Chakravati v Advertiser Newspapers Ltd A41/1996 [1997] HCATrans 266 (1 September 1997)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Adelaide No A41 of 1996

B e t w e e n -

MANOBENDRO CHAKRAVARTI

Appellant

and

ADVERTISER NEWSPAPERS LIMITED

Respondent

BRENNAN CJ

GAUDRON J

McHUGH J

GUMMOW J

KIRBY J

TRANSCRIPT OF PROCEEDINGS

AT ADELAIDE ON MONDAY, 1 SEPTEMBER 1997, AT 2.15 PM

Copyright in the High Court of Australia

MR T.A. GRAY, QC: May it please the Court, I appear with my learned friends, MR P.A. HEYWOOD-SMITH and MR R.J. BRADSHAW, for the appellant. (instructed by Johnston Withers)

MR B.R. McCLINTOCK, SC: May it please the Court, I appear with my learned friends, MR A.R. HARRIS and MR G. O'L REYNOLDS, for the respondent. (instructed by Lawson Downs)

BRENNAN CJ: Yes, Mr Gray.

MR GRAY: May it please the Court, for the purposes of introducing this appeal we have extracted the two articles in question and put pages 1 and 2 side by side. Your Honours should have copies of an A3 sheet available to you on the Bench. I wish to start, if the Court pleases, with the first article, 15 July 1992, and the left-hand side of the A3 sheet appears on the front page of the Advertiser newspaper and the right-hand side within the body of the newspaper on page 2.

The first point I wish to address is the issue of natural and ordinary meaning of the words appearing in the first article. In essence, we say that the article identified conduct of four executives of Beneficial Finance and they are described as officers of that company. The conclusion is that the conduct may be criminal rather than civil. In the body of the article there are a series of statements that go in a qualitative way to fill out the conduct in question. It is the sum total of that and the effect of that of which the appellant complains and, in particular, puts the submission with regard to the first article that Justice Cox the trial judge was right and that, with respect, the Full Court was wrong in its treatment of natural and ordinary meaning.

McHUGH J: The first thing I would want to hear from you is whether or not you are entitled to depart from your imputations.

MR GRAY: Yes. If the Court pleases, we deal with that in our written outline that, as a matter of pleading in defamation law, we are entitled to have the finding of fact come to the conclusion of what it draws as to the natural and ordinary meaning. On the one hand - - -

McHUGH J: What, irrespective of what imputation you have pleaded?

MR GRAY: Irrespective of that, and in that regard we - - -

McHUGH J: That will cause a few problems for defendants attempting to justify, will it not?

MR GRAY: If the Court pleases, the defendants would understand that the plaintiff has pleaded the most serious meaning and that that is at risk of any lesser meaning and as the law allows, the defendant can in fact plead its own imputation and justify that.

McHUGH J: If you are relying on Polly Peck, I would want to hear some argument as to whether Polly Peck was correctly decided, because I must say I have held a prima facie view for a long period of time that Polly Peck is wrongly decided.

MR GRAY: If the Court pleases, we propose to advance that argument and it is dealt with at the second point in our outline of submission. We would prefer, if the Court pleases, to deal with natural and ordinary meaning first, because we say that in fact the meaning that we contend for is within the pleaded imputation as a matter of fact and ordinary reading; that Justice Cox was able to find as he did and that the Full Court, with respect, was wrong and, in particular, wrong in saying that what the article simply gave rise to was a suspicion and nothing more. So that does come back again - - -

KIRBY J: The submission that you are putting now orally is elaborated in your written submission and it appears that the law in New South Wales has developed along a different line. I think you say that is because of a statutory foundation.

MR GRAY: Yes. We say that in New South Wales there is a need to plead each and every imputation and each becomes a separate cause of action. In South Australia that is not so. One is left with the natural and ordinary meaning of the article as a whole. If one elects to plead the false innuendo, then the courts have encouraged that but it is by way of amplification and does not bind to a particular meaning.

KIRBY J: Did the New South Wales provision arise out of the Law Reform Commission Report and did that refer to some defect in the common law but which was thought to require a statutory correction?

MR GRAY: Yes, and in particular that remains unique in New South Wales and has not been picked up in the other jurisdictions.

McHUGH J: It may theoretically be unique to New South Wales, but in practice it applies in the Code States, does it not, because in the Code States everything revolves around the term "defamatory matter" which is defined as "defamatory imputation". So that when you want to justify in the Code States, you have to justify the defamatory imputation.

MR GRAY: If the Court pleases, we would put the submission that there are a line of authority, certainly in Western Australia and Victoria, and we would say also in South Australia, that would allow for the finding of a lesser imputation than the one pleaded. One would plead the highest - - -

McHUGH J: Mr Gray, I have no problem with the idea that as long as the imputation which is found does not differ in substance, then you are entitled to rely on the imputation as pleaded. But once the imputation differs in substance, then it is a different matter. As a matter of common sense, surely that is right. If an article says a man is a murderer and also a thief, and the only imputation he pleads is that of murder, it would be a strange doctrine which then allowed a trial judge to make a finding in respect of the theft which had never been fought as an issue at the trial and which the defendant had no opportunity to plead.

MR GRAY: We would accept that there can be circumstances of procedural unfairness, such as arose in Prichard's Case, where there was a lesser imputation that was available but the plaintiff's counsel made it very plain that that was not to be an issue in the case. Now, in the instance that your Honour Justice McHugh cites, one is putting a quite extreme case and where the case was run on the issue of the statement about murder and the matter of thief was simply left to one side, then the conduct of the trial would delimit that issue.

BRENNAN CJ: Mr Gray, you are at liberty, of course, to put your argument in whatever manner you see fit. You have already outlined your argument in writing so it is a question of what you want to say in supplementation of the written outline.

MR GRAY: If the Court pleases, we think it would most assist us in presenting the matter to the Court to start with the article and draw the Court's attention to what we think are significant matters in it and then come to the points of law that arise. We start with the first article and the point that we wanted to draw particular attention to is the repeated reference to criminal and civil misconduct and the change in the wording that occurs.

McHUGH J: That is why I do not understand why you want to run away from your imputation. Contrary to the findings in the court below, I would have thought there was a very strong case for saying that your first imputation in paragraph 4 is made out.

MR GRAY: That is the point I wish to advance, the basis of the article itself, if the Court pleases, and that is our primary point.

McHUGH J: I thought you wanted to rely on what Justice Cox had found.

MR GRAY: We read Justice Cox as almost coming to the point that we wish to come to, but if we read him too widely, then we certainly want to contend, as we have, the interest we have pleaded. Perhaps I can put the matter simply by drawing the Court's attention to what we say is the gravamen of the article and the Court will see how we put our case and why we say that the Appeal Court, in particular, has not stood back and viewed the article as a whole and its effect.

If the Court pleases, what the Court learns from this article is that, first of all, the conduct that is spoken of was sufficient to involve the chairman of the Bank and its finance arm, Beneficial, and sufficient to call on him to report to the Premier of the State about it. So the ordinary reader would understand that a very grave matter was in issue here that called for a report at the highest level. It was not a matter being dealt with internally within the company. So it presents as a very serious matter for those reasons and the ordinary reader would so understand it.

Then, in the first column, four paragraphs down, this appears:

Mr Simmons said he told Mr Bannon.....there was a "question" of either criminal or civil misconduct to be looked at in relation to four Beneficial executives, including Mr Baker and Mr Reichert.

In the next column, that changes a little - it is the top part of the next column:

the question of criminal or civil misconduct was in reference to Mr Baker, Mr Reichert, Mr Garry Martin and Mr Manob Chakravarti.

Then in the fourth column it changes again, and significantly, in our respectful submission. The second paragraph:

"The investigation -

an investigation was undertaken by Beneficial -

wasn't completed at that stage and there was I believed, as I had said to the Premier, it may be criminal rather than civil."

So the language has changed from a question of "either criminal or civil" to "criminal rather than civil". Then in the fifth paragraph, the first paragraph on the second page of the article, in the middle:

Mr Simmons was asked how Mr Bannon responded when told the conduct of those involved may be criminal rather than civil and what Beneficial had learnt they had been doing.

At that point it has moved to actuality. There has been an investigation, Beneficial has learnt of actual conduct and that conduct is then posing question of "may be criminal rather than civil". The construction we put on that, with respect, we say the ordinary reader would put on that, is that what had occurred was grave, that it as a matter of actuality amounted to civil misconduct. The question was whether it was so grave as to be criminal and that is the ordinary sense of a phrase "may be criminal rather than civil". The question is being limited to the extent of the gravity.

There are some other indications about just how grave the conduct was, if the Court pleases, and when the Premier heard from Mr Simmons, the chairman, of this conduct, he was angry. That appears in the first column in the last paragraph. When told:

about loans to Beneficial executives.....Mr Bannon reacted angrily.

KIRBY J: Mr Gray, may I interrupt you. I have two copies of the second article and it might help if I had the matter you are referring to. When you are the seventh Justice you seem to get these little disadvantages.

MR GRAY: I hope that the other members of the Court are not equally disadvantaged.

KIRBY J: No, no. I think I am the only one.

McHUGH J: My brother Kirby has forgotten. He is now the sixth Justice.

MR GRAY: I hope our submissions are a little clearer now, your Honour. In the fifth column, the first on the second page, after the reference I previously read, this appears:

"I think he -

referring to the Premier -

was very angry, particularly with the reference to the Melbourne joint venture," Mr Simmons said.

So when we pull those threads together, we say the ordinary reader would understand this, that Mr Chakravarti was - it was being said of Mr Chakravarti that he engaged in conduct, it was misconduct, at least civil misconduct, it may have been criminal; that the conduct was sufficiently grave that it was raised at the highest level by a direct report from the chairman of the State Bank and Beneficial Finance to the Premier. When the Premier heard about these loans, he was angry and very angry when he heard about the Melbourne joint venture. We say, if the Court pleases, that that amounts to a statement of guilt of civil misconduct and possibly criminal misconduct.

McHUGH J: Do you have to put it any higher than in paragraph 4(a) of your statement of claim, that:

the plaintiff was involved in criminal or civil misconduct -

MR GRAY: No, we do not. That is the meaning that we say was imputed and, with respect, we had understood Justice Cox to go all but that far at page 886 in appeal book 4.

GUMMOW J: Why did it get so complicated?

MR GRAY: It is difficult to answer that, if your Honour pleases, but we have put behind our outline of argument an analysis of the first article showing the way each judge viewed the matter and we have attempted to at least try and simplify that complexity in that way.

GUMMOW J: Am I right in thinking there have been no jury trials in these cases in this State for a very long time?

MR GRAY: That is so.

