Hakim v Australian Broadcasting Corporation [2012] NSWSC 912

Supreme Court New South Wales

Medium Neutral Citation: Hakim v Australian Broadcasting Corporation [2012] NSWSC 912 Hearing dates: 7 August 2012 Decision date: 10 August 2012 Before: McCallum J Decision: Imputations Catchwords: TORT - defamation - imputations - whether capable of being conveyed by matter complained of - whether bad in form - no question of principle Legislation Cited: Uniform Civil Procedure Rules 2005 Cases Cited: Favell v Queensland Newspapers Pty Ltd [2005] HCA 52 Harvey v John Fairfax Publications Pty Ltd [2005] NSWCA 255 Lewis v Daily Telegraph Ltd [1964] AC 234 Category: Interlocutory applications Parties: Tony Hakim (plaintiff) Australian Broadcasting Corporation (defendant) Stephen Long (second defendant) Representation: Counsel: S Chrysanthou (plaintiff) ATS Dawson (defendant) Solicitors: Somerset Ryckmans (plaintiff) ABC Legal & Business Affairs (defendants) File Number(s): 2011/340506 Publication restriction: None

Judgment 1These are proceedings for defamation arising out of the broadcast of an edition of the Four Corners programme on ABC television and on the ABC website. In the amended statement of claim filed on 10 July 2012, the plaintiff relies upon seven remaining imputations allegedly conveyed by the programme. The ABC objects to each of the imputations. This judgment determines those objections. 2To the extent that the objections question the capacity of the matter complained of to carry the imputations relied upon, they invoke the longstanding practice in the Defamation List of determining that issue as a separate question. To the extent that the objections relate to the form of the imputations, the application invokes the Court's power under rule 14.28 of the Uniform Civil Procedure Rules 2005 to strike out any part of a pleading that has a tendency to cause prejudice, embarrassment or delay. 3The programme deals with the subject of "telephony bundling", the practice of selling telecommunications services together with equipment leases. The pitch, according to the programme, is to encourage customers to switch to a new telecommunications service provider by "bundling" those services with an offer of equipment such as plasma televisions, DVD players and so on. The concept of telephony bundling is explained in the programme by the journalist, Stephen Long, in the following terms: These deals that wrap in phone services and equipment work for some. But they have become a source of controversy. The business model was devised by Tony Hakim, a Sydney businessman, in the late 1990's. It's called bundling and it works like this. You sign up with a Telco for say, five years, and you get equipment, TVs, phones, laptops, you name it. Now the equipment is never free, though the sales pitch might imply it, you rent it for absolute top dollar, big money. But you get discounts off your phone bill, known as call credits. And in theory they offset what you pay for the equipment. But here's the catch. If the Telco goes bust, you lose your phone service, you lose your telephone bill discounts, but you're stuck in an expensive rental contract for the equipment which you might well have been told was free. And in practice, the system is prone to corruption. As we'll see, it's been chronically abused, manipulated and as industry insiders like to put it, mis-sold. 4The programme analyses the experiences of a number of customers of various telecommunications companies who claim to have been required to pay substantial amounts of money on rental contracts as a result of having entered into such contracts. 5Imputation (a) relied upon by the plaintiff is: The plaintiff has knowingly devised and put into action a dishonest scam known as telephony bundling intending to cheat purchasers of telephony bundling products of enormous amounts of money. 6The defendant's objection to that imputation is that the matter complained of is incapable of conveying it. Mr Dawson, who appeared for the defendant, submitted that the imputation elevates the business model said to have been devised by the plaintiff into one that is inherently dishonest. He submitted that the matter complained of does not make that contention, but rather focuses on the business model as being one that "works for some" but is "prone to corruption". Mr Dawson further submitted that there is nothing in the matter complained of to suggest that the plaintiff devised the business model of telephony bundling with the intention attributed to him in the imputation (of cheating purchasers of enormous amounts of money). 