New South Wales Supreme Court CITATION : Moloney v Bales and Anor [2002] NSWSC 381 CURRENT JURISDICTION: Common Law FILE NUMBER(S) : SC 20368 of 2001 HEARING DATE(S) : 21 March 2002 JUDGMENT DATE : 3 May 2002 TERENCE VINCENT MOLONEY (Plaintiff) v PARTIES : KEITH BALES (First Defendant) NATIONWIDE NEWS PTY LTD (Second Defendant) JUDGMENT OF : Levine J B McClintock SC (Plaintiff) COUNSEL : T Blackburn (Defendants) Bush Burke & Company (Plaintiff) SOLICITORS : Parry Carroll Kanjian (First Defendant) Blake Dawson Waldron (Second Defendant) CATCHWORDS : Imputations - capacity - difference in substance CASES CITED : Amalgamated Television Services Pty Ltd v Marsden (1998) NSWLR 158 DECISION : See paragraph 28 DJL:1 [2002] NSWSC 381 N THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION DFAMATION list JUSTICE DAVID LEVINE FRIDAY 3 MAY 2002 20368 OF 2001 TERENCE VINCENT MOLONEY (Plaintiff) v KEITH BALES (First Defendant) NATIONWIDE NEWS PTY LTD (Second Defendant) JUDGMENT (Imputations – capacity – difference in substance) 1 The plaintiff, who at all material times was the director of ABC Enterprises, sues the defendant for damages for defamation. 2 The first publication sued upon was in "The Weekend Australian" 18-19 November 2000. The text of that article is appended hereto as appendix A. The second defendant is sued as a publisher and republisher and the first defendant (Mr Bales) is sued in respect of the words attributed to him in the matter complained of. In respect of both publications the plaintiff contends that the relevant matters complained of carry the following defamatory imputations: "4 & 8(a) The plaintiff is so lacking in business ability that he should be sacked as head of ABC Enterprises. (b) The plaintiff is so resistant to market forces that he should be sacked as head of ABC Enterprises. (c) The plaintiff is incompetent in his role as head of ABC Enterprises in that he is not a proactive deal-maker. (d) The plaintiff is incapable of properly managing a business such as ABC Enterprises. 3 By reference to what is described as the "touchstone" of the test of capacity of a matter complained of to convey a defamatory imputation - reasonableness (Amalgamated Television Services Pty Ltd v Marsden (1998) 42 NSWLR 158 at 166F), the defendant contends that the matter complained of is incapable of carrying the imputations. Accordingly pursuant to Pr 31 r 2 a separate trial by consent was held to the determination of this question of law. 4 With respect to imputation 4(a) and 8(a), the defendant draws attention to the explicit reference to the plaintiff in lines 56 and 57 and the context. The principlal subject matter of the article, it is argued, is not the plaintiff, but Mr Bales, a private consultant and it is said that the portrait of Mr Bales could be understood as being not very flattering of him. The reader could understand that Mr Bales is not being presented as a skilled or sophisticated management consultant. The defendant then goes on to argue that if Mr Bales had been presented as a skilled or sophisticated management consultant, his recommendation as to the plaintiff might have conveyed the defamatory bite which the plaintiff seeks to attribute it. The nub of the defendant's submission is that the recommendation emerges from someone "who ought not be to be taken very seriously". The recommendation to sack Henderson, Lumsden and the plaintiff is a recommendation "from someone whose judgment is suspect". It is further argued that this matter complained of is incapable of carrying the imputation because there is no reasonable suggestion in it that the plaintiff is "so lacking in business ability" that he should be sacked. This, the defendant contends, is an imputation that the plaintiff was lacking in business ability to such a degree that he should be sacked – that is an imputation of a serious lack of business ability and it is unreasonable to draw it. Whilst the suggestion is made that the plaintiff was not an "entrepreneur" an "operator" or "a proactive deal-maker", it is submitted that one may be none of those things but not be so lacking in business ability to deserve the sack. 5 For the plaintiff it is submitted that the reasonable reader could understand that the first defendant recommended that Mr Moloney be sacked because he was not an "entrepreneur" an "operator" or "a proactive deal-maker". Business ability encompasses entrepreneurship, being an operator and being a deal-maker and being proactive. It is argued that the statement that the plaintiff lacks these qualities carries with it the clear implication that he lacks business ability. Further, there is nothing in the publication to suggest that the judgment of Mr Bales is so suspect that the matter complained of is incapable of carrying the imputation. The tenor of the article is that Mr Bales placed a high importance on commercial profitability. Mr Bales was portrayed as someone who himself had been commercially successful; he was enthusiastic and energetic; he was influential and experienced. He focused on the "bottom line" – profit. The fact that such a view was not "clearly accepted inside the ABC" or was not acceptable to the author of the article does not necessarily mean that, to the ordinary reasonable reader, Bales' judgment was suspect or not to be taken seriously. As the plaintiff argues, the ordinary reasonable reader may not share the author's prejudices. It is further argued by the plaintiff that publication by "The Weekend Australian" lent an imprimatur to the first defendant's assertions about Mr Moloney. 