MR GRAY: At page 886 in Justice Cox's reasons he makes his essential findings starting at line 17:

The ordinary reader would conclude that the plaintiff's conduct had brought him, as an executive of Beneficial, into collision with "the board".....and that the matter of his conduct was of such gravity that it raised a question whether it amounted to criminal or civil misconduct, with the possibility tending towards the former rather than the latter in the view of the Chairman of both Boards. While "the Melbourne joint venture", reference to which had made the Premier particularly angry, was not explained, any reader was likely to infer that it was something discreditable to those involved in it who included, the article implied, the plaintiff. There was also an imputation that the plaintiff had left Beneficial under a cloud, most obviously because of his questionable conduct.

So we had taken there the reference to the "possibility tending towards the former", criminal rather than civil, to carry with it the imputation that we contended for. So that is why we put it that Justice Cox, in substance, found for our first imputation. But if his finding falls short of that, we still contend that the natural and ordinary meaning of the article is as we have pleaded it.

Now, against that background, if the Court pleases, could I just draw attention to something in the second article, if the Court could turn to that for a moment, the second article being published on 18 July 1992. This was some three days later. In the interim Mr Chakravarti had been dismissed from his employment. He was dismissed on 17 July. On 18 July this article appeared and it followed Mr Jacobs, the Royal Commissioner, having released extracts of what was called "Mr Simmons' diary". The reason for drawing attention to it at this point is that in the fourth column there is a reference in the third paragraph to:

"Preliminary audit reveals (John) Baker, (Erich) Reichert, (Manob) Chakravarti and (Garry) Martin (all Beneficial Finance executives) have all loans which were not approved and were not authorised and are in excess of agreed benefits.

"The loan I looked at was a joint venture and it appears that this joint venture with a Melbourne developer is in default and the account is in default at a level of $37 million rather than within the approved board $30 million.

"May be criminal rather than civic (civil misconduct).

And then to what is called the graphic below Mr Simmons' photograph, the first and third of those paragraphs are put together and the paragraph dealing with the Melbourne developer is left out. Now, the point that we want to make there is that the language there, "May be criminal rather than civil" is identical with the language I have identified in the first article in the latter two respects.

The Appeal Court took the view, when it took the second article, that there that phrase meant actual civil misconduct and possibly criminal. So the Appeal Court took a different view to what that phrase meant where it took the second article to what it took with the first article. It took a view that accords with what we contend for when it dealt with that phrase in regard to the second article. The Court will find that in particular in the judgment of the Chief Justice at page 935 at line 32, dealing with the second article and the third of the imputations which was an imputation involving the complaint about "involved in criminal or at least civil misconduct":

In my opinion the third of the pleaded imputations is conveyed by the article. It reports the obtaining of unapproved and unauthorised loans, and that that conduct raised the suspicion of criminal rather than civil misconduct. The article does suggest that the misconduct is at least civil misconduct, the question being whether it is criminal.

Whereas in regard to the first article, the Chief Justice in regard to those words took a different view, and we say that that is unreasonable in the circumstances. Now, if the Court pleases - - -

KIRBY J: Is the Full Court decision reported yet or not?

MR GRAY: Yes, it is.

GUMMOW J: It is [1996] SASC 5431; 65 SASR 527.

MR GRAY: I am indebted to your Honour. Justice Cox's decision is only reported in the local Law Society Judgment Schemes, but I will have that reference made available.

Just before leaving the first article and the natural and ordinary meaning, there is one matter that I did overlook to draw attention to, and it is this, that as the Court has read, the article stated that an investigation had been undertaken, at least part undertaken. That had led to a difference of opinion between the board and these officers. The board of Beneficial was of the view that the officers had engaged in what was inappropriate conduct. That appears in the fourth column in the last paragraph:

Mr Jacobs: "It would have been closer to the mark to have said something like there was a difference of opinion between these officers and the board as to what was appropriate conduct for officers of the company.

Because that has to be read then with the fact that Baker and Reichert were asked to resign and did resign in circumstances that amount to a constructive dismissal because in the fifth column there is reference to the possibility of unfair dismissal proceedings being taken. So the ordinary reader would understand that quite apart from the Premier's reaction to all those matters, that these men had left Beneficial in circumstances of tantamount dismissal and may be suing. There is a possibility of suit. Also the article then went on to say, in the sixth column, that Martin had left, his job was axed, and that Chakravarti also left, in circumstances where the ordinary reader would conclude they had left because of this conduct in regard to obviously what were inappropriate loans, in circumstances where there was actual civil misconduct, possibly criminal.

So, if the Court pleases, we start our submissions by saying that - - -

McHUGH J: What imputation do you say that goes to, this last part?

MR GRAY: The second of the imputations. If the Court were to look at the analysis of the first article, behind the outline of submission, there is a treatment there which we set out, the pleaded imputations, and as against the meanings found and one can work through then and see what each of the judges have done. It is the second of the imputations that were pleaded, that:

the plaintiff's conduct in securing loans direct to himself as an executive of Beneficial Finance which loans were in excess of his entitlement was such as to render him not a fit and proper person to be or to remain a Beneficial Financial executive or to be or remain in any other position of trust.

We say that is wide enough to - that is supported by the statements that he left because of this conduct.

McHUGH J: Yes, but that is where, it seems to me, the pleading gets into a problem. You cannot have imputations going over the same ground. You have in imputation (a) the allegation he was involved in criminal or civil misconduct. Now, what independently does (b) add to that? In what way is the plaintiff's reputation further damaged by some other imputation that goes beyond that allegation?

MR GRAY: It was criminal or civil misconduct of such a nature that it led him to be unfit to continue to work in that capacity and he left as a result. So that when one looked at his future job prospects he was damnified in that way, that prospective future employers would say, not only was he involved, it is said, in criminal or civil misconduct as an executive in respect of loans to himself, but that that was of such a nature that rendered him unfit to be working in such employment and, as a result, he was - - -

McHUGH J: That is not what the imputation says. It does not say anything about civil or criminal misconduct. It just talks about him not being a fit and proper person to remain a Beneficial Finance executive.

MR GRAY: That is so. If one was to leave out the question of civil or criminal, the article makes it quite plain that he engaged in inappropriate conduct that led him to be unfit to hold office.

McHUGH J: One has to be careful about double-dipping here. You have an allegation of imputation (a), criminal or civil misconduct, and one would have thought that carried with it many implications of its own. But then you have an allegation he was not a fit and proper person. Now, is that derivative from (a) or is it an independent imputation? If it is the latter, what is the basis, where do you find the basis of that in the text?

MR GRAY: The answer is that, in one sense, it is derivative. In other words, the first imputation would carry that implication. But then, secondly, it is built out of other material. The other material is, for example, that this conduct was of such gravity that it called for a report from the chairman to the Premier. We are not talking about some minor irregularity in regard to a finance company officer's affairs being dealt with in an appropriate way within the company; this has gone to the Premier of the State and that it is such that when the Premier of the State hears about it, he is angry. It is such that there has been a need for an investigation, the chairman being involved in an investigation, and that the point has been reached where the board has decided that in its view this is not appropriate and it differs from the officers concerned. It is of such a nature, and they were all involved in this conduct, that two of them have been dismissed and that the other two have gone.

All of that comes from statements in the first article that stands separate and apart from the allegation of criminal rather than civil. And we say - - -

BRENNAN CJ: Why do you say two have been dismissed and the other two have gone? Is not your allegation that this statement was capable of meaning that your client had been dismissed?

MR GRAY: Yes. It does not say he was dismissed, but it says he also left, without describing the circumstances, and Justice Cox in fact inferred the absence of any reason there might suggest the reason for his going was in worse circumstances than those who were described as having resigned following the request for their resignation. Justice Cox took the view that the absence of identifying why Chakravarti left added perhaps a more serious overtone.

BRENNAN CJ: That is one way of putting it. The other is that Mr Jacobs said as appears on column 4, Mr Simmons agreed that there was a concern about unfair dismissal in column 5, and then that Chakravarti left in column 6.

MR GRAY: If the Court pleases, we would submit that the ordinary reader would conclude that here is Mr Chakravarti, he is involved in these unsavoury loans, he has got to the stage where no doubt it is civil misconduct, the question is is it criminal, two have been asked to leave and who have resigned and Mr Chakravarti also left. The clear implication to the ordinary reader is that he has left as a result of being unfit because of this conduct and that is why he has gone.

McHUGH J: Why would the ordinary reader think that Mr Simmons was worried that Beneficial might be sued for unfair dismissal?

MR GRAY: He obviously recognised there was the possibility of suit, but nothing more than that.

McHUGH J: But if you had a clear case against them, one would have thought he would not be worried about unfair dismissal.

MR GRAY: Yes, except simply as a matter of industrial law, one would have to countenance the possibility and he had a concern. It would depend on simply how cautious he was. We would say that - we accept that that does show he is addressing the possibility that somebody might say this is unfair, but there is no suggestion that he agrees that there is any reason for such a view.

McHUGH J: Mr Gray, what about the next paragraph that says that Martin left "after his job was axed"; not after he had been dismissed, but he left after his job had been axed?

MR GRAY: One would simply conclude from that that - rather equivocal as to whether the job has been axed to get rid of him or whether there is some other reason. But in the case of Chakravarti there is no such explanation offered. He simply "also left". The clear implication, we would say, to the ordinary reader is that these four men were all involved in these unsavoury transactions, they had this colour about them that I have spoken about, and they have all gone in one way or another. In particular, it is open to the suggestion that Chakravarti, for example, was not prepared to accept any invitation to resign, he had to be sacked. That is one possible implication. Justice Cox deals with it at page 880, line 30:

The transcript makes it plain that the concern that Beneficial might be sued for unfair dismissal was the result of the departure of Mr Baker and Mr Reichert from the company, and if the report had stopped at line 61 that is the way the ordinary reader would probably have interpreted the Bank's concern. However, the gratuitous reference to the plaintiff which followed would have led the ordinary reader to conclude that he had been dismissed, and dismissed for some kind of misconduct that might be either criminal or civil - indeed, that might be criminal rather than civil, with its tendency to convey that it was at least civil misconduct and was possibly criminal misconduct as well. It is no answer to say that the report does not state that the plaintiff had in fact been dismissed; that term is not used to describe the departures of Mr Baker and Mr Reichert either and so does not provide a point of distinction between the plaintiff and the other Beneficial executives involved, some at least, it was implied, had been dismissed whatever formula or euphemism might have been employed to describe their manner of leaving the company.

And that, of course, comes from the heading "Resignations" and the reference to resignations. So we say that that view of Justice Cox represents the ordinary reasonable view that the reader would take. The other passage where Justice Cox deals with the matter that we support is at page 886, line 26:

There was also an imputation that the plaintiff had left Beneficial under a cloud, most obviously because of his questionable conduct. In my opinion the article was defamatory of the plaintiff. The defendant's limited attempts to justify - - -

et cetera. So there he has put it in a slightly more neutral way, "left under a cloud" and that is the view that Chief Justice Doyle took. That is the finding that he found, that it was left under a cloud. If the Court wanted a shorthand way through this material, it is to take up the analysis of the first article and the Court will see, under "Meaning" there is a reference to Chief Justice Doyle's findings and the page at which he finds it. He found that the "leaving under a cloud" for Chakravarti at 927.86. He agreed with Justice Cox in that respect.

