Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Milne v Ell [2014] NSWCA 407 Hearing dates: 28 November 2014 Decision date: 28 November 2014 Before: McColl JA at [1]; Basten JA at [2]; Leeming JA at [33] Decision: (1) Dismiss Ms Milne's application for leave to appeal, with no order as to the costs of the application. (2) Dismiss Mr Ell's application for leave to cross-appeal, with no order as to the costs of the application. [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Catchwords: DEFAMATION - imputations - innuendo - extrinsic facts - whether the reputation of a third party can constitute an extrinsic fact relied on to support an innuendo absent proof that the reputation is based on fact PRACTICE AND PROCEDURE - costs - defamation proceeding - no order as to costs - whether successful plaintiff properly deprived of costs - whether defendant should have received costs on the basis of a timely apology which was not accepted - whether either party should have leave to appeal against no costs order Legislation Cited: Supreme Court Act 1970 (NSW), s 101 Cases Cited: Ell v Milne (No 5) [2013] NSWSC 246 Ell v Milne (No 7) [2013] NSWSC 600 John Fairfax Publications v Rivkin [1999] NSWCA 164 Mirror Newspapers Ltd v World Hosts Pty Ltd [1979] HCA 3; 141 CLR 632 Category: Principal judgment Parties: Katie Milne (Applicant/Cross-Respondent) William Robert Ell (Respondent/Cross-Applicant) Representation: Counsel: Mr T Molomby SC/Ms L Goodchild (Applicant/Cross-Respondent) Mr TK Tobin QC/Mr BA Kelleher (Respondent/Cross-Applicant) Solicitors: NLS Law (Applicant/Cross-Respondent) Pikes & Verekers Lawyers (Respondent/Cross-Applicant) File Number(s): 2014/137391 Decision under appeal Jurisdiction: 9111 Citation: Ell v Milne (No 8) [2014] NSWSC 175; Ell v Milne (No 9) [2014] NSWSC 489 Before: McCallum J File Number(s): 2010/417226 Judgment 1McCOLL JA: I agree with Basten JA. 2BASTEN JA: The applicant, Ms Katie Milne was, in 2010, a councillor on the Tweed Shire Council. On 30 March 2010 she distributed an email, in the form of a "letter to the editor", to a number of newspapers (though none published the offending passages) and to a number of individuals. The thrust of the email was to invite readers to lobby the State government to establish an independent inquiry into two developments occurring in Tweed Shire. The developer was the respondent, Mr Robert Ell. 3The broad thrust of the letter was to cast doubt on the behaviour of certain members of council. However, there was also a passage in the letter which referred directly to Mr Ell. He sued the applicant in defamation in the Supreme Court. The matter was heard by McCallum J, without a jury. 4McCallum J found that the respondent succeeded in his claim with respect to two imputations. She gave judgment for him in the sum of $15,000: Ell v Milne (No 8) [2014] NSWSC 175. McCallum J separately ordered that each bear his or her own costs of the proceedings: Ell v Milne (No 9) [2014] NSWSC 489. 5The applicant now seeks leave to appeal from the findings of the trial judge that the two imputations (b) and (f) were conveyed and, with respect to imputation (f), that it was defamatory. She further sought leave to appeal against the costs judgment, seeking an order that the respondent pay her costs of the trial. The second part of the application was not contingent upon success of the first part, although such an order might naturally have followed had the judgment in favour of the respondent been set aside. 6The respondent sought leave to cross-appeal with respect to the judge's order with respect to costs, claiming that he should have obtained an order for costs in his favour, given that he succeeded in obtaining a judgment against the applicant. 7The applicant requires leave to appeal in circumstances where the amount of the judgment against her ($15,000) is well below, indeed a small fraction of, the threshold for an appeal as of right (being $100,000): Supreme Court Act 1970 (NSW), s 101(2)(r). 8The applications for leave to appeal and cross-appeal were set down for hearing with the appeal, should the applications be granted. Both applications should properly be disposed of by refusing leave, in each case because of the lack of merit of the respective grounds, the absence of any issue of principle and, in the case of the proposed appeal, the amount involved. Challenge with respect to imputations 9The full text of the email is set out by the trial judge in her principal judgment at [3] and need not be repeated beyond the key passage. After questioning the conduct of various named councillors, the email continued: "The developer Mr Bob Ell has made massive donations to both the State and Federal Labour and Liberal govts as well as the last Council. The McGurk murder also raises serious concerns. According to Sydney newspapers Mr Bob Ell supplied $100,000 bail when McGurk was accused of firebombings and assault though this was later dropped. McGurk was working for Mr Ell at the time of his murder. Even further scandal in this whole process has erupted with the unearthing by Senator Ian Cohen of advice from the Dept of Environment in 2006 ...." 