6 The matter complained of clearly links the plaintiff's lack of the relevant attributes with the recommendation that he should be sacked. He should be sacked because of the combined deficiencies attributed to him in lines 56 and 57. 7 The very nature of the submissions made on both sides lend facility to the determination of the issue of law. 8 I do not accept that the use of the word "so" in the phrase "so lacking in business ability" is anything more than a turn of phrase. 9 I am persuaded by the plaintiff's submission and imputations 4(a) and 8(a) are found to be capable of being carried by the matter complained of and capable of being defamatory. As to imputation 4(b): the defendant argues that there exists the same vice as in imputation (a) by the employment of the phrase "so resistant to market forces". I am not persuaded by the proposition. Further it is submitted that there is no suggestion in the matter complained of either expressly or by implication that the plaintiff was "resistant to market forces". 10 It seems to me clear, and I do so accepting the submissions for the plaintiff, that there is capable of being understood a clear implication or inference that those within the ABC who are "resistant to market forces" include the plaintiff. It is the proximity between that phrase and the plaintiff which makes it difficult to discern any other meaning. 11 I find that the matter complained of is capable of carrying imputation 4(b) and 8(b) and that it is capable of being defamatory. 12 As to imputation 4 and 8(c): the defendant argues, first, that it is bad in form by reason of the use of the word "proactive". It is said that that word is a piece of jargon which does not have any clear or settled meaning and that jurors might be confused. 13 With this proposition I must disagree. The word "proactive" is the word published by the second defendant and the meaning is unlikely to cause confusion in the minds of jurors. As was submitted for the plaintiff the word has a clear dictionary definition namely: "taking the initiative in directing the course of events, rather than waiting for things to happen and then reacting" (Macquarie Dictionary - 3rd edition). 14 As to the second basis of attack, capacity, it is conceded by the defendant that the matter is capable of imputing of the plaintiff that he is not "a proactive deal-maker". However it is suggested that this is far from imputing of him that for that reason he is "incompetent". It is argues that the notion of "incompetence" is not mentioned in the matter complained of and must arise by implication or inference. 15 In my view the notion of "incompetence" could clearly arise. By implication or inference: the clear implication is that he was not properly qualified or capable to be head of ABC Enterprises. I accept the submission for the plaintiff that the matter could be understood as conveying the message that a person who heads ABC Enterprises should be concerned about increasing the commercial profitability of that arm of the ABC. 16 I therefore hold that the matter complained of is capable of carrying imputation 4 and 8(c) and that imputation is capable of being defamatory. 17 As to imputation 4 and 8(d): this is purely a question of capacity by reason of the thrust of the submissions for the plaintiff and upon my own reading of the matter complained of I am not persuaded that it should not go the jury. Such a meaning is clearly available. 18 Imputation 4 and 8(d) I find to be capable of being carried by the matter complained of and capable of being defamatory. 19 The second matter complained of is a publication in "The Australian" on 23 November 2000 the text of that article is appended hereto as appendix B. 20 The plaintiff says that this article, in its natural and ordinary meaning, carries the following defamatory imputations: "10(a) The plaintiff is an idiot. (b) The plaintiff is so lacking in business acumen that he should be sacked as manager of ABC Enterprises. (c) The plaintiff is so lazy that he should be sacked as manager of ABC Enterprises. (d) The plaintiff is wasting the ABC's great marketing potential to such an extent that he should be sacked as manager of ABC Enterprises. (e) The plaintiff is incompetent in his role as manager of ABC Enterprises in that he is not proactive. (f) The plaintiff is incompetent in his role as manager of ABC Enterprises in that he lacks energy. (g) The plaintiff is incompetent in his role as manager of ABC Enterprises in that he has failed to pursue marketing opportunities for the ABC. (h) The plaintiff is incompetent in his role as manager of ABC Enterprises in that he lacks creativity. (i) The plaintiff is incapable of managing a business such as ABC Enterprises." 