McHUGH J: Could I ask you about this - and this, I think, is an important question about imputations generally - why is not your imputation 4(b) a conclusion as to the consequences that flow from the defendant's imputation as opposed to the imputation itself? Do you follow what I am putting?

MR GRAY: Yes, I do, if the Court pleases. In a sense it is both.

McHUGH J: But is this not one of the problems that modern defamation pleadings have got into, that pleaders plead as imputation what are, in effect, the social consequences or the possible social consequences of the imputation. If somebody says that a person is a thief, that is the imputation, one would have thought - maybe one says the person is dishonest and you can get that out of it - but then you have imputations saying that the person is not fit to hold this or that position. But are they not really the consequences of the imputation and not the imputation itself?

MR GRAY: Yes. This really does strike at the pleading of the false innuendo directly. There the words - - -

McHUGH J: Not always, because sometimes, although it is a false innuendo, it is implied in it. There is nothing particularly defamatory in the actual words, but you construct it out of it.

MR GRAY: This is the point, that here is the statement, here are the literal words used. We say they convey a defamatory meaning and one can draw that from the literal words. But a person, we say, would draw that conclusion, but they would, if you asked them to describe what it meant to them, they would use a slightly different description. They would not simply repeat the precise words. And we say that the ordinary reader, charged with ordinary knowledge, would treat this article as conveying the meanings in the false innuendo pleaded. One could equally say that we could have taken the precise words used and said they carried with them defamatory sting. In a sense, we have drawn a conclusion from the words there, but the false innuendo is all about simply interpreting, in the way the ordinary reader would, these words, and drawing together the threads, because the ordinary reader would read this, but when he read it through he would link something he had read in the first column with something in the fifth column and he would put the two together and, in that way, one gets the slightly fuller picture. Otherwise one does not get the ability to pull the threads together as to the effect of a number of statements. The number of statements together give this result.

So in that sense we support this as being the ordinary meaning, not the literal words, but a false innuendo. We say, on the other hand, that if one was to take the literal words, they can in effect replace what is there.

KIRBY J: Is there any principle concerning the way in which the ordinary reader reads this? I mean, here we are going through it, analysing it, numbering the sentences and so on; it ought not to be thought, I think, that the ordinary reader would pore over these words with the precision that we are doing.

MR GRAY: No. We respectfully adopt that, and what the ordinary reader would be attracted by was, here are some resignations, conduct of a grave kind caused that. That conduct the ordinary reader would pick up and look to understand what it was and you would learn that it was serious, the Premier is involved, it was criminal rather than civil, the board thought it was inappropriate, and so on. The ordinary reader would draw those threads together and would then get a picture, a composite picture. Perhaps some other readers might just get no further than a couple of paragraphs and the defamatory sting thus far.

But, Justice McHugh, the point that you raise is perhaps dealt with by an historical treatment and we were attracted by a decision of the Full Victorian Court as neatly summarising that. It is a case we have footnoted. It is National Mutual Life Association v GTV Corporation [1989] VicRp 66; (1989) VR 747. I had not proposed to read from it but I think that it probably does rather succinctly put the point I would like to make in, I think, perhaps a clearer and more succinct way. It is footnoted on page 5 of our outline under footnote 22. The passage that I wish to just draw attention to is at page 768. This is from a State and a court that has found Polly Peck to be an appropriate statement of principle to follow. At page 768 in the Full Court judgment, joint judgment of Justices Fullagar, Hampel and McDonald, there is a treatment of the way this practice grew up which we respectfully adopt as explaining what happens in regard to these pleadings. It starts at page 3:

The cases seem to show that gradually the practice grew up whereby a plaintiff in a libel action pleaded in his statement of claim what he was going to contend was the meaning of the words used, in their plain and ordinary meaning. That is to say, he pleaded the "false innuendo", being the meaning or imputation which did not depend upon knowledge in the reader or viewer of particular extrinsic facts but only upon his being reasonably equipped with matters of general knowledge. Apparently the profession and the Bench grew to approve of the practice as useful in informing the judge - and perhaps the defendant - of the real complaint of the plaintiff, especially in a case where no precise defamatory meaning was immediately apparent. Defendants were said to be saved from "trial by ambush". But the practice did not, and in our opinion could not, alter the position at law that the meaning of the words was ultimately a question for the jury, and that the jury must be at large in finding the true meaning amongst such possible meanings as were left to them by the judge, and that the judge was not bound to confine the jury to the false innuendos asserted by the plaintiff.

McHUGH J: Except that it depends upon what the plaintiff has pleaded and how the defendant has conducted its case.

MR GRAY: Yes.

McHUGH J: There are cases, for example, which hold that if a plaintiff pleads an outrageous innuendo, that the defendant can justify and prove the truth of that even though that involves proving matters that are not even referred to at all in the article.

MR GRAY: There is something of a curiosity, though, about allowing a defendant to plead - - -

McHUGH J: Let me give you an illustration. I think the case is MacGrath v Black. It is a House of Lords decision where the plaintiff was accused in a book of being involved in numerous murders, I think he was Athenian, and he pleaded that he was a murderer. The defendant justified, and they proved that he was guilty of another murder that was not mentioned in the book at all, and that was held to be a good defence. That is the defendant was able to justify the imputation of being a murderer by referring to matters that were not referred to in the article. It has happened more than once in New South Wales. A plaintiff has pleaded, for example, he is a disreputable person. The defendant has then proved that he is a disreputable person by referring to matters quite different from what is involved in the article.

MR GRAY: That is one example. Another example that does compel a different logic is when the defendant is allowed to plead a lesser implication that is not the plaintiff's case and justify that.

McHUGH J: That is what I was putting to you earlier. That is why I have always thought that Polly Peck was wrong.

MR GRAY: That was certainly the practice in this case, because what happened in this case was that the plaintiff pleaded its imputation, the defendant's response was, "We deny that. We say that this article meant you were suspected of that." The reply was, "If you say that, then we say that suspicion was well founded. The article means it was well founded."

McHUGH J: Mr Gray, it has always seemed to me to lead to this absurd position. For example, in this case, supposing you had said the imputation was that it meant that you were guilty of criminal conduct and that was found to be so in your favour. But the defendant had pleaded as a defence and proved that you were suspected of being involved. Now, where does that lead? It does not lead anywhere. It cannot be an answer to your claim for damages. Once there is a finding that you have been guilty of criminal conduct, it cannot affect the matter; that you might be suspected of it and the defendant has pleaded that.

MR GRAY: But in a case such as this, before the trial judge, on the one hand there is guilt, in the middle was suspicion and then there was an argument, well-founded suspicion. All issues were fairly and squarely raised in this trial and the defendant set out to justify guilt and well-founded suspicion. That is part of the reason there are so many pages in the transcript, in the appeal books, is to demonstrate that these were issues that the defence went to in a very - there is no question of prejudice to the defence here. They fought out this case on the - - -

McHUGH J: Would you just tell me what is it, what are the consequences of this Polly Peck defence in this situation. The defendant says the article means I am a thief and the jury so hold. The defendants, according to Polly Peck can say, no, we only meant you were suspected of theft and we are going to prove that you were suspected of theft. The jury say, we do find that he was suspected of theft. Now, what is the consequence of that? Where do you go?

MR GRAY: It cannot be defamatory if he has been found, on his own confession, to be guilty of thieving.

McHUGH J: No, no. I am saying to you the plaintiff has pleaded that the article means that he was guilty of theft. The jury find that was so, that is what the article means. But if I understand Polly Peck correctly, it says, nevertheless, although you have pleaded it means you are guilty of theft, the defendant can put on a defence and say, no, it really only means you are suspected of theft but I am going to prove it is true. That is what Polly Peck decides, does it not?

BRENNAN CJ: The jury finds the first imputation. How does the second arise?

MR GRAY: The jury would not be bound to find the first innuendo - - -

McHUGH J: No, but we are assuming we do. What I have never understood about Polly Peck is, in practice, where does it - what happens? I can understand it if the plaintiff has pleaded the second imputation. If he fails then on the first imputation, then he just fails, full stop. If he has pleaded alternatives, the suspect, then the defendant says, well, I have got a defence to that second. But I have never understood how you can plead another imputation and justify it when the plaintiff has not pleaded that imputation.

GAUDRON J: Might it be because, if it is open on the natural and ordinary meanings of the words, it is open to the jury to find that there is that imputation even though it has not been pleaded?

MR GRAY: Yes. We would say it is no different than any other pleading case. The plaintiff makes an assertion, the defendant makes an assertion. The finder of fact is not bound to find either assertion. The finder of fact will find a fact on the evidence led and it might be neither the plaintiff's case or the defendant's case.

BRENNAN CJ: What if there is no pleading of the imputation at all, just pleads the article?

MR GRAY: Indeed, then the defendant would be left to deal with any number of possibilities and could raise this question - - -

McHUGH J: That was the old practice, and there is a case called Packer v Mirror Newspapers in New South Wales that is a good illustration of that. The plaintiff just simply pleaded the article, with no innuendos, and there was an attempt to strike out the defence on the basis that there were no innuendos pleaded, but the Court of Appeal held that the plaintiff was not required to plead innuendos. That was under the old practice.

BRENNAN CJ: Is that what you say the South Australian practice is?

MR GRAY: The South Australian practice is to plead the false innuendo and to allow the Polly Peck position of allowing the defence to plead such an imputation as it wishes to raise and justify.

BRENNAN CJ: Must you plead an imputation in South Australia?

MR GRAY: No.

BRENNAN CJ: That is what I am saying. What is the South Australian practice if you choose not to?

MR GRAY: The practice is that the court would come to its conclusion on what the ordinary meaning of the article was on its words.

McHUGH J: And you may get an application to stay the proceedings on the ground that it has prejudiced the fair trial of the action.

MR GRAY: The practice certainly is to plead the false innuendo, that is the practice. But there is nothing under our Rules, as I understand it, that would prevent the simple words being pleaded as simply defamatory, leaving it at large as to the precise meaning the plaintiff contended for.

But we, with respect, thought that the Court of Appeal of Victoria was quite a helpful analysis, explaining how this practice grew up, and it has now become, with respect, a very long and well-established practice in jurisdictions outside New South Wales, certainly in South Australia and Victoria, and as the court there says it was seen to be helpful because it provided particularity of a plaintiff's assertion but it did not stop the finder of fact from coming to the finder of fact's own conclusion, and particularly so in a jury case.