10The two imputations the subject of the proposed appeal read as follows: "(b) that he [Mr Ell] had a scandalous association with the murdered man Mr McGurk; (f) that he [Mr Ell] conducted his business with regard to property development by employing a person with a reputation for violence." Grounds 1 and 3 - imputation (f) conveyed and defamatory 11The finding of the trial judge that imputation (f) was conveyed was dealt with in an interlocutory judgment, Ell v Milne (No 5) [2013] NSWSC 246. There she rejected the submission that imputation (f) arose from the ordinary and natural meaning of the text of the publication, but accepted an alternative submission based upon an innuendo. The innuendo asserted "facts and matters known to the recipients of the publication", namely that Mr McGurk "had a reputation in the community as a standover man": at [20], [21]. 12The judge continued at [22]: "In her defence, Ms Milne has not traversed that paragraph of the plaintiff's claim. At the outset of the hearing, Mr Molomby confirmed that the existence of the extrinsic fact is admitted by Ms Milne and, further, that she admits that the extrinsic fact was known to recipients of the publication. Separately, there is a dispute as to who were the recipients of the publication but the tenor of the admission was to the effect that, whoever they may be, the extrinsic fact was known to them." 13After noting the well-established principle that "an innuendo cannot be based on an erroneous belief as to the existence of a fact", referring to Mirror Newspapers Ltd v World Hosts Pty Ltd [1979] HCA 3; 141 CLR 632 at 642 (in her (No 5) judgment at [25]) the trial judge continued at [26]: "Against those principles, Mr Molomby [counsel for Ms Milne] submitted that the extrinsic 'fact' in the present case is not a fact capable of sustaining a true innuendo, since a reputation amounts to no more than the belief others hold as to a person, and may not in fact reflect the true character of the person. I do not accept that the existence of a reputation is incapable of being an extrinsic fact." 14After diverting to consider imputation (e), not presently relevant, the judge continued at [28]: "As to imputation (f), I think Mr Molomby's argument misconceives the sting of the imputation, which rests squarely on the existence of the reputation and is not undermined by the fact that it may not reflect the true character of the late Mr McGurk. The imputation is that Mr Ell conducted his business with regard to property development by employing a person with a reputation for violence. The sting of the imputation lies in the use of fear as a weapon. The existence of the reputation or, as Mr Molomby put it, the widely held belief, is the relevant extrinsic fact. To a person who knew Mr McGurk had a reputation for violence, the statement that he worked for Mr Ell conveyed the meaning that Mr Ell employed a man with a reputation for violence. The proposition that he did so as a method of conducting the business of a property developer is an inference readily drawn from the letter, having regard to its overall tenor of identifying concerns about Mr Ell's methods of securing approval for his development proposals. I am satisfied that imputation (f) is conveyed as a true innuendo." 15On the application before this Court, Mr Molomby repeated the submission he had made to the trial judge. That submission should be rejected for the reasons given by the trial judge set out above: see also John Fairfax Publications v Rivkin [1999] NSWCA 164 at [11] (Handley JA; Sheller JA and Brownie AJA agreeing). 16A further argument was presented, which may be set out in full from the written submissions, namely: "The imputation states that the respondent 'conducted his business with regard to property development by employing a person with a reputation for violence.' The words 'conducted his business ... by ...' rather suggests that the employment of such a person characterised the whole way he conducted his business. There is no foundation for that in the matter complained of. It would be otherwise if the imputation had been framed 'that in the course of his business as a property developer he had employed a person with a reputation for violence.' That would mean that one of the things he had done in conducting his business was to employ such a person, but not that such employment characterised the whole way he ran the business." 17There was no submission that that distinction was relied upon at trial, nor that the imputation as pleaded was understood in the expansive way suggested in this submission. The submission should be rejected. 18Ground 3 asserted that the imputation was not defamatory. That submission was premised on the proposition that unless Mr Ell knew of Mr McGurk's reputation and intended it to play some role in his employment, neither of which matters was specified in the imputation, the statement was not defamatory of Mr Ell. 19If the imputation did not convey that meaning, then the extrinsic fact was entirely irrelevant. The assumption at trial was that the extrinsic fact was both true and relevant. The better reading of the imputation is that it encompassed the element of employment knowing the person's reputation. Even if it did not, it is too late to raise such a point at this stage. 20It follows that the trial judge correctly accepted that imputation (f) was conveyed, on the basis of the extrinsic fact identified above, and that it was defamatory. Ground 2 - imputation (b) not conveyed 21Imputation (b) asserted that Mr Ell had a scandalous association with the murdered man Mr McGurk. At the heart of the proposed challenge was the following proposition: "The word 'association' imports a relationship between two or more people which is mutual; that is, one person does not associate with another without the other associating with the first. To speak of a 'scandalous association' is to impute scandal to both parties involved in the association." 