Petty v Zhao (No. 2) [2015] NSWDC 18

District Court New South Wales

Medium Neutral Citation: Petty v Zhao (No. 2) [2015] NSWDC 18 Hearing dates: 25 February 2015 Decision date: 25 February 2015 Jurisdiction: Civil Before: Gibson DCJ Decision: (1)Grant leave to the plaintiff to plead back the defendant's imputations in accordance with the Amended Statement of Claim filed in court today. (2)Costs are to be the defendant's costs in the cause. (3)Waive any requirement for the defendant to file a Further Amended Defence, on the understanding that the particulars of contextual justification will become particulars for the purpose of the s 25 defence. (4)Reserve the defendant's right to amend in the event that the proposed s 26 amendments currently under consideration may impact upon the pleading, including any issue of retrospectivity. (5)Any answers by the defendant to the plaintiff's request for particulars of 18 November 2014 to be provided in 21 days. (6)Plaintiff's Reply by 21 days. (7)Matter listed in the Defamation List on Thursday 26 March 2015 at 2:00pm before Gibson DCJ. Category: Procedural and other rulings Parties: Geoffrey Roy Petty (Plaintiff) Yocy Zhao (Defendant) Representation: Counsel: Ms S T Chrysanthou (Plaintiff) Mr A Nelson (Defendant)

Solicitors: Burston Cole & Associates (Plaintiff) Slade Waterhouse Lawyers (Defendant) File Number(s): 2014/148290

Judgment 1. These are my reasons for permitting the plaintiff to adopt the contextual imputations pleaded by the defendant in the Further Amended Defence filed on 4 November 2014 at paragraph 9. 2. The defendant's contextual imputations are pleaded as follows (paragraph 9 of the Further Amended Defence, amended on 4 November 2014): i. That the plaintiff is a selfish man; ii. That the plaintiff is a careless man; iii. That the plaintiff is cheap; iv. That the plaintiff is extremely rude; v. That the plaintiff is extremely disrespectful; vi. That the plaintiff is ungrateful; vii. That the plaintiff is infuriating; viii. That the plaintiff is extremely unpleasant; ix. By way of false innuendo, that the plaintiff is a bad neighbour. 1. This is one of a series of applications (see also Mallegowda v Sood (No. 3) [2015] NSWDC 14) brought following the handing down of Hall v TCN Channel Nine Pty Ltd [2014] NSWSC 1604. In Hall, McCallum J refused to follow and Waterhouse v The Age Co Ltd [2012] NSWSC 9 and Ahmed v Nationwide News Pty Ltd (2010) 11 DCLR (NSW) 396, and permitted the plaintiff to adopt the contextual imputations pleaded by the defendant. The practice of permitting a plaintiff to "adopt" or "plead back" the defendant's contextual imputations is one of long standing: Phelps v Nationwide News Pty Ltd [2001] NSWSC 130 at [10]; Creighton v Nationwide News Pty Ltd (No 2) (2010) 11 DCLR (NSW) 271. This was still the case after Simpson J, in Kermode v Fairfax Media Publications Pty Ltd [2010] NSWSC 852, held that, on a proper construction of s 26 Defamation Act 2005 (NSW), a defendant could not "plead back" the plaintiff's imputations. In practical terms, this took away from the defendant the possibility of a verdict on a s 26 defence unless there were imputations that the plaintiff had not pleaded; the best the defendant could hope for was a reduction in damages. 2. Simpson J did not hold that this interpretation precluded the plaintiff from adopting the defendant's contextual imputations, even though this would effectively deprive the defendant of a s 26 defence. To the contrary, her Honour noted: "[41] Senior counsel who appeared for the defendants advanced a pragmatic argument against this construction. It was 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. That has, in fact, occurred on at least one occasion: Corby v Channel Seven Sydney Pty Ltd (NSWSC, 20086/2007). Senior counsel's proposition is correct, but it cannot be allowed to dictate the proper approach to statutory construction." 1. Similarly, when Kermode v Fairfax Media Publications Pty Ltd was affirmed on appeal (Fairfax Media Publications Pty Ltd v Kermode (2011) 81 NSWLR 157), McColl JA expressly noted that it would still be open to a plaintiff to adopt the respondent's pleaded contextual imputations by pleading them back. McColl JA noted at [88]-[89]: "[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." 