packers' to officials who would be absorbed into the new body: (Ex D, p 417) "1. The Principal hereby agrees: … (6) To attend to the payment of the salary of the Secretary, Assistant Secretary and Organisers of the Trade Union for the duration of the Agreement in accordance with the rate specified in Schedule 'B' hereto and shall, furthermore, make provision for any leave entitlement in law accruing to the Secretary, Assistant Secretary and Organisers of the Trade union during the operation of this Agreement only." 21 On the day the agreement was executed, the sale of the Millers' building was completed. On 30 January 1991, Mr Palmer used approximately $45,000 of the proceeds to open a term deposit in the name of the Millers' Union, known as "The Retirement Allowance/Long Service Leave Fund". 22 The Executive of the Millers' Union met once more on 26 February 1991. Mr Palmer tabled a report from the auditors covering the period up to the time of the new arrangements with the Storemen and Packers' Union. He also reported on the disbursement of the proceeds of the building sale. 23 On 19 March 1991, the various unions which had agreed to amalgamate, to form the National Union of Workers, signed a Federation Agreement. On 29 October 1991, the solicitors for the Millers' Union, W G McNally & Co, wrote to Mr Palmer in relation to the payment of officers of that union once amalgamation had been achieved. The advice was in these terms: (Ex D, p 421) "Upon the completion of amalgamation under the Trade Union Act, the amalgamation is registered and the registration of each union party to the amalgamation is cancelled (Regulation 32). Upon amalgamation the officials of the union will accordingly cease to be officials. Redundancy means that the availability of work of a particular kind and in a particular place is finished, or lessened or is expected to finish or lessen. I am of the view that upon amalgamation the officials of the union will become redundant and their ETP as defined earlier will be taxed at the pre-1 July 1983 rate irrespective of when it accrued …" 24 On 12 February 1992, the Industrial Registrar approved a scheme of amalgamation. The scheme required that members should approve the proposed amalgamation. A poll was conducted on 12 March 1992. The membership in each union voted in favour of amalgamation. The result was announced by the Electoral Commissioner on 18 March 1992. Before that announcement, and on the day following the poll (that is, 13 March 1992), the Millers' Union drew cheques in favour of Messrs Palmer and Boner (and others) in respect of the amounts said to be payable to them under Rule 54. 25 On 25 March 1992, the Executive of the Millers' Union met once more. The Minutes recorded the following: (Ex D, p 422/423) "The Secretary gave a full report, on the aspect of the clause in the rules relating to the Officials and Staff Retiring Allowance, in the light of our amalgamating to form the NUW, NSW Branch. Secretary advised he had spoken with the President, the union's solicitors and the union's Auditors, on what the format should be. The Secretary advices (sic) the rule of the Association was very explicit with regards to the Retiring Allowance RULE 54. W G McNally written letter of advice was tabled and discussed, as was the letter from A J Williams & Co, which talked about freezing the allowance at the time of entering the Federation's Agreement with the other amalgamating unions. … That seeing as superannuation had been made available to the officials, and staff from 1 February 1991, all parties agreed to waive their time right under the rules for the period from 1 February 1991 to date. However, the benefit of accrual ie 3 weeks per year of service should be calculated at the enhanced rate of pay as provided for the Federation. …" 26 The Minutes then dealt with the issue of taxation. This was another issue which was included in one of the publications which is said to be defamatory (Ex C). When the retiring allowances under Rule 54 were paid to Messrs Palmer and Boner (and others) the tax was withheld in the belief that the Union was responsible for its payment. Advice was later received from the auditors, A J Williams & Co, that the payment of taxation was the responsibility of the individuals concerned. Since the monies had not been paid by the Millers' Union (Ex D, p 424), cheques were drawn on 29 May 1992 in favour of Mr Palmer for $339.19 and Mr Boner for $170.60, being the amounts withheld. 