Dow Jones & Company, Inc v Gutnick [2003] HCATrans 385 (3 October 2003)

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Dow Jones & Company, Inc v Gutnick [2003] HCATrans 385 (3 October 2003)

Last Updated: 17 October 2003

[2003] HCATrans 385

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Melbourne No M195 of 2003

B e t w e e n -

DOW JONES & COMPANY, INC

Applicant

and

JOSEPH GUTNICK

Respondent

Application for special leave to appeal

GLEESON CJ
GUMMOW J
HAYNE J

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON FRIDAY, 3 OCTOBER 2003, AT 10.42 AM

Copyright in the High Court of Australia

MR T.F. ROBERTSON, SC: May it please the Court, I appear with MR M.G. LYNCH for the applicant. (instructed by Gilbert & Tobin)

MR J.L. SHER, QC: May it please your Honours, I appear with my learned friend, MR M.F. WHEELAHAN, for the respondent. (instructed by Schetzer Brott & Appel)

GLEESON CJ: Yes, Mr Robertson.

MR ROBERTSON: Your Honours, this application raises two issues of importance in the law of defamation. The first is a pleading point, but it transforms itself into a substantive legal issue. The second is the extent to which the so-called extended defence of common law qualified privilege extended by reference to the principles discussed in Lange’s Case is subject to a gloss or further condition that in order to rely upon the defence it is necessary that the publication, on one view - on another view, the imputations pleaded by the plaintiff - not only relate to a matter of political or governmental affairs but is also necessary for the workings of representative and responsible government.

The learned trial judge, applying that gloss, struck out the defendant’s defence of extended common law qualified privilege. That in any terms is a serious step to take before any findings of fact were made by the court. It was done on a pleading summons. So the assumption is that the defendant was able to make out the factual basis for the defence, but it was not available, as a matter of law, because of the application of the gloss, of which we speak.

The first matter raised in the application for special leave we describe as a pleading issue. It is this. Where a plaintiff pleads imputations said to be defamatory of the plaintiff published by the defendant, is the defendant then able, in pleading a defence of justification, to state other or different imputations? If so, to what extent can those other imputations differ from the imputations pleaded by the plaintiff?

HAYNE J: Now, the other imputations which you sought to plead, did they depend upon other parts of the article, that is, parts of the article other than those of which the plaintiff complains?

MR ROBERTSON: In part, yes, but in part, no, as I shall proceed to demonstrate. Can I take your Honours to page 15 of the application book which contains that part of the article of which the plaintiff complains. The heading is “Unholy Gains” and then the statement is made “When stock promoters cross paths with religious charities, investors had best be on guard”. The first full paragraph deals with the fact that Mr Gutnick, who has amassed a fortune, was, with the help of a US bank, trying to get investors to put $500 million into a hedge fund he plans to run. Omitting the next paragraph and going to the paragraph commencing, “Gutnik may be most revered for his charitable work”, at the bottom of the picture on the left-hand side, the sentence beginning:

But some of Gutnik’s business dealings with religious charities raise uncomfortable questions. A Barron’s investigation found that several charities traded heavily in stocks promoted by Gutnick. Although the charities profited, other investors were left with heavy losses.

In addition, Gutnick has had dealings with Nachum Goldberg . . . Another individual with ties to Gutnick is Judah Wernick, who is now awaiting trial for stock manipulation in New York. Barron’s has found that Wernick used religious charities to finance his ventures and manipulate stocks.

Now, if your Honours would go to the pleading which is set out at 21 – this is the defence that is struck out of which complaint is made today – your Honours will see that it commences with the statement:

“That the Plaintiff is a devious businessman who should be investigated by U.S. regulators -

that is, as it were, a reference to the concluding words of the article, which are not in the part of the article complained of but are at page 33 at line 30 in the statement:

Clearly, U.S. regulators need to take a closer look.

That is the conclusion of the article proper. The next statement:

in any event American investors should beware of Gutnick-promoted shares and American depository receipts and his new hedge fund helped by Chase Manhattan Bank.

That is a combination of a heading “investors had best be on guard” and a statement that Mr Gutnick was moving a large amount of capital to the United States to invite investors to participate in a hedge fund. The next statement:

This is because the Plaintiff has stated that he intends to increase his business in the U.S. -

a reference back to the first paragraph of the article -

and there is reason to suspect that U.S. based religious charities have been used to manipulate the price of the stocks he has promoted in the U.S., arranging for the charities to make profits but leaving other investors to suffer losses.