If one goes on to the next paragraph in that judgment, there is the qualification that provides what we would say, with respect, was a sensible brake to all this, that it is for he judge "to decide what meanings were fairly open" and to be left for the jury. So if in fact there was an occasion of procedural unfairness, then it could be dealt with in that way. So the problem that arose in Prichard of there being a lesser meaning, but the plaintiff's counsel had said my client is not pursuing that lesser meaning and disavowed it, in those circumstances in Prichard, the South Australian court found, in effect, there was a procedural estoppel and it could not be raised because of the plaintiff's conduct through his counsel. He had eschewed reliance on it. There are other examples, no doubt, of procedural unfairness that would lead the judge not leaving it to the jury, it would not be fair in the circumstances or, alternatively, a judge alone would simply not consider it. But in a case like the case at bar, the case was fought out on these issues, absolutely no doubt at all that the defence came to meet a case of well-founded suspicion or suspicion, and there can be no prejudice in the case at bar at all.

What Justice Cox did, in fact, was to simply look at the article and not say, "Do I agree with this imputation or that imputation as pleaded?'. He simply said, "What do I think the natural and ordinary reader would conclude about this?" and at 886 he sets that out. We would say that he in fact has found the substance of the imputation as we pleaded. If we are wrong in that, then we say the imputations we have pleaded are fully justified.

If the Court pleases, it is plain from that analysis of the Victorian Full Court that they are dealing with, in effect, a practice, a pleading practice that has evolved and it is a matter controlled at the practice level. It is a system that has worked satisfactorily, we would say with respect, in this State, in Victoria and other States, for a long period of time and that the Polly Peck circumstances that your Honour Justice McHugh mentioned in a case which would cause an injustice would be dealt with, presumably, as a matter of procedural fairness. It could only arise in circumstances of procedural unfairness.

KIRBY J: Some of the reasoning that supports the practice seems to be tied in with the realities of jury trials.

MR GRAY: Yes.

KIRBY J: Not entirely. Some of the reasoning seems to be based on the movement towards greater flexibility and less rigidity in pleading rules in civil proceedings. But you do not have jury trial in South Australia.

McHUGH J: The big problem - this is what eventually caused the New South Wales practice, is there was a terrible inefficiency in resources. The defendant would go to trial - because you did not have to plead false innuendo in New South Wales prior, and since, all pleaders never did. The defendant would have to go to trial armed with all sorts of evidence to meet all possible meanings. You get to trial, the plaintiff might say, "I am only relying on one particular meaning", and all the defendant's evidence would be irrelevant to the whole question of justification.

KIRBY J: I suppose you could say that the New South Wales Parliament saw fit to change this and in these more enlightened climes you did not.

McHUGH J: In New South Wales it was overcome by judges ordering particulars, starting from 69.

MR GRAY: I do not know that I would adopt Justice Kirby's description but what has happened in South Australia is that there has not been a difficulty in regard to the way in which cases are pleaded. There is no difficulty in this case. Justice Cox had no difficulty, against the background of this trial when these issues were ventilated, and no question of procedural unfairness was raised before him, of coming to a conclusion what he thought the natural ordinary meaning was. The fact that he has chosen different language to the language the plaintiff has pleaded in some respects is not to the point. In substance, he has found the imputations we pleaded. In that way, as though with a jury, he has come to the conclusion and the practice and procedure has worked without difficulty. It works without difficulty in Victoria. So the pleadings are simply the tool, they are simply the process, and worked in the way they have been, they work very well, without the difficulties perhaps that have been encountered in New South Wales, with respect.

McHUGH J: But how does the judge sum up on justification to a jury, for example, if the jury are at large and they can find any meaning that they like?

MR GRAY: As was put, it is a question of the judge at that stage having had the addresses of both counsel, he then sums up as to what is fairly left open to the jury and he will then direct them about what he views as the possibilities. Now, they - - -

McHUGH J: I have no problem with that, as long as it is understood - and I take it you are not submitting that the jury are at large to go outside the way the parties conducted their case?

MR GRAY: No, and the judge will, with respect, control that because in the second of those paragraphs the Full Court there spell out that that is the judge's role when he comes to address the jury, to explain to them carefully and clearly what is fairly open to them to find, the alternatives. They would, if they attend to that direction, will confine themselves within those boundaries. Hence, no difficulty. But, with respect, if one comes from a different jurisdiction where there is a need by statute to plead each and every imputation that one relies on, and that becomes a separate cause of action, one is dealing with a very different regime and a regime that, with respect, is not obviously viewed favourably in other jurisdictions.

One must say that some of the difficulties that have been encountered through the New South Wales courts just do not arise in the other States and, with respect, we think it is part of the reason, if the matter is left very simply, is left as a matter of practice and procedure and is controlled by the judges in the well-honed fashion.

KIRBY J: One disadvantage of the New South Wales system is that it depends very much on the ingenuity of counsel sitting in their chambers on a Saturday, dictating the innuendos that will be pleaded, and the case gets locked into that.

MR GRAY: Yes.

KIRBY J: Instead of the common sense of the jury or of a jury-like decision applied to the reading of the article as the reader would read it.

MR GRAY: As counsel for a different jurisdiction appearing before a court well steeped in New South Wales practice, one obviously has regard to the authorities and one has to say that one is left with the impression that the debate is whether what the pleader has said as against the article - and the focus rather moves away on to the pleader's matter, rather than the substantive issue between the parties. It becomes very much a semantic dual rather than simply looking back and saying, what, in essence, would the ordinary person think of this? Is it defamatory and what is the result? That practice of trying to, in effect, compel particularity, which is in essence what the New South Wales statute does, does in fact compound problems rather than resolve them.

BRENNAN CJ: Spot the difference.

MR GRAY: Yes, spot the difference.

McHUGH J: And you say that trivialises it.

MR GRAY: Yes, we do, and we say that is demonstrated by Justice Williams' approach in this case. That is not what it is about. It is not spot the difference at all. It is about the court assessing what the ordinary person or the reasonable person would think, having read this. I do not know that I can advance - - -

BRENNAN CJ: You cannot take that much further, I do not think.

MR GRAY: The Court will be thinking I have perhaps taken it too far. I have not yet, the Court will be sorry to hear, focused on the second article on natural and ordinary meaning. If the Court were to take up the analysis of the second article, I am wondering if I might just deal with this a little more superficially. If the Court would take up the analysis sheet as well, the Court will see the way we have tried to simplify this maze, as your Honour Justice Gummow was suggesting.

We have set out in the left-hand column the pleaded imputations and there are six. Then under "Meaning" we have set out in summary what each of the judges has done. Justice Cox makes his finding at 892 and he does not consider the six imputations. What he does is he looks at the article and he comes to his conclusions and we say that what he has done is accepted (b), (c), (d), (e) and (f). In regard to (a) he has said that he would not accept that, that "the plaintiff had engaged in criminal conduct" is too high; it was a possibility.

The reason why we still put that in issue, we say imputation (a) is made out, the reason we say that is it comes from (b). The article speaks of, in the opening paragraph:

Sensational allegations of a conspiracy within the State Bank group -

and the word "conspiracy" gets mentioned again in that first column.

Sensational allegations of a conspiracy within the State Bank group and multimillion-dollar unauthorised loans involving senior executives have been revealed in diary notes kept by the former bank chairman Mr David Simmons.

Mr Simmons says the circumstances surrounding the loans "may be criminal".

The loans include unapproved loans -

and then there is a reference to conspiracy of silence referred to in the next paragraph:

Mr Simmons's diaries also refer to a "Beneficial conspiracy" -

and a little further down there is a reference to "conspiracy of silence" whilst in the fourth column, about halfway down:

He says board presentations were pulled and not accurate, that internal audit reports were screened, that the Beneficial board did not get the true picture, and there was a conspiracy of silence.

What we say is that the ordinary reader, reading the word "conspiracy", would not think of a civil conspiracy. The ordinary person equates conspiracy with criminal conduct. It is on that basis that we justify - that we assert that the first imputation is made out and the Court is either with us or against us on that. The courts below were against us. We say that the ordinary reader, on reading of this conspiracy, would infer a crime.

Now, the Court will see that Chief Justice Doyle found (b) to (f) as meanings that were conveyed but he found in regard to (a) that it did not arise, but the lesser imputation of suspicion of criminal conduct did. Justice Perry agreed with Chief Justice Doyle and Justice Williams found (b) to (f) and said that (a) did not arise. So, in terms of the imputations that we have pleaded and in terms of the findings of all judges below, with the exception of (a), we have been successful and I do not know that it is going to assist the Court if I were to trace through the second article at this stage to support each of that.

The Court will see that the parts that we rely on are confined to the first page article. Your Honours should have aligned on the side of yours where we have marked the particular words that have been pleaded as being complained of. When I come to deal with "fair and accurate report" I need to come back and analyse the second article a little more closely and I will perhaps leave till that time before I come to address particular matters.

If the Court pleases, one other aspect of natural and ordinary meaning I did wish to deal with - it is a discrete matter - and it relates to the reply pleading that if this article is dealing with suspicion rather than guilt, it is dealing with well-founded suspicion. Our case below, and our case before this Court, is that one can look at this at three levels of state of mind. One is suspicion, the second and the middle one is well-founded suspicion and the third state of mind is guilt.

McHUGH J: I would have thought that the most obvious one you have not mentioned and that is that if they want to justify, they have to show that he engaged in either criminal or civil misconduct.

MR GRAY: Yes, but - - -

McHUGH J: You are talking about suspicion. I do not see where that comes in. You are talking about - that is the imputation alleges, according to your pleadings, that the plaintiff was involved in criminal or civil misconduct. Now, that is what they have to prove, have they not?

MR GRAY: Indeed, except - - -

McHUGH J: That carries with it, obviously, something a little bit more serious than civil misconduct but it is at least that.

MR GRAY: We had hoped that was our simple point, but it did not find favour in the Full Court, the Full Court against which we now appeal said that this article did not impute guilt, that well-founded suspicion equals guilt and it therefore proceeded on the basis of suspicion only in regard to civil and criminal conduct. That is the reason why we address it. That is the finding of the Full Court and, in fact, Chief Justice Doyle found there was a lesser imputation of suspicion and it was actionable, but he was in a minority. Justices Perry and Williams, who formed the majority in the first article, say no damages at all because you have only made out suspicion. You have not pleaded that, you have pleaded actuality and you failed. So in terms of putting our case, we put it at the very simple level; the Full Court has simply misread a phrase "criminal rather than civil". The Full Court has overlooked the fact that it has interpreted that phrase what we contend for when we go to the second article but does not do so with regard to the first. Justice Perry adopts specifically Chief Justice Doyle's reasons. So we obviously have to address it.

We say that the characterisation of well founded equals guilt is wrong. Can we demonstrate it by a simply example. The man is by the bank. He sees the balaclava-clad person coming out, sack over shoulder, hears the bank siren go and somebody saying "Thief, thief". He would have a well-founded suspicion that he was seeing the thief. But if he was to learn that this man was there purely fortuitously on the way to fancy-dress party, the well-founded suspicion would not equal guilt. Those examples compound.

On the other hand, one can have suspicion that can be based on prejudice, on surmise, on nothing, a suspicion. But well-founded suspicion cannot equal guilt. It may, it may be guilt, but it cannot equal guilt. And the Full Court erred in that treatment.

