The Registered Clubs Association of NSW v Australian Broadcasting Corporation [2016] NSWSC 835

Supreme Court New South Wales

Medium Neutral Citation: The Registered Clubs Association of NSW v Australian Broadcasting Corporation [2016] NSWSC 835 Hearing dates: 18 March 2016 Date of orders: 10 June 2016 Decision date: 10 June 2016 Jurisdiction: Common Law Before: McCallum J Decision: Leave granted to the defendant to seek discovery and interrogatories directed to the issue whether, as at the date of publication, the objects for which the plaintiff is formed include obtaining financial gain for its members Catchwords: DEFAMATION – corporations – whether plaintiff an excluded corporation Legislation Cited: Civil Procedure Act 2005 (NSW), s 56 Corporations Act 2001 (Cth), ss124, 125 Defamation Act 2005 (NSW), s 9 Uniform Civil Procedure Rules 2005, r 22.1 Cases Cited: Commissioner of Taxation of the Commonwealth of Australia v Consolidated Media Holdings Ltd [2012] HCA 55; 250 CLR 503 Palace Films Pty Ltd v Fairfax Media Publications Pty Ltd [2012] NSWSC 1136 Category: Procedural and other rulings Parties: The Registered Clubs Association of NSW (Plaintiff) Australian Broadcasting Corporation (Defendant) Representation: Counsel: K Smark SC (Plaintiff) ATS Dawson (Defendant)

Solicitors: Pigott Stinson (Plaintiff) Australian Broadcasting Corporation (Defendant) File Number(s): 2015/303558 Publication restriction: None

Judgment 1. HER HONOUR: These are proceedings for defamation commenced by The Registered Clubs Association of NSW against the Australian Broadcasting Corporation arising out of a number of broadcasts and online publications. The matters complained of reported an allegation made by the former Federal Labor Minister, Peter Garrett, that "Clubs New South Wales, the peak licenced clubs body that has lobbied against poker machine restrictions for more than a decade" had handed him "an envelope filled with money" at a function shortly after he was elected in 2004. The articles reported that Mr Garrett had later sought to retract the allegation, saying that the event in question occurred before the election, not after and that the envelope contained a cheque, not cash. The articles included quotes attributed to the Independent MP, Andrew Wilkie, expressing his scepticism about the retraction (implicitly endorsing the original allegation). 2. The plaintiff sues on a single imputation in respect of each matter complained of, being: "That the plaintiff had attempted to bribe Mr Peter Garrett shortly after his election to Federal Parliament by handing him an envelope containing large amounts of cash." 1. Mr Andrew Wilkie was initially named as the second defendant but the proceedings as against him have been discontinued. 2. An application by the ABC for interlocutory steps (discovery and interrogatories) has thrown up an interesting question as to whether The Registered Clubs Association of NSW is an entity that can sue for defamation. Section 9(1) of the Defamation Act 2005 (NSW) provides that a corporation has no cause of action for defamation in relation to the publication of defamatory matter about the corporation unless it was an "excluded corporation" at the time of the publication. 3. Section 9(2) of the Act provides that a corporation is an excluded corporation if: 1. the objects for which it is formed do not include obtaining financial gain for its members or corporators, or 2. it employs fewer than 10 persons and is not related to another corporation, 3. and the corporation is not a public body. 1. The plaintiff claims to fall within s 9(2)(a). The statement of claim filed on 16 October 2015 alleges, in paragraph 2: At all material times, the plaintiff was an excluded corporation under the Defamation Act 2005 (NSW) in that the objects for which it is formed do not include obtaining financial gain for its members or corporators and it is not a public body. 1. That allegation is not admitted by the ABC: see the defence filed 12 February 2016 at paragraph 2. 2. There is accordingly an issue in the proceedings as to whether the plaintiff is an "excluded corporation" within the meaning of the Defamation Act, which turns on the question whether, as at the time of publication of the matters complained of, the objects for which it is formed include obtaining financial gain for its members. 3. The ABC seeks orders for discovery and interrogatories directed to that issue. The plaintiff opposes the orders sought. 4. Mr Smark SC, who appears for the plaintiff, submitted that, for the purpose of s 9 of the Defamation Act, the objects of a corporation are to be determined by reference to its constitution and not otherwise. He submitted that the focus of the inquiry is not on the entity's "trading patterns" or its activities at any time but must be confined to its stated objects. Mr Dawson, who appears for the ABC, submitted that it is permissible to go beyond a corporation's constitution in order to ascertain its objects. He further submitted that, even if the objects of a corporation are to be ascertained exclusively by reference to its constitution or other relevant corporate document, the interlocutory steps sought here are necessary to assist in determining the proper construction of that document. 