27 In September 1992, Mr Belan approached Mr Palmer. He had become aware of the payments under Rule 54. He was disturbed by them. Indeed, he believed, that the payments were "socially and morally wrong" (T 36). The following was put to Mr Palmer by counsel for Mr Belan as to what was said: (T 36) "Q. Indeed, 'I am sorry to have to do that you know, I worried about it all weekend, but that is virtually misappropriation'? A. Yeah, misappropriation was mentioned, I remember that." 28 Mr Belan, when cross-examined, gave the following evidence: (T 96) "Q. I asked you about what Mr Molomby had said, that it was virtually misappropriation what he had done, they were your words, wasn't it? A. No, my words, 'was wrong', 'was wrong'. Q. You used the word, 'misappropriation'? A. As I can recall it I used words, 'wrong'. Q. I want you to just think long and hard, when you were talking about this matter did you use any words to the effect of misappropriation as you understood it? A. Not that I can recall. Q. You believed he had misappropriated union funds, didn't you? A. I believe that the money he paid himself and the others was … HIS HONOUR: Q. Could you answer that question, did you believe that he had misappropriated union funds? That's a simple question, if you just answer that question rather than some other question? A. Yes, yes. HOLMES: Q. Had you told him so? A. I could have. Q. The fact is you know you told him that, didn't you? A. I don't know, I could have told him." 29 On 15 October 1992, Messrs Turner Freeman, solicitors, provided advice to the National Union of Workers that officers of the former Millers' Union were not entitled to any payment under Rule 54. On 19 October 1992, Mr Belan wrote to the officers of the former Millers' Union, including Messrs Palmer and Boner, requiring reimbursement, and stating the following: (Ex D, p 411) "Such refund is sought as the subject payments were not authorised by Rule 54 …. Clearly, you did not retire nor were you removed from office and the condition precedent for the payment of 13 March 1992 was not satisfied nor was the payment made on 29 May 1992 authorised by the rules …" 30 Mr Belan, on the authority of the Committee of Management, required the reimbursement within seven days, adding: (Ex D, p 411) "I confirm that in requiring the repayment neither myself nor the Committee of Management have considered the issue of the responsibility for the payment nor whether any culpability or impropriety was involved by any individual in respect of the subject payments." 31 On the same day, 19 October 1992, Mr Palmer spoke to Mr Belan concerning the repayment of the money. He sought a special meeting of the Branch Secretary's to consider the issue. Such a meeting then took place. However, Mr Belan and the other Secretaries advised Mr Palmer that, even if the monies were repaid, they would not guarantee that charges would not be laid (Ex E, p 478). 32 On 22 October 1992, Mr McNally, solicitor for Messrs Palmer and Boner, wrote to Mr Belan in these terms: (Ex F, p 115) "In order to avoid costly litigation we sought and obtained instructions from our clients to seek Senior Counsel's advice to resolve the conflict. We are now advised by Richard Kenzie QC that the original advice given to the union was in his view correct and that of Turner Freeman incorrect. We trust that this now resolves this issue." 33 A copy of the advice was furnished. 34 On 28 October 1992, the Committee of Management met and resolved to charge Messrs Palmer and Boner and one other former officer of the Millers' Union. The charges against Mr Palmer were as follows: (Ex D, p 412) "(i) Committing substantial breaches (two) of the rules of the union in that he failed to carry out directions and instructions of the State Secretary to refund to the union each of the said sums of $21,368.72 and $339.19; (ii) Committing substantial breaches (2) of the rules of the union in that he failed to act in accordance with lawful directions of the Committee of Management in that he failed to comply with a request from the State Secretary of the union to refund each of the said sums of money; and (iii) Misappropriation (two) of the funds of the union in that he failed to refund to the union each of the said sums of money." 35 The $21,368.72 mentioned in the first charge was the amount paid to Mr Palmer under Rule 54, and the smaller sum ($339.19) was the taxation mistakenly deducted from the amount which the union believed to be payable. 36 Similar charges were laid against Mr Boner. The charges were returnable, in each case, before the Committee of Management on 11 November 1992. 37 On 30 October 1992, Mr Belan wrote to Messrs Palmer and Boner in the following terms: (Ex D, p 414) "Due to the current circumstances in relation to the charges being laid against Edward Palmer and Denis Boner, it is my view that it would be in the best interests of the organisation and all concerned that Edward Palmer and Denis Boner be relieved from all official duties as from today's date, until 11 November 1992, when the charges will be heard."