1. This reasoning was endorsed by the New South Wales Court of Appeal in Holt v TCN Channel Nine Pty Ltd (2014) 86 NSWLR 96 at [23]. Macfarlan JA, with whom Gleeson JA and Sackville AJA agreed, stated: "[23] The submission should be rejected as those contextual imputations were not ones upon which Mr Holt sued. It was open to Mr Holt to "adopt" the respondents' pleaded contextual imputations by himself pleading them against the respondents (Fairfax Media Publications Pty Ltd v Kermode [2011] NSWCA 174; 81 NSWLR 157 at [88]–[89]) but he did not do so. It would be a subversion of the litigious process for him to be awarded damages in respect of conduct of the defendants of which he did not complain. Defendants are entitled to fair notice of the case made against them and to the opportunity to deal with it. This did not occur in relation to the conduct that Mr Holt seeks to rely upon for the first time on appeal. There is no reason to doubt the respondents' assertion on appeal that if the point had been taken by Mr Holt at first instance, the evidence there may have been different, in particular as a result of cross-examination of Mr Holt as to why he sought damages for imputations that he had not identified at the outset of the proceedings, or before, as carried by the publication (compare Coulton v Holcombe [1986] HCA 333; 162 CLR 1 at 7–8)." 1. The combined weight of these repetitions of the relevant principles should ensure that the entitlement of a plaintiff to adopt the defendant's pleaded contextual imputations is beyond doubt. In fact, the reverse is the case, in that Bozic SC DCJ (in Ahmed v Nationwide News Pty Ltd) and Nicholas J (in Waterhouse v The Age Co Ltd) held to the contrary, as McCallum J noted in Hall v Nationwide News Pty Ltd. 2. Ms Chrysanthou submitted that Ahmed v Nationwide News Pty Ltd was wrong in law for the following reasons: "31. In Ahmed v Nationwide News Pty Limited [2010] NSWDC 268 Bozic DCJ reached a different conclusion in similar circumstances. His Honour was of the view (at [10]): "that while the deprivation of a s 26 defence was not a factor which her Honour considered could dictate the proper approach to statutory construction, in my view, it is a relevant discretionary factor in considering whether or not to permit an amendment." His Honour did not refer to any authority in coming to that view. 32. Bozic DCJ went on to find that he did not need to determine whether the amendment amounted to an abuse of process and instead determined the question by applying s.64 of the CP Act: [20] – [23]. His Honour refused the application to amend because "the defence created by s26 of the Act is a significant defence" and "to permit the plaintiff to amend would enable the plaintiff to deprive the defendant of a potentially significant defence": at [24] – [25]. His Honour went on to add that even if the defendant succeeded in proving true some of the imputations, the plaintiff would "nevertheless still be entitled to a judgment, and, prima facie, an order for costs in relation to such of the imputations as are not successfully justified or otherwise defended" and "the effect of this decision will be to require those acting for a plaintiff to give careful consideration from the outset to the imputations said to arise": at [26] – [28]. 33. His Honour's reasoning is incorrect for a number of reasons: (a) Section 26 is not a "significant defence"; (b) having not decided the question of abuse of process, the fact that the defendant was deprived of a defence was not a relevant consideration in determining the application to amend; (c) a defendant can rely on the truth of parts of the matter complained of in mitigation of damages: see Ahmadi, cited above; (d) where a defendant proves the truth of some of the imputations or parts of the matter complained of a plaintiff may not be awarded all of his or her costs: see Ahmadi; (e) a plaintiff should not be penalised because his or her legal representatives missed an imputation, or formed a view, contrary to others, about whether an imputation arose; (f) a plaintiff is entitled to elect how to put his or her case and the availability, or otherwise of defences is not a relevant consideration in determining the veracity of a claim. 34. The effect of his Honour's judgment is that it is unfair to a defendant for a plaintiff to plead all of the imputations that are said to arise from a defamatory matter. Because the issue of "who came up with the imputation first" cannot really be the determinative question. His Honour's refusal to amend in that case appears to have been contrary to the dictates of justice." 1. Ms Chrysanthou similarly submits that the decision of Nicholas J in Waterhouse v The Age Co Ltd is wrongly decided (written submissions, paragraph 35). However, unlike the careful reasoning set out in the judgment of Bozic SC DCJ, Nicholas J did not provide any explanation for his findings, so Ms Chrysanthou's submissions are correspondingly limited. 