Evans v John Fairfax Publications P/L [2002] NSWSC 317

New South Wales Supreme Court

CITATION : Evans v John Fairfax Publications P/L [2002] NSWSC 317 CURRENT JURISDICTION: Common Law Division Defamation List FILE NUMBER(S) : SC 20869/01 HEARING DATE(S) : 17/04/02 JUDGMENT DATE : 22 April 2002

PARTIES : Len Evans AO, OBE (Pl) John Fairfax Publications Pty Limited (Def) JUDGMENT OF : Kirby J

COUNSEL : B McClintock SC/R G McHugh (Pl) T Blackburn (Def) SOLICITORS : Abbott Tout (Pl) Freehills (Def) CATCHWORDS : Defamation - Imputations - Whether capable of arising LEGISLATION CITED : Defamation Act 1974 CASES CITED : Amalgamated Television Services P/L v Marsden (1998) 43 NSWLR 158 DECISION : Ref para 37

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION DEFAMATION LIST

KIRBY J

Monday 22 April 2002

20869/01 - LEN EVANS AO, OBE v JOHN FAIRFAX PUBLICATIONS PTY LIMITED

JUDGMENT 1 KIRBY J: This is an application to strike out certain imputations in the Statement of Claim. Mr Len Evans (the plaintiff) has commenced an action for defamation against the publishers of The Australian Financial Review, John Fairfax Publications Pty Limited (the defendant). The action arises out of the publication by that company of an article on 24 October 2001 in The Australian Financial Review in the following terms: "LEN EVANS' NET OFFERING CORKED Katrina Nicholas How do you convert zero dollars into $920,000 in two years, plus get paid a quarter of a million a year to do it? If you're wine pro Len Evans, it's easy. Just collect $250,000 per annum in consulting fees to run a website that has minimal sales. Then, after about 18 months, decide the revenue model's no longer viable, shut up shop and tell shareholders you'll kindly return their funds. Play down the fact that of the $25 million they tipped in, there's only $7.4 million left. And hope they don't notice that, as the majority shareholder, you're entitled to $920,000 - more than 12 per cent of the kitty. This exact scenario looks set to transpire, following the news yesterday that online liquor group Winepros plans to voluntarily liquidate its business. In a statement to the stock exchange, Winepros, which listed in December 1999 after raising $25 million by selling shares at $1 apiece, said that after a meeting of directors it had 'resolved to take steps to realise the assets and business of the company and return the proceeds and cash on deposit to the shareholders'. It would also seek to 'sell the Winepros business as a going concern' and as such would continue to operate the business accordingly, the statement said. According to Winepros' latest quarterly cash flow statement, the company had $7.35 million in the bank as at September 30. It made just $37,000 in sales for the quarter and burnt through $811,000. Leaving aside what may be realised from the sale of its non-cash assets, a pro rata redistribution of funds to shareholders would see Mr Evans receive just over $1 million 918,750 of which it represents the 6.25 million shares he received for nix in 1999. Other beneficiaries would include fellow wine buff James Halliday, who also received an annual consulting fee of $250,000, and News Corp's Harper Collins Publishers. Both parties, who paid $600,000 for their shareholding - 6.25 million shares at 9.6c each - would receive a pro rata payout of about $920,000. With a 20 per cent holding, colesmyer.com would receive $735,000. But receiving such a handsome payout was certainly not his idea, Mr Evans said last night. 'I didn't originate this deal. I want to make it quite clear I was given the deal. In fact, I was talked into it,' he said. 'If I've finished off with a monetary gain, then so be it.' Not set to receive any pro rata redistribution - she owns no shares - but still not waking away empty-handed is Mr Evans' daughter and Winepros managing director, Ms Sally Evans. She has received $160,000 a year for running the site. While the pro rata redistributions may be more, depending on how much Winepros gets for its two main assets - a minor shareholding in US online wine site vineyard, which operates wine.com, and its own website and content - industry players said yesterday Winepros' assets were worth little. 'My opinion is that the assets are worth around $2.50', said Mr Mark Mezrani, the one-time chief executive of Winplanet.com.au, which in March was bought and subsequently dismantled by majority shareholder Foster's. 'Of all the models put up at the time, Winepros was one of the most ambitious because they believed people who pay to get content,' said Mr Mezrani, who is now concentrating on his property developments. Mr Geoff Dahlsen, managing director of WineRobot, an internet company that sources the best online wine prices for customers, also cast doubt on the group's business model. 'Winepros has always been a romantic notion - people aren't prepared to pay for content that other retailers give away for free. They've struggled from the start.' Mr Dahlsen also said that with research indicating 80 per cent of wine in Australia is bought for consumption within 24 hours, demand for premium wine content advising drinkers of the best drop to cellar, for example, was low." 2 The plaintiff alleges that the article conveyed the following imputations which were defamatory of him: (a) The plaintiff had established a dishonest scheme involving an online liquor group, Winepros Limited, whereby he was paid $920,000.00 and $250,00.00 per annum for doing nothing. (b) The plaintiff had deliberately misled shareholders of Winepros Limited for personal gain. (c) The plaintiff had cheated the shareholders of Winepros Limited by deliberately running down the business of that company and then closing it down. (d) The plaintiff misappropriated $17.6 million (ie $25 million minus $7.4 million) in Winepros Limited. (e) The plaintiff managed the business of Winepros Limited in an incompetent manner so as to lose much of its funds. 3 The defendant objects to each imputation, asserting either that they do not arise or they are bad in form. I will deal with each imputation in turn.