Supreme Court New South Wales Medium Neutral Citation: Waterhouse v The Age Company Ltd & Ors [2012] NSWSC 9 Hearing dates: 15.11.11 Decision date: 01 February 2012 Before: Nicholas J Decision: Par 32 Catchwords: DEFAMATION - pleading - plaintiff's application to further amend statement of claim - proceedings to be tried by jury - contextual truth defence - whether plaintiff should be permitted to amend to "plead back" the contextual imputations - whether amendment necessary for determination of the real questions in the proceedings - whether unjust to permit amendment Legislation Cited: Civil Procedure Act 2005 Defamation Act 2005 Uniform Civil Procedure Rules 2005 Cases Cited: Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 Besser v Kermode [2011] NSWCA 174; (2011) 282 ALR 314 McMahon v John Fairfax Publications Pty Ltd [2010] NSWCA 308 Category: Interlocutory applications Parties: Robert (Robbie) Waterhouse - plaintiff The Age Company Ltd - first defendant Andrew Rule - second defendant John Silvester - third defendant Representation: Counsel: R Rasmussen - plaintiff T D Blackburn SC - defendants Solicitors: Stacks/Goudkamp Lawyers - plaintiff Johnson Winter & Slattery - defendants File Number(s): 10/416092 Judgment 1The plaintiff seeks leave to further amend his statement of claim by adopting, or "pleading back", the contextual imputations pleaded by the defendants in support of the defence of contextual truth under s 26 Defamation Act 2005 (the Act). The application was opposed. Background 2The matters complained of were published on 30 November and 4 December 2010. In the statement of claim filed on 15 December 2010 it was alleged (pars 4, 6) that each conveyed the following defamatory imputations: "(a) The Plaintiff murdered George Brown. (b) The Plaintiff procured the murder of George Brown. (c) The Plaintiff was an accessory to the murder of George Brown." 3On 24 January 2011 the defendants filed a notice of intention to make election for trial by jury under s 21 of the Act, as required by UCPR Pt 29, r 29.2A. 4The defendants' contested application to strike out the imputations on grounds that they were defective in form, and incapable of being conveyed was heard on 11 February and 7 March 2011. On 17 March 2011 ([2011] NSWSC 159) I ordered that the imputations in pars 4(a) and 6(a) be struck out, and those in pars 4(b), 4(c), 6(b), and 6(c) be left to the jury in the alternative. 5On 4 April 2011 the amended statement of claim was filed in which the plaintiff's imputations were pleaded in each of pars 4 and 6 as follows: "(i) The Plaintiff procured the murder of George Brown. OR (ii) The Plaintiff was an accessory to the murder of George Brown." A claim for aggravated damages was pleaded based on the plaintiff's knowledge of the falsity of the imputations (r 15.32(a)). 6On 2 May 2011 the defence was filed. It included a defence of contextual truth in the following terms: "4. Further and in the alternative, the Defendants say that insofar as and to the extent that it may be found that either or both of the First Matter Complained Of or Second Matter Complained Of was or were published of and concerning the plaintiff and to be defamatory of him in its or their natural and ordinary meaning, or that either of them bore the imputations pleaded in paragraphs 4(ii) and 6(ii) respectively (which is denied): (a) such imputations were published contextually to the following imputations (contextual imputations): (A) The plaintiff feared arrest for the murder of George Brown, because he used Brown to fix horse races and placed money in a suspicious betting plunge on a horse Brown trained, two days before he was murdered. (B) The plaintiff attempted to cheat bookmakers and the general public out of large amounts of money in the Fine Cotton ring-in. (C) The plaintiff was an accessory to a criminal conspiracy to cheat and defraud. (D) The plaintiff was sent to gaol for lying to the Racing Appeals Tribunal about his prior knowledge of a criminal substitution racket. (E) The plaintiff acted so dishonestly as a bookmaker that he was warned off race-tracks worldwide. (F) The plaintiff acted criminally as a bookmaker. (G) The plaintiff is a repeatedly dishonest bookmaker. (b) by reason of the substantial truth of one or more of the contextual Imputations, publication of any of imputations 4(ii), or 6(ii) did not further injure the plaintiff's reputation." 7It included (par 5) a defence which pleaded a "common sting" imputation. Also pleaded were particulars of matters to be relied upon in mitigation of damages under r 15.21(3) which included: "(b) the substantial truth of each contextual imputation and/or Common Sting as may be proved to be true. (c) evidence adduced at the hearing for the purpose of proving the truth of the contextual imputations and/or the Common Sting." 8It was common ground that by letter of 9 June 2011 the plaintiff's solicitors notified the defendants' solicitors of the intention to plead back the contextual imputations. Thereafter the proceedings were before the court and the Registrar on a number of occasions when orders and directions were made as to the interlocutory steps to be taken. The present application was heard on 15 November 2011. 