BRENNAN CJ: Is suspicion defamatory?

MR GRAY: Yes.

BRENNAN CJ: Why?

MR GRAY: Because people will infer that where there is smoke there is fire. Where there is suspicion there is obviously something behind it.

BRENNAN CJ: Well, it is well founded.

MR GRAY: If it is well founded, then all the more so. The reader would then infer, well, it is not just a case of mere suspicion and hence I have a question mark about employing this man and perhaps I will prefer somebody where there is no suspicion. The employer might say, well, this is clearly a well-founded suspicion, I will not have anything to do with this man. He may be guilty, I do not know, but it is a well-founded suspicion. When it is guilt, I am not going to touch, as an employee, somebody who is guilty of these unauthorised $37 million transactions that involve civil and may well be criminal conduct. So one can see from an employers' point of view how the currency of each level of different defamation would affect employment to a different degree. But our point is this, that we lost on the first article in the Appeal Court because, it is said, this article amounts to suspicion only and that was the lesser imputation we had not pleaded. And that is where we lost. It was not raised. They said, well, you have raised well-founded suspicion, but that equals guilt, and you lose on that. And they did not consider whether our case on well-founded suspicion was made out or not because they said it equated with guilt and they would not separately consider it.

The court deals with that, for example, Chief Justice Doyle at 923, lines 1 to 10. In the first paragraph, "The defendant pleaded", then:

The plaintiff, by his Reply, denied that this was the natural and ordinary meaning of the words used. If it was, he pleaded that the words used "carried the further imputation that the suspicion was well founded." I accept the defendant's submissions that this is to plead, in different words, an imputation of guilt, and so it is simply a repetition of the claim that the article imputed guilt.

So he does not go on to deal with it. Justice Perry - - -

McHUGH J: It is a strange way to plead an imputation as a reply, is it not?

MR GRAY: One could perhaps have amended the statement of claim to include it there - - -

McHUGH J: That is what one would have expected.

MR GRAY: - - - but it is well and truly before the court in an appropriate document. It is capable of rejoinder. The issues are well and truly joined. It does not matter, with respect, which piece of paper it is in. These are procedural documents and this was a practice that was viewed as satisfactory. There are other examples of this.

BRENNAN CJ: There was a rejoinder, in any event, to the reply, was there not?

MR GRAY: There was a right to rejoinder and in the absence of rejoinder - - -

BRENNAN CJ: There was.

MR GRAY: Oh yes, yes. At page 945 Justice Perry at lines 31 to 40 deals with the matter. He takes:

the respondent in his reply joined issue with the assertion.....and asserted that the article "carried the further imputation....."The respondent cannot be permitted to eschew the meaning suggested by the appellant but then be permitted to recover on the basis of that meaning, when the only meaning which he asserts in his own pleading is not made out.

He goes on to say "the trial may well have been radically different", but there is just absolutely no evidence to support that at all. This was an issue they set out to justify. There are days of cross-examination with Mr Chakravarti as they set out to justify the well-founded suspicion, allegations that these loans were not authorised, days of it. Justice Williams at 950, line 15, says:

I think that the plaintiff is trying to have his cake and to eat it. In my opinion, the essence of the plaintiff's pleadings is an assertion that the article contains overtones of guilt and I propose to confine the plaintiff to that assertion alone irrespective of the different ways in which ostensibly it has been pleaded.

So, in essence, they have agreed with Chief Justice Doyle, although in slightly different language. The end result is Chief Justice Doyle was prepared to allow the lesser imputation and allow recovery but he was in the minority in the Full Court and the end result is the plaintiff recovered nothing in regard to the first article. By a majority of 2:1 Justice Cox and Chief Justice Doyle would have allowed recovery.

The footnote at page 2 of our outline, we deal with this at the second page of our outline, in the first paragraph on that second page, we put our argument and footnote 8 picks up the authorities that we say support well-founded suspicion being a category between suspicion and guilt.

Our learned friends in their argument have referred to a High Court decision of Mirror Newspapers Ltd v Harrison [1982] HCA 50; 149 CLR 293 and I wanted to touch that briefly. This case should be in the defendant's book of authorities, No 4 in the defendant's list. We had not copied it so we would have the Court use the defendant's copy. Does the Court have that authority?

McHUGH J: Yes.

MR GRAY: The passage that touches this point is at page 303 in the judgment of Justice Mason as he then was and it is at point 5 of the page. Justice Mason is referring to what Justice Glass said in the Court of Appeal in the case under appeal and he says:

Glass J.A. was right in saying that any publication which goes on to say or suggest that the charge was well founded, i.e., that the plaintiff was guilty, carries the further imputation of guilt.

As we understand it, it is suggested that that is some support for saying well-founded suspicion equals guilt. Our first point is it is one thing to talk about a charge being well founded and a suspicion being well founded; but when one goes back to the context in which Justice Glass spoke - and I can pass the Court the Court of Appeal decision - this is Harrison v Mirror Newspapers Ltd (1981) 1 NSWLR 620. The relevant passage is at page 626. Justice Glass said this at paragraph F, having referred to Rochfort's Case:

There is a common element in these observations, I believe, to the following effect. Where the publisher suggests that a suspicion of guilt is well founded, an inference of guilt may be open as part of the ordinary meaning of the words used.

And that is a correct statement. It may be, but it is not must. Well founded might be guilt, well founded does not equal guilt. So when one goes behind the High Court reference of Justice Mason and looks at the precise words that Justice Glass has used, one can see that, in the case of suspicion, well-founded suspicion does not equal guilt. It might, it might not, and one can multiply examples like the balaclava-clad man leaving the bank to demonstrate that. So on that discrete point we say that the Full Court was plainly in error. It follows, if that be right, that the majority in the Full Court, the entire Full Court but in particular the majority, failed to consider a relevant matter before the Court and that there the Full Court decision is wrong for that reason.

Could I move back to the pleading point that has been discussed already to a degree. We deal with this is the outline commencing at page 4 and we speak there of what is described in paragraph 3.2 as the modern pleading practice. At 3.3, the plaintiff is not being bound by his pleadings in the sense of to the precise imputation. We draw the distinction there between the New South Wales position as we have discussed. We give the Court references to a number of common law jurisdictions supporting the practice. One finds it is supported not only in other Australian States but of course in the United Kingdom. One also finds it supported in Canada. The Canadian intermediate courts of appeal have followed, in particular, the Victorian position.

We have set out in detail in the footnotes many references and content ourselves with but a few quotes to illustrate the well-developed practices. Although one might have a different view about how it might be dealt with, we would say that this Court would be reluctant to interfere with a long established well-trodden practice that has proven to do justice in many jurisdictions over many years. There would need to be, with respect, we would say, a very good reason why one would want to upset that practice, particularly when the area of procedural fairness, pleading and those matters that traditionally have some flexibility and laxity about them to cover situations, because one can never from a pleading point of view - a pleading direction point of view anticipate all the bends and swerves that will come in cases of the future. There will always be anomalous cases.

Now, we have taken in the reference to Gumina v Williams and in particular the remarks of Chief Justice Malcolm. I do not propose to go to that case in any more detail but the quote is there. Justice Murphy in the same respect in the Victorian case of Kelly. In a sense, all this matter was debated and the various points were put in Slim v Daily Telegraph Ltd. There, and we address that at page 6 paragraph 3.5 when we deal with the English position, in Slim which was in 1968, one had the three possible positions put. Lord Denning was of the view that neither party could control the natural and ordinary meaning. It was always left to the jury or the judge to conclude what he thought or what they thought at the end of the day and that neither party could circumscribe by pleadings - - -

KIRBY J: You answered a question earlier from Justice McHugh that the jury could not go outside the way the case had been presented by the parties, so do I take it that you are adopting a principle which is narrower than that which Lord Denning raises?

MR GRAY: Yes, we adopt what is the Lord Diplock approach.

McHUGH J: Not Lord Justice Salmon?

MR GRAY: Lord Diplock's view was that the parties were entitled to select the particular defamatory meaning that they contended for but that, in particular, a lesser meaning from a plaintiff's point of view would remain actionable and the jury or judge could choose a lesser meaning. The narrow view was put by Lord Justice Salmon and he took the view that one was bound by one's pleadings but not in an absolute sense, that if there was a nuance that was perhaps within the pleaded imputation, one could go to that.

KIRBY J: There is a yet further extreme view then.

MR GRAY: Yes.

McHUGH J: Did not Justice Stephen in Sungravure v Meani Ltd in this Court seem to prefer the judgment of Lord Justice Salmon? I know he referred to Lord Justice Diplock's judgment as an alternative but - - -

MR GRAY: If the Court pleases, so did Chief Justice King in Prichard's Case. In Prichard's Case, when the court faced this circumstance of the plaintiff's counsel eschewing the lesser meaning, Justice King in his reasons in Prichard, speaking for the Full Court, refers to Slim and the pages he refers to are those that pick up Lord Justice Salmon. But when one looks at what happens in Prichard's Case and one looks at the approach of Chief Justice King, it is so close to Lord Justice Diplock's approach that it is hard to distinguish because Justice King, in the passage we have quoted, does in fact say the lesser meaning in the ordinary case will be actionable.

McHUGH J: Not always - - -

MR GRAY: Not always, and Prichard was a very extreme case. Even then, even in a case where the plaintiff had eschewed the matter, had said we are not relying on that, Justice King was still troubled about allowing amendment on the appeal to do justice. He finally concluded he would not for two reasons. The first was the plaintiff's conduct through its counsel and the second was the possibility that the plaintiff had said that because he was concerned about what might happen if he did plead that in regard to justification, for example.

That passage from Justice Stephen is quoted at page 8 of one of my learned friend's outlines. We say that is not materially different from what we are putting because what Justice Stephen does is to not only quote from Lord Justice Salmon but also to quote from Lord Justice Diplock. It is page 8 of one of their outlines - - -

KIRBY J: Was that referring to the practice or law in New South Wales, the special practice of law relating to innuendo?

MR GRAY: Yes. And even there there is the qualification:

Having pleaded this innuendo the plaintiff was bound by it, and by such others as he also relied upon, and was not free thereafter to rely on some quite different meaning which he might seek to read into the words complained of - Slim v Daily Telegraph Ltd per Salmon LJ [1968] 2 QB 157 at p.185 - at least not one more injurious to the plaintiff per Diplock LJ [1968] 2 QB at p.175 - - -

GAUDRON J: But what does "quite different meaning" mean? What one is talking about in the context of this argument is shades of meaning.

MR GRAY: We say that this is a very - we would respectfully adopt that in this case and say this is a very clear case of a nuance or a shade of meaning. To talk about a suspicion of guilt being, in terms of this article and what is said of being criminal rather than civil, to talk about it being a substantially different case is, we would say, very unfair. We are talking about nuances, we are talking about shades of meaning. In the circumstances of this case we say it was just very unfair on the plaintiff to say that this was not a matter alive before the hearing.