2. The defendant, who opposes this application, relies upon Waterhouse v The Age Co Ltd and submits that it is good in law notwithstanding the statements to the contrary by the NSW Court of Appeal in Fairfax Media Publications Pty Ltd v Kermode at [88] – [89] and Holt v TCN Channel Nine Pty Ltd at [23], as well as the refusal of McCallum J in Hall v Nationwide News Pty Ltd to follow it. Mr Nelson submitted that the plaintiff, himself a Senior Counsel, had retained Senior Counsel to draft the statement of claim, and that the omission of these imputations, which were clearly conveyed, must have been a deliberate decision; in those circumstances, his client, should not be deprived of the chance to rely upon their truth. Alternatively, Mr Nelson submits that, as a matter of discretion, I should refuse to grant leave, as the amendment could add complexity at the trial and the application to amend could have been made more promptly. 3. As I noted in Mallegowda v Sood (No. 3), a similar application, it is a counsel of perfection to require a plaintiff to be able to distil every single imputation arguably capable of arising, and to penalise that plaintiff for failing to identify them all. Defamation trials would be impossible to run if plaintiffs were obliged to plead every single imputation available, at the risk that any unpleaded imputation could be seized upon by a defendant (and therefore denied to the plaintiff) for the purpose of a s 26 defence. Additionally, as McCallum J notes in Hall v TCN Channel Nine Pty Ltd at [35]-[36], there is no property in an imputation. 4. There is no likelihood that any complexity will be added to the trial. The impact of the amendment is so slight that it is not necessary for the defendant to amend the defence to accommodate this amendment. No issue of prejudice was raised. 5. Where an application of this kind is brought promptly, it should be granted in accordance with the accepted principles for the right to amend generally. Mr Nelson agreed that the application had been foreshadowed as soon as Hall was handed down, but submitted it was nevertheless too late to bring the application now. 6. As to the right to challenge pleadings and amend generally, I note that, in Hibbert v Nationwide News Pty Ltd [2015] NSWCA 13, the court refused leave to appeal on the basis that the defendant could bring a fresh challenge to the plaintiff's imputations before the trial judge. If the defendant has such a right, then the same generous rights should be available for a plaintiff. The plaintiff in these proceedings is at the same early stage of litigation as was the case in Hibbert. 7. It is not necessary for me to deal with Ms Chrysanthou's submissions that Ahmed v Nationwide News Pty Ltd was wrongly decided, because the approach taken by the decision of the New South Wales Court of Appeal in Fairfax Media Publications Pty Ltd v Kermode and Holt v TCN Channel Nine Pty Ltd (both of which were handed down after Ahmed) clearly confirm the plaintiff's entitlement to adopt contextual imputations pleaded by the defendant. In Holt, the plaintiff's failure to do so was relevant to the issue of damages. Certainly the issues explained by the New South Wales Court of Appeal in Holt v TCN Channel Nine Pty Ltd demonstrate the danger of pursuing the course of refusing a plaintiff leave to plead back, assuming that it is done in a timely fashion. 8. The absence of reasoning in Waterhouse for refusal of leave renders consideration of this decision problematic, as both counsel conceded. I was not able to discover any decisions of the Supreme Court, or from any other jurisdiction, where the principles set out in either Waterhouse v The Age Co Ltd (or in Ahmed v Nationwide News Pty Ltd) were reviewed, challenged, or even referred to. Ms Chrysanthou and Mr Nelson both made similar searches, were unable to turn up any cases, although Ms Chrysanthou told me that this decision was the reason why, in Holt v TCN Channel Nine Pty Ltd (in which she had been one of the counsel), this course had not been adopted. 9. Taking all of the above into account, I decline to exercise my discretion to refuse to grant leave. The amendment will accordingly be permitted. 10. Counsel have informed me from the bar table that the interpretation of s 26 taken by the New South Wales Court of Appeal in Fairfax Media Publications Pty Ltd v Kermode has resulted in a proposed amendment to s 26 of the uniform legislation. The precise terms of that amendment are unknown. I have accordingly reserved the defendant's position.