That is a reference, back on page 15, to, in broad terms, the allegation made at lines 45 to 50 on that page. Then if you go to the particulars that are provided, the first particular about “irrational predictions of wealth” does not appear in the matter complained of. That is a reference to page 27 of the application book at lines 40 to 45 in the article. The next one does:

(ii) the profit taken by U.S. based charity Colel Chabad as the result of selling its shares in the Plaintiff’s company shortly before the price collapsed -

is a reference back to the allegation made on page 15, lines 45 to 50. No (iii) about “the trading record of American depository receipts”, which are share equivalents in the plaintiff’s companies, does not appear in the matter complained of but appears at pages 27 to 28 of the article. The next three particulars, (iv) (v) and (vi), each appear in one form or another on pages 15 to 16 of the application book. The last particular does not. It is a reference to pages 34 to 35 of the application book.

So the answer to your Honour’s question is that in part the alternative meaning pleaded, what we say was the common sting of the article, is founded in part upon the matter complained of. So, far from this not being a suitable vehicle for a special leave application to resolve the questions left outstanding in Chakravarti and whether the application of the principles discussed by the majority in Chakravarti lead to the conclusion that a defendant, in pleading an alternative imputation, has to go under the plaintiff’s imputation, not depart from it, that is have a less serious imputation and one that is a mere nuance, a mere variant of what the plaintiff pleads, can be determined on the facts of this case because, despite the width in some respects of the Polly Peck defence, it is nonetheless firmly founded in that part of the article of which complaint is made.

What we say is complaint is made in the plaintiff’s imputations concerning a species of a genus, essentially an imputation. The point of the defamation action is to find the reputation of the plaintiff and answer the question whether it has been improperly exposed, if you will, then the imputation has to relate to the aspect of character or reputation that lowers the opinion of the plaintiff in the minds of reasonable persons.

Having regard to that, it is appropriate to permit a defendant, in the context of a defamation trial, to identify a meaning which is at a higher level than the meaning pleaded by the plaintiff, that may be more serious than the meaning pleaded by the plaintiff, but nonetheless depends upon the same factual substratum as the plaintiff complains in the matter complained of on which he sues, this being in common law where the cause of action is, of course, the publication of the matter complained of rather than the more refined cause of action in New South Wales and possibly Queensland of the imputation.

HAYNE J: Now, how, if at all, do you relate what appears in that paragraph of the defence which raises Polly Peck to what appears in the statement of claim and is it relevant to attempt to relate them?

MR ROBERTSON: Yes. The first question is whether it is relevant to relate them. We say that it is relevant not to match, as it were, or seek to match the refinements that the defamation lawyers have made to the matter complained of, but to ask this question, “What is the meaning that a reasonable reader would place upon the matter complained of in respect in which it is said to affect the character of the plaintiff?” and then - - -

HAYNE J: But do I misread the statement of claim as focusing at least upon the suggestion that because of dealings with Nachum Goldberg, Mr Gutnick was associated with money laundering and tax evasion?

MR ROBERTSON: Well, that is certainly the context from which it is drawn, your Honour, but what affects the reputation of Mr Gutnick is the imputation that he acted unlawfully or the imputation that he engaged in sharp practices and the imputation that he was a tax evader or money launderer. We say that one is then entitled to look at what is in truth the reflection the article makes on the plaintiff’s character.

If it reflects on the plaintiff’s character in that respect, according to other facts that are not brought into play by the plaintiff in his imputation, then it is open to a defendant to plead those facts in answer and say, based upon that material, what an ordinary reasonable reader would, after reading this article, be left with, the impression that reader would be left with, is that the defendant is alleging that the plaintiff is disreputable or dishonest in his business dealings in a particular area in, we say, abuse of religious charities, which is one of the themes of the Goldberg allegation.

So that if the true object of a trial for defamation is to find out the truth about reputation, then one looks at the imputation as a statement of the manner in which the character of the plaintiff is affected by the publication. So one does not look, as it were, to the fact that it might have been in relation to Mr Goldberg, if in truth the reputation the plaintiff is seeking to recover by the action is a reputation for honesty or a reputation for abiding by the law, then a defendant is entitled to plead an imputation which may be more serious and not a mere nuance of the imputation crafted by the plaintiff.