5. The parties had different views as to the approach the Court should take in determining the application. The ABC submitted that the question as to the proper approach in determining the objects for which a corporation is formed need not be determined finally for the purpose of determining interlocutory applications; it would be enough to sustain interlocutory steps if the Court were satisfied that the approach contended for by the ABC was reasonably arguable. Mr Smark submitted that it would not be appropriate to approach the interlocutory applications on that basis. He submitted that the competing positions of the parties raised a stark question which the Court must determine in order to assess whether the interlocutory steps sought by the ABC are "necessary", as required by the Defamation List Practice Note SC CL 4, clause 17 and, in the case of the proposed interrogatories, under r 22.1 of the UCPR. 6. Upon reflection, I do not think I am required to take the approach stated by Mr Smark. Neither party sought an order for the determination of a separate question. In my view, the test of necessity in determining what interlocutory steps will be allowed, while imposing an important constraint consonant with the overriding purpose of the Civil Procedure Act 2005 (NSW), does not require a party to make good its ultimate case in order to establish an entitlement to the very steps it seeks to rely upon to make that case. In identifying what are the issues in the proceedings to which interlocutory steps might properly be directed, it would be enough for the ABC to establish that it is reasonably arguable that the objects for which a corporation is formed may be ascertained by reference to matters going beyond the objects stated in its constitution. 7. That is not to say that case management considerations will not inform the scope of permissible interlocutory steps. The issue I am presently addressing is the proper approach to the identification of the issues in the proceedings for the purpose of applying the test of necessity. 8. However, in case I am wrong and in deference to the careful arguments put by both parties, I propose to indicate my view as to the correctness of the proposition contended for by the ABC, rather than confining myself to an indication as to whether it is reasonably arguable. 9. My first impression was that s 9(2)(a) plainly refers to the objects stated in the relevant entity's constitution. Upon further reflection, however, I have concluded that the position contended for by the ABC (that the inquiry is not necessary limited to any such document) is correct. It may be accepted that, in the vast majority of cases, the question whether a corporation was an excluded corporation under s 9(1)(a) would be answered uncontroversially by reference to the company's stated objects. However, I do not think it follows that s 9 prohibits excursion beyond any such document, as the plaintiff would contend. 10. The task of construing the section must begin and end with a consideration of the text itself: Commissioner of Taxation of the Commonwealth of Australia v Consolidated Media Holdings Ltd [2012] HCA 55; 250 CLR 503 at [39] per French CJ, Hayne, Crennan, Bell and Gageler JJ. That task is complicated in the present case in one limited respect, which is that the text itself refers to the statute that governs the formation of corporations, the Corporations Act 2001 (Cth). The construction of the Defamation Act must accordingly be informed to some extent by the relevant corporations law and must be approached in a manner that is coherent with that law. 11. The term "objects" is not defined in the Defamation Act. As acknowledged by the ABC in its written submissions, an Australian corporation's objects may be (and often are) recorded in its constitution but it is not mandatory for a corporation to state its objects. Section 125(2) of the Corporations Act 2001 (Cth) provides: If a company has a constitution, it may set out the company's objects. 1. Implicitly, the Corporations Act contemplates the possibility that a company will have neither a constitution nor stated objects. Plainly, in such a case, the ascertainment of the objects for which the company was formed would require inquiry beyond the documents by which it was formed, potentially extending to consider its activities and published statements since incorporation (what the company had said and done). 2. As noted by the ABC, it is clear that the drafter of the Defamation Act had the Corporations Act in mind, since it is expressly referred to in s 9(4) of the Defamation Act. It is difficult to know what to make of that reference for present purposes. Identification of the objects of a corporation was historically important in the context of the doctrine of ultra vires but that doctrine is now abolished; the power of a corporation is plenary (s 124 of the Corporations Act) and, although its constitution may state restrictions on power, the exercise of a power contrary to any such restriction is not invalidated on that account (s 125 of the Act). 