9The application was pursuant to s 64(2) Civil Procedure Act 2005 (CP Act) which provides: "64 Amendment of documents generally ... (2) Subject to section 58, all necessary amendments are to be made for the purpose of determining the real questions raised by or otherwise depending on the proceedings, correcting any defect or error in the proceedings and avoiding multiplicity of proceedings." 10A judge's power to give leave to amend under s 64 CP Act is to be exercised in accordance with s 56 - s 59, the effect of which was explained by Giles JA in McMahon v John Fairfax Publications Pty Ltd [2010] NSWCA 308 as follows: "44 I will not set the provisions out, but they include - (a) prescribing an overriding purpose of facilitating the just, quick and cheap resolution of the real issues in proceedings, and obliging the court to seek to give effect to the purpose and imposing duties on parties to proceedings to assist the court to further it (s 56); (b) requiring that proceedings be managed, for the purpose of furthering the purpose, having regard to the objects of the just determination of the proceedings, the efficient disposal of the business of the court, the efficient use of available judicial and administrative resources and the timely disposal of the proceedings and all other proceedings in the court at a cost affordable by the parties (s 57); (c) requiring that, when carrying out its obligation to seek to act in accordance with the dictates of justice, the court must have regard to the provisions of ss 56 and 57, amongst other matters non-exhaustively stated (s 58); and (d) requiring that the court's practice and procedure be implemented with the object of eliminating delay beyond that reasonably required for necessary preparation for fair and just determination (s 59). ... 46 ... The judge's power to give leave to amend in s 64 of the Civil Procedure Act was to be exercised in accordance with ss 56-59. Justice to the appellant in permitting amendment, always to be balanced against injustice to the respondents, also required regard to the overriding purpose and to the efficient and timely disposal of the proceedings. Each case must turn on its own facts, but there can be a significant brake on the exercise of the power." 11Under the Act a person has a single cause of action for multiple defamatory imputations arising from the same publication (s 8). A party may elect for the proceedings to be tried by jury (s 21). In proceedings that are tried by jury the roles of judge and jury are different. The jury is to determine whether the matter published is defamatory and, if so, whether any defence has been established (s 22(2)). If the jury finds the matter to be defamatory, and no defence has been established, it is for the judge and not the jury to determine the amount, if any, of damages to be awarded, and related issues of fact (s 22(3)). 12Relevantly, the Act provides: "25 Defence of justification It is a defence to the publication of defamatory matter if the defendant proves that the defamatory imputations carried by the matter of which the plaintiff complains are substantially true. 26 Defence of contextual truth It is a defence to the publication of defamatory matter if the defendant proves that: (a) the matter carried, in addition to the defamatory imputations of which the plaintiff complains, one or more other imputations (contextual imputations) that are substantially true, and (b) the defamatory imputations do not further harm the reputation of the plaintiff because of the substantial truth of the contextual imputations." 13In Besser v Kermode [2011] NSWCA 174; (2011) 282 ALR 314 the Court of Appeal was concerned with the proper construction of s 26. McColl JA (Beazley JA and Giles JA agreeing) held that a defence of contextual truth must defeat the whole defamatory matter; contextual imputations under s 26 must be in addition to those of which the plaintiff complains; and on its proper construction s 26 does not permit a defendant to plead back any of the plaintiff's imputations as a contextual imputation to establish a defence of contextual truth. Her Honour concluded: "77 The shift from the defamatory imputation to the defamatory matter as the cause of action sets the context for understanding s 26. This is first apparent from the direction in s 26 to there being in the circumstances there provided a "defence to the publication of defamatory matter". This refers to the single cause of action constituted by the publication of such matter "even if more than one defamatory imputation about the person is carried by the matter": s 8, 2005 Act. It is language repeated, as I have earlier remarked, in each other defence under the 2005 Act. In contrast, a defence under s 16 (and s 15) of the 1974 Act went to the "imputation complained of". 78 This markedly different language highlights the sea-change the 2005 Act has wrought to defamation law in this State. Although s 26 created a new defence for all Australian jurisdictions other than this State, it is framed by s 8 in terms of the common law cause of action. A defence of contextual truth must defeat the whole defamatory matter (cause of action) of which the plaintiff complains, that is to say all of the plaintiff's stings: see [ 47 ] above. Thus s 26 postulates that the defence of contextual truth must carry contextual imputations "in addition to" those "of which the plaintiff complains". 