7The principles applicable to the question of capacity are well known. A convenient statement of the approach to be taken by the Court may be found in the decision of the High Court in Favell v Queensland Newspapers Pty Ltd [2005] HCA 52 at [9] to [11]. That decision also provides an instructive illustration of the application of those principles. Of particular relevance in the present context is the "important reminder for judges" in Favell of the statement of Lord Devlin in Lewis v Daily Telegraph Ltd [1964] AC 234 at 277, that "whereas, for a lawyer, an implication in a text must be necessary as well as reasonable, ordinary readers draw implications much more freely, especially when they are derogatory": Favell at [11]. 8In my view, the matter complained of in the present case is capable of carrying imputation (a). It may be acknowledged that the story does not expressly attribute to the plaintiff the responsibility for all of the woes of customers exposed in the story. However, the gist of the story is that the business model devised by Mr Hakim is one that is prone to being used as a method of cheating people of large amounts of money. Specifically, a common feature of the complaints featured in the programme is that the customers were told that the equipment was free. That was only the case so long as the telecommunications company continued to meet the lease payments. One of the customers who complains of being stung by such a deal states (at line 281): DES GOMMERS: There was a lot of deception and the deception wasn't limited to the people who were selling it. The deception was also with the finance companies being in cohorts (sic) with these people. And some very, very clever people manipulating the system then pulling the pin and running away with money. 9Further, aspects of the programme point towards the conclusion that Mr Hakim perpetuated the model for huge personal gain although he knew it was deceptive. The story reports that National Telecoms Group or "NTG", a company owned by Mr Hakim, was prosecuted by the ACCC "for scamming small businesses" and that NTG "admitted it had misled and deceived customers, telling them they'd get equipment for free". The programme continues (at line 151): Wounded, Tony Hakim withdrew into the shadows. But a raft of new telcos sprang up, many run by his friends, family members, and former business associates. Though there is no evidence that Tony Hakim was directly involved. They were all offering bundle deals, and pretty soon the complaints against them were mounting 10As noted by Ms Chrysanthou, who appeared for the plaintiff, the story adopts a visual device throughout that passage of a photograph of Mr Hakim which fades, but does not disappear, during the references to the new telcos run by friends, family members and former business associates, rhetorically suggesting Mr Hakim's ongoing influence on the business conducted by those new telcos. 11It is necessary also to have regard to the strong language of the matter complained of. The customers of the companies that adopted Mr Hakim's business model are not happy. Some raise complaints about companies not suggested to have any association with Mr Hakim. However, ultimately the question is what a jury could reasonably make of the programme considered as a whole. In my view, the question whether imputation (a) is conveyed is one that should properly be left to the jury in accordance with the principles stated by the High Court in Favell. 12Imputation (d) is: that the plaintiff had managed the affairs of his company NTG so dishonestly as to warrant the ACCC bringing a prosecution against it for scamming small businesses. 13The objection to that imputation was also an objection as to capacity. Mr Dawson submitted that there is nothing in the matter complained of about the plaintiff's management of NTG, dishonest or otherwise. With great respect to Mr Dawson, that submission reflects a lawyerly analysis. As submitted by Ms Chrysanthou, the ordinary reasonable reader is not an expert in company law. In my view, a jury could reasonably take it that, when the programme refers to "Tony Hakim's National Telecoms Group", it is attributing the management of that company to him. That another person might have been responsible for the conduct that gave rise to the prosecution is a possible understanding of the programme, but it is certainly open to understand that the programme was attributing that responsibility to Mr Hakim. 14Separately, Mr Dawson submitted that the programme says nothing as to whether the ACCC prosecution was "warranted". I do not accept that submission. The programme reports that NTG admitted to misleading and deceiving customers and describes Mr Hakim as having withdrawn "wounded" into the shadows. 15In my view, imputation (d) is capable of being conveyed by the matter complained of. 16Imputation (g) is: that the plaintiff's company Clear Communications Group threatened Dylan Crowe with physical violence, should Mr Crowe fail to pay his telephone bills. 17In response to an objection that a company cannot threaten violence, Ms Chrysanthou sought to amend the imputation to read: that the plaintiff's employee threatened Dylan Crowe with physical violence, should Mr Crowe fail to pay his telephone bills. 