21 The plaintiff also contends in the alternative that a true innuendo is available by reference to particularised extrinsic facts namely: "11(a) The plaintiff's incompetence in failing to develop a business plan for a $67 million deal with Telstra had caused the ABC to lost the deal." 22 The first imputation under challenge is imputation 10(c). The defendant contends that there is no express reference to the plaintiff being "lazy". If such a meaning is capable of arising it could only arise from lines 8 to 10; however, there is, it is submitted, a significant difference between the plaintiff needing to be "a bit more energetic" and "sitting around waiting for someone to ring [him]" and the plaintiff being lazy. This imputation is said to be strained and forced. I disagree with this submission. Imputation 10(c) is capable of arising and capable, on a reasonable basis of being understood from the phrases to which reference is made. I agree however with the submission for the defendant that imputation (c) does not differ in substance from imputation (f). 23 It is also argued that imputation (g) does not differ in substance from imputations (c) and (f). I am of the view, as I have said, that there is no substantial difference between being "lazy" and lacking "energy". There is however a difference between those two concepts and failing to pursue marketing opportunities and lacking "creativity". 24 The plaintiff will have to elect between imputations 10(c) and 10(f). 25 As to imputation 10(e) I do not agree with the defendant's submission that it suffers same vice as (c); it is capable of arising and differs in substance as I have indicated. 26 Accordingly with respect to the second publication sued upon I find that imputations (a) (b), (d), (e), (g), (h) and (i) are capable of being carried by the matter complained of, capable of being defamatory and differ in substance. The plaintiff will have to elect between imputations (c) and (f). 27 There was no challenge to the true innuendo. 28 Accordingly, the formal orders are: 1. Imputations 4 & 8(a), (b), (c) and (d) are capable of being carried and are capable of being defamatory. 2. Imputations 10(a), (b), (d), (e), (g), (h), (i) and 11(a) are capable of being carried and are capable of being defamatory. 3. The plaintiff is to elect between imputations 10(c) and (f). 4. The defendants are, within 14 days of today, to file defences as to issues to be tried by the jury pursuant to s7A of the Defamation Act, 1974. 5. At the expiry of 21 days from today the action is to be placed in the list for call-up for the trial by jury of issues pursuant to s7A. 6. Pursuant to SCR Part 31 r 2 I order the separate trial by jury of the issues of fact joined between the parties pursuant to s7A. 7. No later than 14 days before the date allocated for the s7A jury trial, the plaintiff is to deliver an outline of evidence to be called in support of the true innuendo. 8. The defendants are to pay the plaintiff's costs. APPENDIX A 1. Aunty's ticket to Disneyland. 2. Amanda Meade 3. Soon after Jonathan Shier was appointed to run the ABC, he was contacted by fellow expatriate Keith 4. Bales, who had lived in Europe even longer than he had. 5. Bales, who was visiting his parents in Perth, dropped Shier a note congratulating him on the job and 6. offering his services as a marketing man. 7. Shier was keen and the two men nutted out the terms. Bales, a management consultant would be paid 8. handsomely for a four month investigation into how the ABC could make money. (He has boasted 9. the deal included return airfares to either Perth or Britain). A former Walt Disney executive, Bales 10. told Shier he had increased Disney's European merchandising and licensing revenue to $4 million 11. from a base of $500,00 in the 1970's. As managing director and vice-president of the Disney 12. corporation, Europe, Bales knew all about commercial exploitation. Maybe he was the person to take 13. the trusted ABC brand and turn it into a money-spinner. 14. Bales had big plans. He wanted to bring advertising, sponsorship and product placement to the ABC. 15. The private consultant was give access to the staff and finances of ABC Enterprises and ABC 16. Children's television - the departments that last year raised about $53 million through merchandising 17. soft toys, t-shirts and other program spin-offs. The Bananas in Pyjamas program alone has raised 18. $10 million 19. Continued – page 2 20. Aunty's ticket to Disney 21. From Page 1 22. for the corporation since its inception in 1992. 23. Bales, florid-faced 54-year-old, shared some qualities with his boss. Both are verbose, enthusiastic, 24. energetic and have the patter of salesmen. They also share a love of expensive restaurants, fine food 25. and wine. 26. Once installed in the ABC - he had an office at Gore Hill and Ultimo - Bales began to enjoy the social 27. life Sydney had to offer. 28. He set up a lunch meeting for Shier with former News Limited chairman Ken Cowley, now at media 29. company PMP Communications, at the exclusive city restaurant Banc. 30. Bales loved to tell people at the ABC of his association with Cowley, whom he met when he worked 31. for the News Corporation in the late 1960s and early 70s. 32. The report he was to produce five months later is packed with suggestions for business opportunities 33. with companies Cowley is associated with, including RM Williams, Newslink and PMP 34. Communications. 35. Bales contacted everyone from telecommunications companies to food and toy manufacturers – all in 36. the name of the ABC. All the time, he was sending Shier briefing notes to keep him informed of his 37. progress. 