79 Secondly, when the tribunal of fact comes to the weighing exercise the contextual truth defence entails (see [73], s 26(b)) it must be able to conclude that because of the substantial truth of the contextual imputations "the defamatory imputations" - that is to say the plaintiff's cause of action - do not further harm the plaintiff's reputation. One [sic] again the focus is on comparing the defendant's contextual imputations with the plaintiff's cause of action. 80 Thirdly, the use of the definite article in both sub-paragraphs of s 26 (" the defamatory imputations") focuses attention on the plaintiff's imputations as a group - emphasising that the defence has to respond to all the plaintiff's imputations (cause of action). In contrast, s 16 of the 1974 Act used the indefinite article, directing the defence to "any imputation complained of", thus permitting the pleading-back of any other of a plaintiff's imputations to another. ... 84 ... this construction of s 26 does not lead to a manifestly absurd and unreasonable outcome, let alone ignore the mischief that section sought to achieve. Rather, it is consistent with the language and purpose of all the provisions of the 2005 Act and corresponds with the grammatical meaning of s 26: Project Blue Sky (at [68], [78]). 85 Both the language of s 26, the context in which it appears and the extrinsic materials (in particular the explanation of s 26 in the Explanatory Note) make it apparent that the mischief to which the s 26 defence was directed was the defect in the common law position identified in Plato Films Ltd v Speidel (see [69]). Hasluck J understood that to be the purpose of s 26 as it appears in the Defamation Act 2005 (WA): see Wookey v Quigley [2009] WASC 284 (at [62]). A defendant will be able to defeat a plaintiff's cause of action if its substantially true contextual imputation(s) outweigh the plaintiff's defamatory imputations. A plaintiff will not be able to avoid serious stings in defamatory matter by selective pleading. This represents a substantial advance for all jurisdictions other than New South Wales which had no contextual truth defence. 86 In summary, a defendant seeking to justify the defamatory matter under the 2005 Act may take the following courses of action, some statutory, some based on the common law: (a) prove that the defamatory imputations carried by the defamatory matter of which the plaintiff complains are substantially true: s 25; (b) prove that rather than the defamatory imputations pleaded by the plaintiff, the defamatory matter carries nuance imputations which are substantially true; (c) to the extent that the defendant fails to establish all the defamatory imputations carried by the defamatory matter of which the plaintiff complains are substantially true, rely on those proved to be true in mitigation of the plaintiff's damages: partial justification; and (d) to the extent the defendant can not prove that the defamatory imputations carried by the defamatory matter of which the plaintiff complains are substantially true, prove that it carries contextual imputations that are substantially true, by reason of which the defamatory imputations do not further harm the reputation of the plaintiff: s 26." 14With respect to the defence of partial justification, so far as is relevant to this case, her Honour said: "47 As Gillard AJA explained in Herald & Weekly Times Ltd v Popovic (at [306], see also at [279]): ... (iii) A publisher may justify part only of the words complained of provided the part sought to be justified contains a distinct and separate imputation. What is important is that the particular defamatory imputation is severable from the other defamatory imputation and conveys a distinct and separate imputation. See Biddulph v Chamberlayne and Davis v Billing . The plaintiff must not be left in any doubt as to what the defendant seeks to justify. But importantly this partial justification is not a defence to the cause of action, which is the publication of defamatory words. However, it is relevant to the question of damages, and if proven, results in a reduction in damages ." (emphasis added) ... 50 The defence to which Gillard AJA referred (at [306](iii)) was known as partial justification. Such a defence enables a defendant to seek to justify any one of several distinct defamatory meanings raised by a plaintiff's claim: Howden v "Truth" and "Sportsman" Limited and Another (No. 2) (1938) 38 SR (NSW) 287; Hadzel v De Waldorf (1970) 16 FLR 174 (at 179) per Fox J. The defence mitigates the damages the plaintiff might obtain in respect to the unproved material or meaning: Whelan v John Fairfax Publications Pty Ltd [2002] NSWSC 1028; (2002) 56 NSWLR 89 (at [77]) per Levine J; Prager v Times Newspapers Ltd [1988] 1 WLR 77; [1988] 1 All ER 300 (at 308) per Purchas LJ. ... 59 In summary, at common law in Australia: (a) a defendant seeking to justify defamatory matter had to prove all stings of the defamatory matter relied upon by the plaintiff were substantially true; (b) a defendant seeking to justify defamatory matter could not do so by seeking to plead and justify an imputation with a substantially different sting from that or those pleaded by the plaintiff; a defendant could only plead nuance imputations; and (c) if a defendant could only establish that one of two or more stings relied upon by the plaintiff was substantially true, the defence of justification failed, but the evidence led to establish that defence could be relied upon in mitigation of damages: Channel Seven Sydney Pty Ltd v Mahommed (at [158]); P Milmo and W V H Rogers, Gatley on Libel and Slander , 11th ed (2008) Sweet & Maxwell (at [35.14]) ("Gatley"). ... 