One can take perhaps the more extreme cases your Honour Justice McHugh has instanced and test out the logic and the strength of position. In this case, it is not a live issue. It only really has come about because Justices Perry and Williams took a very very strict view on the pleading governing the matter and we say, with respect, allowing the procedural tool to become the master, that is what has happened. As a result, it has caused an injustice. We say, in ordinary parlance, whether one talks about suspicion well founded, suspicion or guilt, this man was badly defamed and deserves a remedy.

GUMMOW J: But is the difference we are talking about a difference that is measured or bears upon justification?

MR GRAY: No, it does not, because below there was an attempt to justify that failed - - -

GUMMOW J: No, I am not talking about this case. I am talking about cases like Slim and Lord Justice Salmon, for example.

MR GRAY: If the Court pleases, the defendant has to make his decision about justification and if he faces the words, he can assess the reasonable possibilities and the defendant can make his assessment. So we say, with respect, there is nothing in the Lord Justice Diplock approach that troubles one on justification. It certainly has not troubled the later English courts. The Lucas-Box Case that we refer to specifically approves the Diplock approach and that represents the modern practice in the United Kingdom. None of the jurisdictions that adopt this practice identify any difficulty with justification. We would put it that - - -

GUMMOW J: To justify, you confess, do you not? You have to confess something and then you justify it.

MR GRAY: Yes.

GUMMOW J: You have to know what you are confessing, I suppose.

MR GRAY: The defendant makes its decision as to what it says it can justify. The English cases in fact led to the Polly Peck decision and it was the adoption of the Lord Justice Diplock approach that led to the Polly Peck approach to allow the defendant this flexibility. If one was to say to the plaintiff, you are bound by what you have pleaded strictly, you cannot go an inch away from it, then there is no occasion for allowing a defendant to raise some other imputation. It just would not be relevant. Either the plaintiff wins or loses on the precise words pleaded. That is the end of it. If he has slipped, if he has put a higher hurt, if he has misread what a reasonable man might do, although a reasonable man might have a lesser meaning of defamatory, he is out of court because he has made that mistake. He has wrongly assessed how a court will say, or a jury or judge, will say a reasonable man might react. He has got that wrong.

That presents a certain fickleness about it that does not really accord with justice. It is very difficult to say of a pleader who believes he has been wronged - particularly if he is emotionally charged it - that he is going to be able to correctly pick how a judge or jury might say a reasonable person would read a document. One only has to look at this case. We have four judges having quite a range of different views about what the reasonable person would say words mean.

McHUGH J: Yes, but the problem may be, as I put to you earlier, that people have been pleading consequences of imputations rather than the imputations themselves.

MR GRAY: That is a matter that can be dealt with at the pleading stage. If the defendant feels there is that embarrassment he can apply and say this is not a matter that arises fairly. You plead a consequence and not an imputation and please be specific about it. If you want to plead - - -

GUMMOW J: Particulars are not pleadings.

MR GRAY: Regrettably, in this jurisdiction, they are. Our rules actually - - -

GUMMOW J: Maybe they should not be.

MR GRAY: - - -make our particulars part of the pleadings. They actually define particulars to be part of our pleadings under - - -

GUMMOW J: They are particulars of pleadings, they are not pleadings.

MR GRAY: But if, to answer your Honour directly, the plaintiff elected to plead a false innuendo as part of his pleaded meaning and the defendant said, you are pleading conclusions, that can be dealt with as a pleading debate, if the defendant was embarrassed about that and totally prejudiced.

GUMMOW J: That is why I have some difficulty with Polly Peck. It contains a not entirely satisfactory account of some English 19th century cases after the Common Law Procedure Act of 1852 and at page - I have the All England Report - it jumps into particulars under the English system. It is nothing to do with anything that is happening under the Common Law Procedure - - -

MR GRAY: If the Court pleases, we would answer those criticisms by saying that all this has developed out of what was seen to be a convenient and pragmatic way of approaching these issues, as the Full Court of Victoria have described it. That history, they brought up the history there very clearly as to how it has come about, why it has come about, why it has been of use and the way in which it is controlled so that there are no prejudices that follow. And I do not know that I can advance the point beyond that.

McHUGH J: But they are only calling on English practice there. There was not much defamation in Victoria before 1989. You had the occasional case but they were few and far between.

BRENNAN CJ: They did have the advantage of a Judiciary Act.

MR GRAY: If the Court pleases, it is not just Victoria.

McHUGH J: This practice that they refer to is really set out, if I recollect rightly, in Olim's Case. The English courts refer to this same sort of thing as is referred to in the Victorian decision.

MR GRAY: But the other dilemma is that if one has the statutory regime that is in place in New South Wales, then that leads to its own problems. One could speak of the practical problems that follow from that for a long time, and they do not exist in those jurisdictions, but it is a very significant difference that, in the New South Wales courts in that State, they have a different practice that is statute based and necessarily so. Now, I do not know that I can further advance - - -

KIRBY J: I suppose we have to be careful, as a national Court, not to be too overborne by New South Wales' practice.

MR GRAY: Indeed. I was wondering if I might leave that particular topic. If I had the opportunity over night to reflect on Polly Peck, I would like to have the opportunity tomorrow to address shortly in the morning.

If the Court pleases, the next matter I want to take the Court to is the Wrongs Act 1936 . The Court will find a copy of part of the Wrongs Act in the appellant's list of authorities. It is behind tab 14. I wanted to take the Court immediately to the section concerned. The entire Act is not reproduced but this particular part of the Wrongs Act is complete in itself. It is described as the Wrongs Act. Its history is that this particular section or, in all relevant respects, this section was enacted in 1895 as the Law of Libel Amendment Act 1952 of South Australia.

BRENNAN CJ: What section are we looking at?

MR GRAY: We are looking at section 7, if the Court pleases. So although this is referred to as 1936, the origin of this section are 1895. It provides that:

(1) A fair and accurate report.....of the proceedings of -

.....

(c) a meeting of any royal commission -

and then down to the further paragraph, and the publication by a newspaper -

shall be privileged unless it is proved that the report or publication was published or made maliciously:

Then there are three provisos and the second of those I wish to draw attention to in particular. It is a proviso (b):

the protection intended to be afforded by this section shall not be available as a defence in any proceedings if it is proved that the defendant has been requested to -

publish by the same newspaper -

a reasonable letter or statement by way of contradiction or explanation of such report.....and has refused or neglected to -

do so. I have not read all of the words but I believe I have read the material words. So section 7, a fair and accurate report privilege, is simply not available if there has not been accorded to the defamed party the opportunity, the reasonable opportunity to put his position.

Now, that represents, at a policy level, something of a fair exchange, a privilege for a fair and accurate report, providing that the defamed party has an opportunity to reasonably put forward their position. Now, a question arises as to what is meant by "a reasonable letter" and at this point of the submission we wish to draw attention to the fact that Parliament saw fit not to talk about an accurate statement of facts, an accurate letter, in the sense of it must be true and accurate. It does not use - - -

KIRBY J: Given that the purpose is to inform the public of the other point of view, it is pretty hard to suggest that an inaccurate letter is going to - - -

MR GRAY: Quite so. But there is a question of reasonable from whose point of view and we say it is reasonable from the point of view - - -

BRENNAN CJ: Why whose point of view, as distinct from an objective point of view?

MR GRAY: Objective in the sense of a reasonable man standing in Mr Chakravarti's shoes.

BRENNAN CJ: Why?

MR GRAY: Because it is his contradiction, his explanation that is to be put forward.

BRENNAN CJ: But it is the quality of the letter that is in question, not the conduct of the person who writes it.

MR GRAY: Yes, but is one to take - perhaps I can come to the facts of this case to illustrate what we say is an important point and why the question of what test is applied is critical. We have put a chronology with the outline of argument. If the Court would turn to that chronology.

BRENNAN CJ: But does it not turn, for this purpose, on the question of the fact that Mr Chakravarti was working on the uncorrected transcript?

MR GRAY: Yes.

BRENNAN CJ: And the fact was, as found by the trial judge, that that transcript was inaccurate?

MR GRAY: Yes.

BRENNAN CJ: And does it not then turn on the question of whether or not the assertion by Mr Chakravarti that there was no answer was an unreasonable assertion?

MR GRAY: Yes, it does.

BRENNAN CJ: Then what is the question for us to determine?

MR GRAY: Because there are some facts that are relevant to what occurred against which reasonableness is to be assessed, and the facts that your Honour the Chief Justice has summarised are materially incomplete. If I could take the Court to the chronology, the Court will see the fuller picture.

The chronology on page 2 addresses 14 July 1992 about halfway down page 2. On the right-hand side the Court will find a reference to the transcript page where this is to be found. On 14 July Mr Simmons gave evidence to the royal commission. On that day the journalist, Ms Read, had available in her possession the unamended transcript having the question not answered. Then on 15 July, Mr Chakravarti contacted a Mr Townsend. Mr Townsend was a principal legal officer working as a member of the royal commission staff assisting - instructing counsel assisting Mr Jacobs. Mr Townsend advised Mr Chakravarti that the transcript did not refer to him. So he had that oral advice from the solicitor.

He then went and inspected the transcript and he then wrote his letter. The Court will find his letter - it is perhaps important to go to it - at page 862 in volume 4.

KIRBY J: Have you done an analysis similar to the one you did on the imputations of the other issues in the case and how they fell? I do not think you won this with anyone, did you, this point,?

MR GRAY: No, we lost this - we have not done that analysis in a spreadsheet. We lost this issue at every stage of the case.

KIRBY J: May it not be helpful if we had an analysis similar to the one that you handed us that shows - - -

MR GRAY: I will have that prepared over night, if your Honour pleases.

At 862 on this point, it is the third paragraph, Mr Chakravarti does not say Mr Simmons did not make the allegation. What he says is:

I do not believe that Mr. Simmons either intended to or did make any allegation to the Premier.....of criminal or civil misconduct which extended to me.

So here is a man who has gone, he has spoken to the solicitor who has told him he is not referred to, he has gone and read the transcript that does not contain Mr Simmons saying that and he then writes to the newspaper who hold that transcript, showing the unanswered question, saying "I do not believe Mr Simmons" did something. Now, any reasonable person in Mr Chakravarti's position would have come to that conclusion. There was nothing more he could have done.

GAUDRON J: Do you go so far as to say any reasonable person at that stage, except, perhaps, the royal commissioner, himself?

MR GRAY: If he had gone and spoken to the transcript reporter, she would have told him, "I did not hear any answer". If he had gone to the junior counsel appearing before the commissioner, Mr Lane, Mr Lane would have said, "I did not hear any answer".

BRENNAN CJ: What did Ms Read hear? The reporter, what did she hear?

MR GRAY: The reporter said she did not hear the answer. What she went on to say was she did not hear an answer and did not record an answer. She went on to say if Mr Jacobs said he heard an answer she could not gainsay that, but she did not hear an answer.