3. Interestingly, as acknowledged by the plaintiff, s 9 contemplates that a corporation's objects may be "ambulatory" in the sense that they may change over time. The section expressly directs attention to the objects for which the corporation is formed for the purpose of ascertaining whether the corporation is excluded "at the time of the publication" (of defamatory matter): see s 9(1). Accordingly, it is clear that the task is not confined to a consideration of the objects at the time the company was formed; the possibility of changing objects is acknowledged. 4. In my view, there is force in the ABC's submission that nothing in the text of the section supports the narrow position contended for by the plaintiff. 5. Moving to broader considerations as to the context and purpose of the section, I accept, as submitted by the ABC, that the Defamation Act is otherwise neutral as to the present question. No helpful guidance is provided by the legislative history or extrinsic materials save to observe that the term "not-for-profit organisations" was used in the second reading speech to describe what became "excluded corporations" in the Act. 6. The ABC submitted that the Court should have regard to the underlying purpose of the Defamation Act, as stated in the express objects in s 3 of the Act, as follows: The objects of this Act are: (a) to enact provisions to promote uniform laws of defamation in Australia, and (b) to ensure that the law of defamation does not place unreasonable limits on freedom of expression and, in particular, on the publication and discussion of matters of public interest and importance, and (c) to provide effective and fair remedies for persons whose reputations are harmed by the publication of defamatory matter, and (d) to promote speedy and non-litigious methods of resolving disputes about the publication of defamatory matter. 1. As acknowledged by the ABC, the construction contended for by the plaintiff would lead to the more "speedy" resolution of these proceedings. Conversely, however, if the purpose of s 9 was to deprive corporations formed for objects including obtaining financial gain of a cause of action for defamation, the achievement of that purpose would be better attained by examining matters of substance rather than form – an approach that would favour the construction contended for by the ABC. 2. The ABC noted that, if the interpretation contended for by the plaintiff were adopted, a corporation could avoid the prohibition in s 9(1) by drafting its objects so as expressly to exclude, or be silent as to, the aim of obtaining financial gain for its members. The prospect of manoeuvring of that kind may not be as remote as it sounds: cf Palace Films Pty Ltd v Fairfax Media Publications Pty Ltd [2012] NSWSC 1136. 3. The ABC relied, in support of its construction, on the well-established principle that, in determining whether an entity is a charitable, scientific or sporting institution for the purpose of income taxation, the Court looks not only to the objects as stated in any constitutional document but also to whether its activities conform to those objects. 4. The plaintiff submitted that Parliament clearly intended that the issues posed by s 9(2) would be amenable to a "bright line test" and would not pose any "ragged question of fact". Mr Smark asked, rhetorically, how could the same Parliament which enacted s 56 of the Civil Procedure Act in the same year as the Defamation Act have intended that, in order to determine whether a corporation was an excluded corporation, its business affairs would have to be analysed over years as part of a defamation case which might otherwise be in small compass? Two answers may be given. The first is that, if the plaintiff is a corporation Parliament intended should have no cause of action for defamation (because it does not fall within the classification of a "not-for-profit" organisation), that is an issue which must be determined on the merits, not summarily or peremptorily against the interests of the defendant. Secondly, as noted in the ABC's written submissions, the "overriding purpose" stated in s 56 of the Civil Procedure Act expresses the purpose of that Act and the Uniform Civil Procedure Rules. It is not to be elevated to a canon of construction governing all legislation; nor can it be imputed as a purpose of the Defamation Act. 5. I should record that the ABC relied on an affidavit annexing a number of existing documents to which it has had access to support the submission that there appears, at first blush, to be a proper basis for thinking that the actual activities of the plaintiff reveal an object of financial gain for its members. In light of the narrow issue determined in this judgment, I have not found it necessary to consider that evidence. 6. For those reasons, I am satisfied that the approach contended for by the ABC is correct and that that determination should inform the resolution of the interlocutory applications. 7. The order sought in that event was that the defendant have leave to seek discovery and interrogatories directed to the s 9(2)(a) issue. The parties expressly reserved for further argument their specific disputes as to the content of those steps. Further argument on that issue is fixed for 24 June 2016. 8. Accordingly, the only order is that the defendant have leave to seek discovery and interrogatories directed to the issue whether, as at the date of publication, the objects for which the plaintiff is formed include obtaining financial gain for its members or corporators.