18The first difficulty with the imputation as reformulated is that it identifies no act or condition attributed to the plaintiff. Separately, to the extent that it was intended to mean that the plaintiff bore a measure of responsibility for the threat (which is not what it says), I do not think it is capable of being conveyed by the matter complained of. 19Dylan Crowe is one of the aggrieved customers interviewed in the programme. The account of his woes begins with the assertion that, by 2006, Mr Hakim was "back in the game" and had gathered a series of companies under the banner of his Clear Communications Group. Beyond that, however, there is no reference to Mr Hakim. 20Mr Crowe complains that his bills were meant to be capped but that they sky-rocketed after the first six months, contrary to his understanding of his contract. The programme gives an account (in one instance played out by an actor) of threats made to Mr Crowe and his business partners when the the bills were not paid. However, the programme clearly identifies the author of the threats as a person other than Mr Hakim. There is no ambiguity in that respect. 21In my view, any meaning attributing responsibility to Mr Hakim for the threats must be rejected as the product of a strained or forced interpretation of the matter complained of. 22Imputation (h) is: that the plaintiff's company Clear Communications Group deceived Dylan Crowe. 23As with imputation (g), one difficulty with that imputation is that it identifies no act or condition attributed to the plaintiff. It is also apt to cause confusion, in my view, on the basis that the matter complained of does not identify a company called Clear Communications Group. Rather, the programme says that Mr Hakim had gathered "a series of companies under the banner of his Clear Communications Group". 24In my view, the imputation in its present form should be struck out as being bad in form. 25Imputation (i) and (j) may be considered together: They are: That the plaintiff is an evil genius in that he created a scheme which has misled and ripped off thousands of customers. That the plaintiff is scum in that he has created a scheme which has misled and ripped off thousands of customers. 26The terms "evil genius" and "scum" are drawn directly from the matter complained of. The objection to the imputations was that those terms are imprecise. Mr Dawson relied on the discussion of the relevant principles in Harvey v John Fairfax Publications Pty Ltd [2005] NSWCA 255 at [126] where Hunt AJA deplored the vice of "merely pleading the words of the matter complained of as the imputation for which the plaintiff contends where those words do not adequately distil the act or condition attributed to the plaintiff". Although those remarks were made in a different statutory context, they record an unexceptionable proposition. 27Ms Chrysanthou submitted that the imputations do not fall foul of that principle because the meaning of each term is identified within the imputation. I do not think that cures the problem. In my view, there is scope for confusion or ambiguity at the trial as to the meaning of those imputations. Accordingly, I am satisfied that they should be struck out. 28Imputation (n) is: That the plaintiff created and operated a fraudulent scheme whereby finance companies would pay telecommunications companies he controlled millions of dollars upfront, and the telecommunications companies would collapse, leaving consumers stuck with paying vast sums for worthless contracts. 29The first objection to that imputation repeated the points considered above in respect of imputation (a) as to whether the programme says that the business model devised by the plaintiff is one that is inherently dishonest. For the reasons explained above, I think the programme is reasonably capable of conveying that meaning. 30However, I do think that confusion is introduced by the words "and the telecommunications companies would collapse". The word "collapse" is confusing because it suggests an event beyond the control of the creator of the scheme, whereas the imputation as a whole implies that the scheme controls that event. The imputation might have been intended to be understood to mean that deliberate (fraudulent) withdrawal from the arrangements by the telecommunications companies was an aspect of the scheme (in which event the word "collapse" does not capture the intended meaning). 31Alternatively, it might have been intended to be understood to mean (less nefariously) that the scheme failed to address the risk of collapse of the telecommunications companies, in which event it probably does not sustain the characterisation of the scheme as fraudulent. In my view, the pleader needs to grapple with that issue. The imputation in its present form should be struck out. 32I order that imputations (g), (h), (i), (j) and (n) be struck out with leave to replead.