88 Mr McHugh repeated the argument advanced before the primary judge (primary judgment at [41]) that: "... in any case where a defence of contextual truth is pleaded by a defendant, a plaintiff may defeat that defence by simply adopting the contextual imputations as imputations of which he or she complains. In doing so, a plaintiff would lose nothing, because, by pleading the imputations as contextual imputations, the defendant has signalled an intention to prove their truth. By adopting (or, put more pejoratively, 'appropriating') the contextual imputations pleaded by the defendant, the plaintiff could deprive the defendant of a defence under s 26." 89 The primary judge accepted that this proposition was correct, but said (at [41]) "it cannot be allowed to dictate the proper approach to statutory construction". I agree with her Honour. The defendant in this scenario will still be able to justify pursuant to s 25 the imputations it had pleaded as contextual imputations, but which the plaintiff has "adopted", but will be unable to defeat the plaintiff's cause of action entirely as it would have sought to do by seeking to have the tribunal of fact weigh its contextual imputations (proved to be substantially true) against the plaintiff's defamatory imputations. The defendant will still have the benefit of its justification of the imputations it had pleaded in mitigation of the plaintiff's damages. That outcome is a product of the new defamation model created by the 2005 Act." It may be observed that her Honour gave no indication that it would be either impermissible or an abuse of process for a plaintiff to adopt the contextual imputations pleaded by a defendant, and thereby deprive the defendant of a defence under s 26. Submissions 15The plaintiff submitted that the application was for leave to adopt the defendants' contextual imputations as his own. It was put that the amendment would enable the real issues to be put before the court, and would not delay the proceedings. It was put that as they had an alternative defence of "common sting", the defendants would suffer no disadvantage or prejudice if the s 26 defence became no longer available. Although it was accepted that there had been a delay of about two months in bringing the application, it was put that this should not tell against a grant of leave given that interlocutory steps had not been completed, and no date for trial has been fixed. It was submitted that it was fair to permit the plaintiff to adopt as additional imputations those which the defendants alleged were capable of arising from the matters complained of, leaving open to them a defence of justification under s 25 of the Act. 16For the defendants it was submitted that with regard to the considerations required under s 56 - s 58 CP Act leave should be refused. It was put that to permit the amendment would be to destroy legitimate reliance on an available defence, with consequential injustice far outweighing any injustice to the plaintiff if leave was refused. In essence, it was put that the consequence of amendment would impede the just determination of the proceedings (s 57(1)(a)), and would be contrary to the dictates of justice in the case (s 58(2)(b)(vi). 17The court was invited to refuse leave also on the ground that it should be inferred that the true purpose of the application was to eradicate the defence rather than to enable the just determination of the real questions in the case. In any event, it was put that the plaintiff had had ample time, with the assistance of experienced lawyers, to plead the imputations he wished to allege, including to amend the statement of claim after the defendants' challenge to the imputations originally pleaded had been determined. In short, it was put that the application was no more than an opportunistic foray which should be repelled. 18It was also put that another ground for refusal was that it was an abuse of process to make use of a procedural power to amend to obtain a result which would be manifestly unfair to the defendants. 19The defendants also submitted that the plaintiff had failed to show, as required under s 64(2) CP Act, that the amendment proposed was necessary for the purpose of determining the real questions raised by the pleading. It was put that there was no such necessity because the questions raised under the contextual truth defence were whether the contextual imputations were in fact conveyed, were defamatory, and were true, which were questions no different to those which would be raised under the amendment. It was argued that the effect of the amendment would be to preclude the determination of a real issue raised under the defence, namely whether, by reason of the substantial truth of the contextual imputations, the plaintiff's reputation was not further injured by his own imputations. Determination 20In Aon Risk Services Australia Ltd v Australian National University ; [2009] HCA 27; (2009) 239 CLR 175 it was said: "111 An application for leave to amend a pleading should not be approached on the basis that a party is entitled to raise an arguable claim, subject to payment of costs by way of compensation. There is no such entitlement. All matters relevant to the exercise of the power to permit amendment should be weighed ... 