38. Today, most of the broadcaster's Sydney staff would have heard of Keith Bales. 39. They were intrigued by Bales's role at the ABC and what he and Shier were plotting. A flamboyant 40. character, Bales's commercial view of the world was not easily accepted inside the ABC. A Disney 41. man inside Gore Hill, they cried. 42. Bales's brief was to tell Shier how to turn ABC Enterprises into a real money-spinner. The trusted 43. ABC brand could be the key to substantially boosting the federal Government allocation of $550 44. million. 45. Shier always has been interested in attracting alternative sources of revenue. It has been his mantra. 46. Since arriving, he has dropped the $67 million Telstra Deal because it didn't earn enough money; he 47. has asked Canberra and the states for extra money; and publicly called on program makers to sell 48. their products overseas. 49. Bales immediately identified that the barrier to the expansion of ABC Enterprises into character- 50. based confectionary, ice cream and cereals was the high standards demanded by the children's 51. television department headed by Claire Henderson. 52. Henderson and executive producer Virginia Lumsden have an impressive track record. Henderson is 53. the original executive producer of Bananas in Pyjamas and Lumsden has won an International Emmy 54. for the ABC. Together, they produce and commission 1700 hours of children's programming a year. 55. But Bales was focusing on the bottom line. He recommended Shier sack Henderson and Lumsden 56. as well as the head of Enterprises Terry Maloney who is not an "entrepreneur", an "operator" or a 57. "proactive deal-maker". 58. While acknowledging the ABC is the most successful broadcaster of children's TV in Australia, 59. Bales focused on what he saw as its resistance to market forces. Henderson is not surprised by the 60. report's contents. She is keenly aware of the potential to exploit her stable of successes, Bananas 61. in Pyjamas and Play School. 62. "If you take a company like Sesame Street, they took many years before they put their toe in 63. the water for food," Henderson says. 64. "I think one of the smartest audiences around the world is the ABC parent or care-giver…it would be 65. interesting to see the reaction if the ABC or Bananas moved into endorsing a wider brand of 66. product." 67. But Henderson also is worried programming decisions inevitably take a back seat when marketing is 68. around. "I am not opposed to merchandising in any way – one lives in the real world -but it must 69. begin with a quality television program." appendix B 1. ABC chiefs 'idiots', says Shier adviser 2. Amanda Meade 3. Media writer 4. ABC managing director Jonathan Shier's marketing consultant, Keith Bales, has labelled the 5. managers of ABC Enterprises idiots with no business acumen. 6. Speaking on the eve of Mr Shier's appearance today before a Senate estimates committee hearing on 7. the ABC, Mr Bales told The Australian the ABC was wasting its great marketing potential. 8. I am just saying they have to be better at it and a bit more energetic and proactive rather than 9. reactive," Mr Bales, a former Disney executive, said yesterday. 10. " I think they have been sitting around waiting for someone to ring them." 11. Mr Bales recommended in the report on ABC Enterprises that its manager, Terry Maloney, and 12. Children's television head Claire Henderson be sacked. 13. Mr Shier is expected to face questioning from the committee today over the Bales report, cuts to news 14. and current affairs, job losses and his executive salary budget. 15. The ABC section secretary of the Community and Public Sector Union, Graeme Thompson, said last 16. night that a further 28 jobs would be lost in the technical services department. 17. "Theses cuts are to fund Shier's fatted executive structure and is the first in a batch of cuts," he said. 18. "Expect to see a further 150 job losses before Christmas. These job losses are not related to funding 19. cutbacks but to fund Shier's overspending." 20. Mr Shier may also face questions about the security contract Mr Bales set up whilst a consultant at the 21. ABC. 22. Mr Bales, the executive vice-chairman of Microdata Technology, said he told Mr Shier the 23. technology would protect the ABC's assets and that Mr Shier said to talk to the finance director Russell 24. Balding. 25. Mr Bales also slammed the now defunct Telstra deal set up by the former managing director Brian Johns. 26. "With the Telstra deal, they didn't have a business case or a business plan, " he said. 27. "None of those idiots worked out how much it was going to cost to provide Telstra with the deal. 28. There is no one there with the business acumen to do the deal." 29. The ABC's independence would not be compromised by any of the ideas he had recommended, Mr 30. Bales said. 31. " I am not recommending they do anything different from what they were doing before," he said. 32. "The ABC brand, like the Disney name, is trusted. In surveys it rates as the number-one trusted brand 33. behind some charities. 34. "Within the ABC umbrella, there are great brands or intellectual property like Bananas in Pyjamas, 35. but the problem with that is they've only got one. Where are the new creative things coming from the 36. ABC?" ********** Last Modified: 05/06/2002 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.