BRENNAN CJ: Sorry, the newspaper reporter, Read.

MR GRAY: I am sorry. Debra Read claimed that she had heard an answer.

BRENNAN CJ: That is right. She wrote the article.

MR GRAY: Yes. I am sorry; I thought your Honour meant the court reporter.

KIRBY J: The problem for you is that the adjective qualifies the word letter or statement. It is not the conduct of Mr Chakravarti that has to be reasonable, it is letter or statement, and this brings you back to the question of the Chief Justice. It seems that what you have to establish in order to get this special protection is that the letter was objectively a reasonable letter.

MR GRAY: That would mean that someone in Mr Chakravarti's position, no matter how reasonably he behaved, no matter what he did, could never get the protection of this proviso.

BRENNAN CJ: That is right.

MR GRAY: Yes, and we would say, with respect, that the Court would be constrained not to construe the proviso to cause such a result.

BRENNAN CJ: But the reason for it is because of the curious and unfortunate omission on the transcript on this occasion, is it not?

MR GRAY: Yes, of course. The matter goes on, if the Court pleases, that on the chronology, nothing happens as far as the royal commission is concerned until 28 July, at page 3.

BRENNAN CJ: Just as a matter of principle, let us assume that this article was a perfectly fair and reasonable report of what happened in the royal commission, and that the answer, "Yes", was, in truth, given and heard by the reporter who writes the article. If, having heard that answer, the person who is now the plaintiff, says to the newspaper, "That was never said", and the newspaper does not publish it because the reporter heard the answer being given, does the newspaper lose its protection?

MR GRAY: We would say that Ms Read claims she heard this said. But, she knows the official transcript does not record it.

BRENNAN CJ: Be it so.

MR GRAY: So, then, she takes it to the editor. The editor is aware of that when he receives the letter, and all he reads in the letter is not an assertion that Simmons did not say this, the assertion from Chakravarti is that "I believe Simmons did not implicate me".

KIRBY J: Yes, but the editor, when he got it, had the corrected version and therefore would have thought this was not a reasonable thing to do.

MR GRAY: No, that is my point. He did not get the corrected version. The corrected version did not come through until August, a month later. This issue was not taken up - - -

KIRBY J: But I think he went to his reporter and the reporter stuck by her notes and she said, "I stand by what I said", and subsequently she was borne out.

MR GRAY: Yes, quite so. So, from the editor's point of view, he would understand that from Mr Chakravarti's point of view, his statement was quite reasonable - "I do not believe Mr Simmons said this". He would understand that to be reasonable, because he would know Mr Chakravarti would be able to get access to a transcript.

McHUGH J: You can test it this way, from your point of view. You say, it would be a strange result if two months later it turned out that your view was right, and the failure to publish it was unreasonable, but, because two months later it turns out the other way, it was reasonable. Have you looked at the history of this section at all, as to the parliamentary debates?

MR GRAY: Yes. I do not know that we have gone as far as the debates. The section first came in in 1881 in England.

McHUGH J: I knew I had seen it somewhere before, and I could not remember seeing it in terms of South Australia - - -

MR GRAY: There is a book of our materials, if the Court pleases, that we have put together.

McHUGH J: What I am wondering about, Mr Gray, is whether or not the question of reasonableness has anything to do with the reasonableness of the contradiction or the explanation, as opposed to link defamation of other people, and so on. On one view it is there to allow you to contradict something that is said. Apart from the words in brackets in the third paragraph, on any view it would be very difficult to see why this was not a reasonable letter. It is difficult to see that this would not be a reasonable letter, apart from the words in brackets, and one asks oneself why should that make any difference.

KIRBY J: Was there any suggestion that the paragraph could be worked by, as it were, deleting a phrase. Justice Cox said he was unhappy about the result he felt driven to but - - -

MR GRAY: Yes, but felt the court could not direct the newspaper to go about an editing process. Chief Justice Doyle takes the view the newspaper makes its election and runs its risk, but that does not really help in that...... The object of this section, and the Law Reform Commission comments have effect, that the object is to allow for the other side of the story to be put. Of course, the newspaper can do a rejoinder.

McHUGH J: Exactly.

MR GRAY: There is no reason why the newspaper could not say, "Here is Mr Chakravarti's letter. We wish to point out to our readers that he asserts his belief. Our reporter was present in court and heard Mr Simmons answer the question". No reason at all why it could not deal with it that way and, in fact, perhaps not from the Bar table, but examples of that are known to the court in the press. It happens. The Advertiser was well able to accommodate this. That editor, as he sat there at his desk, knew that Chakravarti was asserting a belief and had a reasonable basis to do so. He knew that he was only in an advantaged position because he had his own reporter there who gave him a different account. He knew that he had the ability to publish Mr Chakravarti's position, to allow him to defend himself against the currency of these rumours immediately and deal with the matter by way of a rejoinder.

McHUGH J: It leads to some strange results if you are going to get into examine the reasonableness of the contradiction or reply, as the case may be. The newspaper could say, "Well, look, seven bishops gave evidence in this court case against this particular defendant. He wants to publish a letter saying he is not guilty of these offences? We are not going to publish it." Perhaps that is not what the section was concerned to give him the opportunity of their reply in that situation.

MR GRAY: We had hoped that the submission that the test to be imposed was the reasonable man in Mr Chakravarti's shoes would accommodate the matter. If one applied that test, one would say that this letter was perfectly reasonable.

GAUDRON J: But would it not be perfectly reasonable by anybody's standards, except perhaps the royal commissioner and the lady journalist?

MR GRAY: Yes.

GAUDRON J: In a particular situation where there was, at best, uncertainty?

MR GRAY: We would respectfully adopt that position and we would also add that one could not have asked Mr Chakravarti to do anything more. He phoned the legal officer assisting the commission. He went and viewed the transcript.

KIRBY J: I think you are taking it the wrong way. Looking at it from what is reasonable, Mr Chakravarti, the adjective qualifies the letter but the letter must be a letter that can work in the context of this provision which is a provision for virtually instant responsiveness and the reasonableness is looking, on your submission, as I understand it, at questions such as length, content and - - -

MR GRAY: Adopting that position we would - - -

KIRBY J: The problem with the other is that there are statutory formulae, for example in the Insurance Contracts Ac,t which specifically refer to a person in the position of the plaintiff and it is just not what is used here. The adjective qualifies the letter.

MR GRAY: Yes, I do not want to labour the substance but it does talk about, it is a letter of a particular type. It is a reasonable letter of contradiction.

GAUDRON J: Or explanation.

MR GRAY: Or explanation.

GAUDRON J: So it can be about other matters not necessarily directed to the report?

MR GRAY: And once the word "reasonable" is to qualify a letter of a particular quality or type, one of explanation , then it becomes much easier to construe the proviso - - -

GUMMOW J: Reasonable, in a way, it may have a suggestion of reason rather than abusive.

MR GRAY: Yes. We would respectfully - we obviously would put both contentions - - -

KIRBY J: You adopt both points.

BRENNAN CJ: Mr Gray, I am sorry, have you answered?

MR GRAY: Yes, I have.

BRENNAN CJ: I will explain the difficulty that I am having at the moment. It is dealing with the defence of fair and accurate report, so the hypothesis is that there has been a fair and accurate report made. On that assumption, defamatory matter has been published by the publication of fair and accurate report. But that will not avail the publisher if the letter of this relevant kind has been not published. Now, why is it that the question of the letter is concerned with the accuracy of the report as distinct from the defamatory matter which is published by publishing the accurate report.

MR GRAY: Because in this case, obviously Mr Chakravarti had a real interest in saying "I am not guilty of these things", but on top of that he had credibility being given to those statements because of the source from which they came. It was the chairman of the State Bank that was saying it and that added the gravity. It was not just anybody saying it, it was the chairman of the Bank saying it and so he had a need to meet that as well.

BRENNAN CJ: That is right.

MR GRAY: For that reason, his reasonable letter went to that issue and he was then able to address that, having made proper inquiry, and what he put was very, very cautious for a person in his position. He did not say that Mr Simmons did not say these things.

BRENNAN CJ: If his belief was right, then there would have been no fair and accurate report. The problem would not have arisen.

MR GRAY: Quite so, but surely he is going to defend himself - - -

BRENNAN CJ: No, it is a question of what the meaning of the statute is and the difficulty I am having is to think that there is something about the content of the statute which is concerned at all with the question of the accuracy of what happened.

MR GRAY: From the point of view of, we would say, the objective position - what was the objective position? The objective position was that as at this date, 15 July, a person writing this letter would fairly believe that Mr Simmons had not said this. Any reasonable inquiry he had made - - -

BRENNAN CJ: Said where, to the Premier or to the royal commission?

MR GRAY: To the royal commissioner. It is to both, because the question put to him in the transcript is as to what he is telling Mr Jacobs he told the Premier and he does not answer the question.

BRENNAN CJ: And the defamation is as to what he told the Premier, is that right?

MR GRAY: Yes, if the Court goes to page 858 book 4. The Court has the uncorrected transcript, line 8, Mr Abbott asks Mr Simmons:

I don't want to read out all that is in it -

referring to his note -

on those two topics but did you make it clear to the Premier that with reference to Messrs Baker, Reichert, Martin and Chakravarti there was a question of either civil or criminal misconduct to be looked at.

No answer. The commissioner is shown then to ask a question. Then we say that all the questions that follow after that are dealing with the topic the commissioner raises which is what is it:

that led to the resignation of Mr Baker and Mr Reichert.

We do not come back to the wider question of Martin and Chakravarti. Anything that follows after that is in the context of Baker and Reichert. The Court can follow it through. The commission is obviously interested in the events that led to the resignation of Baker and Reichert and that was a matter that was announced in Parliament by the Premier. The point in discussion here before the royal commission was was the Premier, Mr Bannon's, statement to Parliament some time earlier accurate or not and the suggestion was being put that the Premier had misled Parliament about the reasons for the resignation of Baker and Reichert. The Premier's statement in Parliament did not concern Martin and Chakravarti, it only concerned Baker and Reichert, so the commissioner's focus was, "What am I to do with this statement the Premier made to Parliament about the reason for the resignation of Baker and Reichert?" It was being suggested he underplayed it, that he knew a lot more than he did and he did not disclose to Parliament the gravity of what was going on. That was what the commission was interested in.

BRENNAN CJ: Mr Gray, I do not want to delay you further but, for my part, the only difficulty I have with your submission with regard to the letter of 862 relates to the words in brackets.

MR GRAY: Yes.

KIRBY J: May I understand that your position is now that you do not contest that the answer "Yes" was given.

MR GRAY: No, we must accept that. There were days of evidence about it, it was a major part of the trial. Justice Jacobs gave evidence that he recalled - - -

KIRBY J: I was not seeking an explanation. I just wanted to know where you stand.

MR GRAY: For the purposes of this appeal, we have to accept that finding.