112 A party has the right to bring proceedings. Parties have choices as to what claims are to be made and how they are to be framed. But limits will be placed upon their ability to effect changes to their pleadings, particularly if litigation is advanced. That is why, in seeking the just resolution of the dispute, reference is made to parties having a sufficient opportunity to identify the issues they seek to agitate." 21The crucial question under s 64(2) CP Act is whether the amendment is necessary. Its determination requires consideration of the existing questions raised by the present pleadings. Relevantly the pleadings show the following. 22The plaintiff's imputations are pleaded in the alternative. It follows that the jury will be required to determine which, if any, of these imputations is conveyed, and whether it is defamatory. 23As pleaded, the contextual truth defence is to the publication if it is found that imputations 4(ii) and 6(ii) are conveyed. I do not understand the pleading to raise this defence if imputations 4(i) and 6(i) are found. 24The issues under the contextual truth defence are whether the contextual imputations are conveyed, and are true (s 26(a)), and whether by reason of the substantial truth of the contextual imputations the plaintiff's imputation does not further harm his reputation (s 26(b)). Upon the defendants' election, these issues are to be tried by jury. If the defendants succeed, the defence would be established by the jury, and the defendants would be entitled to a verdict. 25If the amendment was allowed, the defence under s 26 would be lost. Disregarding the common sting defence, the plaintiff would be entitled to a verdict if a defence of justification under s 25 failed in respect of any imputations found to be defamatory. The issue of harm, to be determined by the trial judge, would only arise under the plea of mitigation of damages. In a sense, this issue is similar to that under s 26 in that both involve balancing the harm to reputation caused by the imputations proved to be true against the plaintiff's imputations not proved to be true. The significant difference is that the task under mitigation of damages is for the trial judge, not the jury. 26By the amendment the issues as to truth or falsity of the imputations, and resulting harm to reputation, would be raised on the plaintiff's pleadings, which include the claim for aggravated damages that harm was increased by the falsity of the imputations. However, the defence already raises the same questions, and includes the plea in mitigation that harm was reduced by the truth of the imputations. It follows, in my opinion, that for the agitation of questions as to truth or falsity of the imputations, and resulting harm to reputation, it is not necessary to allow the amendment sought by the plaintiff. The plaintiff did not identify any other question in controversy which necessitated the grant of leave to amend to include it in these proceedings. Accordingly, leave to amend under s 64(2) CP Act should be refused. 27Nevertheless, the principled exercise of discretion requires consideration of the provisions of s 56 - s 58 CP Act, which require a just resolution of proceedings (s 56(1), s 57(1)(a)). 28In accordance with the Act, the defendants are entitled to the jury's determination of all issues other than damages. If successful they will be entitled to a verdict, and no question of damages will arise for subsequent determination by the trial judge. The election having been made, the Act provides that the resolution of these issues be left to the jury. 29If the amendment was permitted, the defendants would be deprived of the right to have the issue of harm under s 26 determined by the jury. In my opinion, such a result would work a grave injustice to them in these proceedings. 30This is not a case in which the amendment would impede the progress of the litigation or otherwise cause delay, or would waste public resources. It is not required to avoid a multiplicity of proceedings. The application stems only from the fact that the imputations were pleaded in the defence of contextual truth. 31Taking into account all the circumstances of the case, I find the plaintiff would suffer no injustice by the refusal of leave. It is reasonable to suppose that at the time he learnt of the publications, or soon thereafter, the plaintiff would have had a good idea of the defamatory meanings which harmed his reputation and hurt his feelings. There has been full opportunity to identify and plead them, and those he chose were adhered to in opposition to the defendants' challenge earlier referred to. In McMahon (par 49) Giles JA referred to the importance of getting the framing of imputations right the first time, at risk of refusal of leave to amend at a later time. 32Accordingly, in my opinion it would not be in the interests of justice in this case to grant leave to amend, and the application should be refused. In view of this conclusion it is not necessary to consider the defendants' contentions based upon abuse of process. Conclusion 33It is ordered that: (1)the plaintiff's application for leave to further amend the statement of claim be dismissed; and (2)The plaintiff is to pay the defendants' costs. ********** 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. Decision last updated: 01 February 2012