22The facts known with respect to Mr McGurk, as contained in the publication, were that he had been charged with serious offences which were later dropped and that he was murdered. The association with Mr Ell arose from two statements, first that Mr Ell supplied bail when Mr McGurk was charged and that Mr McGurk was working for Mr Ell at the time of the former's murder. These facts, it was submitted, did not demonstrate an element of scandal in their association. The extrinsic fact referred to above was not pleaded with respect to imputation (b). 23The trial judge accepted that there was no wrongful conduct implied with respect to Mr Ell in the statement complained of: judgment (No 5) at [13]. She accepted, inevitably, that the matter complained of identified an association between the two men. She further accepted that the subject matter of the publication was the dealing by Council with two development proposals put forward by Mr Ell. Immediately after referring to the association between Mr Ell and Mr McGurk the email spoke of "even further scandal", implying that that which had just been explained constituted a scandal. 24Counsel submitted that it was important that the phrase "[e]ven further scandal" was followed by the phrase "in the whole process", which was, he submitted, the planning process. Mr McGurk was not said to have had any part to play in that. This submission was, in effect, that the offending passage had no relevance to what preceded or succeeded it. While the connection was obscure, the fact that the passage, and the linking phrase, were included in the publication left this argument without substantial support. 25The trial judge herself was concerned about the meaning of the phrase "scandalous association", on the basis of its vagueness and imprecision: at [15]. If, as may be the case, the connection was so imprecise as to carry little weight with respect to Mr Ell's reputation, that would militate against a grant of leave on what would become a largely technical complaint. However, the present challenge is not that the imputation was not defamatory, but that it was not conveyed. It was clearly conveyed. 26Although, quite properly, the judge did not seek to distinguish between the two imputations in assessing damages, it is clear that imputation (b) would not have entitled the respondent to a significant award. The award he received was, in any event, small on almost any scale. It was not submitted that any issue of principle arose. These considerations, with the absence of any tenable indication of error, require rejection of the ground as a basis for leave to appeal. 27It follows that the challenges to issues of liability are without substance. Costs 28The refusal of the judge to award costs to either party was, in the circumstances of the case, understandable. The applicant's complaint is that the judge failed to give proper weight to a pre-litigation offer of an apology, with respect to imputations more serious than those which were ultimately upheld. The offer of an apology had not been accepted, partly on grounds which, it may be said, were rhetorical and offensive, but partly on the ground that the apology did not concede the imputations were conveyed or defamatory and was therefore less than complete. 29The cross-appeal was pursued on the ground that although the judge had refused to strike out the proceedings on the basis that they were brought for an improper purpose, the respondent's failure to proffer evidence with respect to any hurt to his feelings was nevertheless held against him. Thus, he took issue with the trial judge relying upon the material presented on the abuse of process application to form "the unhappy conclusion that the proceedings, although not an abuse of process, were in some measure a cynical exercise undertaken for the purpose of causing grief to a political opponent of Mr Ell": Ell v Milne (No 9) at [28]. This was said to be inconsistent with a passage in the reasons in Ell v Milne (No 7) [2013] NSWSC 600 at [23], rejecting an application to dismiss the proceedings as an abuse of process. However, each of the passages at [23]-[25] in the abuse of process judgment referred to the "dominant" motive of the plaintiff: that is not the language of the costs judgment. There is no demonstrated inconsistency. Nevertheless, Mr Ell submitted that the refusal to award costs was punitive and did not relate to the actual conduct of the litigation. 30Each party sought to identify complaints about the absence of costs orders in his or her favour as raising issues of principle. Even if that were so, which is not self-evident, the order in fact made was, in all the circumstances, within the discretionary range available to the trial judge. Given that there is no other issue which would warrant the attention of this Court, the Court should not give leave with respect to the costs order. Costs in this Court 31Each party having been unsuccessful, one possible order would be that costs follow the event. The possibility of further disputation as to the respective entitlements, which may not be far apart, warrant this Court making no order as to the costs of either application. Orders 32The Court should make the following orders: (1) Dismiss Ms Milne's application for leave to appeal, with no order as to the costs of the application. (2) Dismiss Mr Ell's application for leave to cross-appeal, with no order as to the costs of the application. 33LEEMING JA: I agree with Basten JA's reasons and with the orders he proposes. ********** 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: 28 November 2014