Just if I might deal with the matter that Justice McHugh raised about the history of this section. In the book we have passed up dealing with historical materials item 4 is Odgers, the 2nd Edition, the 1890 publication, and if the Court could turn to that at page 266 of Odgers there is a relevant history in regard to this matter. The Court will see that the matter starts with the Newspaper Libel and Registration Act 1881 of the United Kingdom. That is where the proviso first enters into law. That was then taken up in the 1888 English Act and that then was taken into the 1895 Law of Libel Amendment Act of South Australia that, in turn, has been the subject of the consolidation of the Wrongs Act. So, for practical purposes this section has found its - - -

GAUDRON J: And are there any decisions anywhere on it?

MR GRAY: There is only one decision that we have been able to find in any way on it and it is not helpful in the sense it is too general. We footnote that at page 13 footnote 81.

GUMMOW J: And it was repealed in the UK by the Defamation Act , was it?

MR GRAY: Yes.

GUMMOW J: No British decisions?

MR GRAY: I am sorry.

GUMMOW J: No English decisions?

MR GRAY: No, just Khan v Ahmed. There is a Canadian decision, again not helpful on the question of construction, and Khan v Ahmed has the obvious limitations that are noted in the footnote, so they are uncharted waters directly, if the Court pleases.

BRENNAN CJ: Then does the history tell us anything?

MR GRAY: Not usefully, no.

KIRBY J: Just interesting.

GAUDRON J: I would be interested if you could refer me to the Canadian decision, even though you say it is not helpful.

MR GRAY: It is referred to, your Honour, I will just pick it up.

GAUDRON J: Yes.

KIRBY J: It is an early indicium of a right of reply, really, which is, of course, the suitable solution to most defamations.

MR GRAY: It is page 12 and is referred to in the body of the text, Nowlan v Moncton.

GAUDRON J: That textual reference does not deal with this issue, does it?

MR GRAY: No, but that is the case that alludes to this proviso.

GAUDRON J: In that case, was it a fair and accurate report or was it accepted that it was a fair and accurate report?

MR GRAY: The answer is that it was. I would like to look at it overnight, if I could, and answer your Honour more directly.

KIRBY J: Is there a proviso like this in other States of Australia, or Territories?

MR GRAY: Yes, there is. To varying degrees I can give the Court the references; the Wrongs Act 1889 of Victoria 1958, section 5(3), section 5A(3); in Queensland it is the Defamation Act section 13(4); in Western Australia it is the Criminal Code, the final sentence of section 354; in Tasmania it is the Defamation Act 1957 , section 13(2)(b); in the Northern Territory it is the Defamation Act, and it is section 6(1) proviso (b); and in the ACT it is the Defamation Amendment Act, section 5, the final sentence, and that was formerly the 1909 New South Wales Act. None of them, I think, are in identical terms but - I am sorry - the Northern Territory is almost identical, but the others vary to a degree.

Now, if the Court pleases, could I move to the second article - the second letter which the Court finds at page 867 in book 4. Justice Cox dealt with this at page 892 of volume 4 and the Full Court agree with his reasons. Justice Cox found against the reasonableness of the letter on three grounds. The first was the:

description of the article as "grossly unfair and inaccurate".

The second was that there was a reference to, in the third paragraph, second-last line,

"your inaccurate and unfair reporting".

The third was the "allusion" at the start to "purported diary notes" in the third line. I would like to deal with the factual matters, if I could, first. The reference to the "purported diary note". Could the Court have regard to page 854a. Page 854a to d is what is described as a "purported diary note" and the Court will see why. It is an attendance note in the nature of an aide-memoire and it is not what the ordinary person would think of as a diary but it undoubtedly, from a business point of view, does the work of a diary. It is a contemporaneous note of an attendance and to call that document a "purported diary" is utterly reasonable. It is saying that it is a document that performs the function of a diary in the sense of an aide-memoire, but one could equally describe it as an attendance note and not a diary.

To suggest that this letter was unreasonable because the author sought to describe such an attendance note as a "purported diary" - - -

KIRBY J: Is this the same document that is referred to in the little caption in the second article, .....recorded in my diary or "would you mind repeating"?

MR GRAY: Yes, it is and that is because - - -

KIRBY J: They called it the diary themselves.

MR GRAY: They called it the diary. The concern is Justice Cox's use of the word "purported" and the letter writer was concerned that it was an attendance note that does the work of a diary and not a diary, but to suggest that to call an attendance note of that type a "purported diary" when they have described it as a diary and to say that that is unreasonable is a very harsh, with respect, approach. On Justice Cox's reasoning, if that was the only factor, he would have found this note was unreasonable.

BRENNAN CJ: Page 892, was it, you said Justice Cox dealt with it?

MR GRAY: At 892 line 6 to line 20.

BRENNAN CJ: "Purported" was picked up there as carrying the suggestion that the diary note was faked, not that it was not a diary note.

MR GRAY: Justice Cox has not gone on to say that. He has - - -

BRENNAN CJ: He has put the quotes around only one word and that is "purported".

MR GRAY: Yes, well we would say that on the face of it an attendance note does not meet the ordinary description of a diary.

BRENNAN CJ: Sure.

MR GRAY: The ordinary reader - - -

BRENNAN CJ: Be it so, Justice Cox does not contradict that.

MR GRAY: No, but to say that it is unreasonable for the author, Mr Chakravarti, to describe this attendance note as a "purported diary" does not carry any sinister imputation. It is simply something that does the work of a diary and purports to be a diary. It purports to be a contemporaneous note and that - - -

BRENNAN CJ: The criticism may be one of what Justice Cox has said, but the writer is perfectly entitled to say that this is a "purported" note even if I do not accept its accuracy. The point of controversy that, I think, you have raised is a different one, and that is that you suggest that the judge is saying that he should not have called it a diary note.

MR GRAY: No, we understood that his concern was the allusion to being "purported". His trouble was with the word "purported".

BRENNAN CJ: Yes.

MR GRAY: And we say that when one looks at the document, to describe it as a "purported diary note" is perfectly reasonable. It is not something that would touch the reasonableness of the letter.

McHUGH J: When I read it late last week I had some difficulty in understanding what it was purporting to do. It seemed on its face that it purported to do more than record something that had happened or am I mistaken? I think if you go over to 854d, for example, under the heading "Board's Position" are these things that he is alleged to have told the Premier?

MR GRAY: It is hard to know. He drew on it as an aide-memoire but it is almost in some ways a note being prepared in advance.

GAUDRON J: That is how I would read it:

Meeting set up to discuss:

MR GRAY: Yes, and it is almost as though he has prepared a note which he is going to use when he speaks to the Premier and we just find great difficulty in it being, in ordinary parlance, described as a diary note. In a sense it has the effect of a diary in that it is addressing contemporaneous events like "Dear Diary, I am going to do something tomorrow" but it is more like a commercial attendance note that somebody puts on the file.

GUMMOW J: It does not purport to be an account of what transpired at his attendance on the Premier, as far as I can see.

MR GRAY: For example, it does not contain any reference to the Premier being very angry.

GUMMOW J: It looks as if it comes before, rather than after.

MR GRAY: Our point is that it looks like it has been an aide-memoire for the discussion rather than a recording of what transpired. So the reference to it in the letter as a "purported diary note" was perfectly reasonable. It has been described as a diary note. In some ways it is like a diary note.

GUMMOW J: But a note of what?

MR GRAY: Yes, but of what? It does not present as an ordinary person which is a diary note and according to his explanation Mr Chakravarti, we would say, was quite reasonably entitled to describe it as a "purported diary note" so that the public would know that it was not quite a diary note. The other - - -

McHUGH J: But it is a matter of no little significance, on one view of it, is it, because the reader gets the impression that these were matters that were being kept by way of a diary and were recording things as they were occurring from time to time. When you look at it, it rather looks like a document being prepared to be taken along to arrange various matters with the Premier.

MR GRAY: Yes, and what is Mr Chakravarti to do? He faces that and he picks a neutral description of "purported diary". It does not close the matter one way or the other. He might have been justified in using stronger language. He has chosen a reasonable position that leaves everybody's position open. He is protected, others are protected by the use of, he would say, a fairly neutral term "purported diary note".

McHUGH J: How were they referred to in evidence? Were they referred to as "diary notes" in evidence"

MR GRAY: "Diary notes".

McHUGH J: They were?

MR GRAY: Yes, the Court will find in the passage of transcript in regard to this as being referred to as "diary notes". An example is at - I just have to check that.

McHUGH J: When I say "evidence", I mean evidence before the royal commission.

MR GRAY: Yes, there is reference to typed file notes, at 856 line 30 there is a reference to:

typed file note of that meeting.

It could be that the answer is that the word "diary" is not referred to. I need to just check that overnight. This is only part of the transcript of this. Whether the royal commissioner described them as "diary notes" when he released them is not clear.

KIRBY J: Were you going to say anything about this angry language of "grossly unfair and inaccurate"? It sounds most uncharacteristic of a defamation claim.

MR GRAY: Yes, if the Court pleases. The only matter is that from the plaintiff's point of view these allegations were pretty gross. It is being said of him that he has been a conspirator in regard to unauthorised loans and one of them involving $37 million and that there is certainly civil misconduct and maybe criminal. One would view that as being, from his perspective when none of it is true, very gross indeed. He is entitled in his explanation to say that. These are not just false allegations.

GUMMOW J: What, and have it published?

MR GRAY: Yes, he is entitled to have the public know that they are not only false, they are grossly false and that that, when viewed from his perspective, any independent reasonable observer would say was quite tolerable language to use in the circumstances.

BRENNAN CJ: Is there anything further you wish to say on this aspect?

MR GRAY: The only other aspect was that Justice Cox also, his other matter was that the complaint was that the report was inaccurate. Well, plainly from Mr Chakravarti's point of view that was a reasonable statement. It was inaccurate and he was saying bluntly, "You have got it wrong and I want your readers to know it is wrong." and that was the position. So we say that that letter, when it is understood from his position, is very reasonable.

Might one say, if the Court pleases before Court adjourns, the final point on this is that he has just been dismissed. The first article was published, he is off work for two days, he goes back to work, he is dismissed peremptorily and his first letter has not been published and he then reads this article now accusing him of gross misconduct. In that circumstance, we say his response to be viewed in the light of that circumstance, was reasonable. That is all on that topic, if the Court pleases.

BRENNAN CJ: How long do you expect the balance of your argument to take, Mr Gray?

MR GRAY: If the Court pleases, I would hope for less than an hour.

BRENNAN CJ: How long do you expect to take, Mr McClintock, as best you can judge?

MR McCLINTOCK: I will not finish before lunch, your Honour, if Mr Gray takes another hour. I would say I would finish about half an hour after lunch. I may even go longer, your Honour, I would have to be frank about it. It is very hard to estimate.

BRENNAN CJ: We will adjourn until 10 o'clock tomorrow morning.

AT 4.33 PM THE MATTER WAS ADJOURNED

UNTIL TUESDAY, 2 SEPTEMBER 1997