Your Honours, the effect of the Hore-Lacy rule, which has been adopted in the Victorian Court of Appeal, is stated at page 42 of the application book at paragraph 19. There is no doubt that the statement made by his Honour that:

The effect of Hore-Lacy is to confine a plaintiff who pleads specific meanings by way of false innuendos or imputations to a case which relies upon those meanings or, at least, relies upon meanings which are not substantially different from those pleaded and are no more injurious than the meanings pleaded -

is correct. The majority held in Hore-Lacy that that rule, which they derived from the majority’s decision in Chakravarti, applied also to the defendant, so the defendant was similarly confined. That would, as it were, reverse the practice which had taken hold in the defamation pleading of pleading common stings, because a common sting frequently is not a mere variant and in some cases is not, of course, less serious.

The principle in Chakravarti we say was expressed in relation to a plaintiff departing from a pleaded meaning in a jury trial where questions of fairness and surprise are paramount. The effect, however, of adopting the Hore-Lacy rule can be seen in this case because of the submissions put to the Court of Appeal, which the Court of Appeal accepted, that the statement of the imputation by the plaintiff confined the subject matter of the defence of qualified privilege. So that instead of just confining the subject matter of justification, the plaintiff could only plead a defence of qualified privilege in relation to matters concerning Mr Goldberg in the way in which it is said the plaintiff was involved with him.

The plaintiff could not, it is said, or cannot now, once the pleading rule in Hore-Lacy is adopted, plead a defence of qualified privilege to the occasion of the publication, that is, to its subject matter. So the pleading rule has been extended now into a restriction of a substantive defence in the law of defamation.

The second matter which we say is appropriate for special leave concerns the Lange principle. His Honour dealt with that at page 50 of the judgment. At page 51 at paragraph 42 he said:

The constitutional implication of freedom of communication about government and political matters is grounded in the nature of representative government. However, that freedom of communication is not absolute. It is limited to what is necessary for the effective operation of that system of representative and responsible government provided for by the Constitution.

Then he concludes on those premises:

In order to attract the extended qualified privilege expounded in Lange there must be a nexus between the subject being discussed in the allegedly defamatory words and the concepts of representative government.

Not a nexus between political and governmental matters, but between the concepts of representative government. Then on the following page at the bottom of paragraph 43, at point 30 on that page, he said:

If political or “Lange” qualified privilege was not confined by a concept somewhat narrower than merely a discussion of a subject which was of relevance to government there would be scarcely an area of human activity which would be outside its reach. The limiting factor must be that the discussion sought to be protected must not only be of a subject relevant to the political process but also one relevant to the existence and operation of representative government.

Now, it is our understanding of the way the court dealt with the extension of this defence in Lange’s Case that once the notion of a constitutional requirement for freedom of communication was understood – and that itself involved the nexus so to speak – the common law shifted to accord with it. It was no longer necessary to apply the test that the court applied for the purpose of finding the constitutional implication as an additional factor in determining the availability of a common law defence. The common law defence stood or fell on whether it was for the common convenience of society now that it be recognised that there be a duty or interest in imparting or receiving information on political or governmental affairs. That is the true test - the question which his Honour should have asked. His Honour asked himself the wrong question.

This is a matter of great significance, in the context of this case, because it means that we have been stripped of an area of qualified immunity, and we have been stripped of that before an investigation of facts has taken place. The defence itself looks, once the groundwork for it is established, to the conduct of the defendant, whether it was, as it were, a responsible journalist in publishing the material.

GUMMOW J: Where do we find the pleading of the qualified privilege - - -

MR ROBERTSON: The pleading of the defence, your Honour, is at page 22 and 23. It is at page 23 in paragraph (b). There are two defences. The first is the subscriber newsletter-type defence and the second is the common law discussion of political and government matters. It is simply pleaded in (i):

the Article as published related to subjects of public interest which were also political and government matters affecting the people of Australia.

Those were the assertions of fact. His Honour looked at the article and said that even if the discussion in the article concerned governmental matters, it was after all – and this is the part of the article of which complaint is expressly made by the plaintiff – it is about tax evasion, money laundering and whether there are unprosecuted criminals out there in the community whose participation in Mr Goldberg’s money-laundering scheme has never been disclosed.

GLEESON CJ: Thank you, Mr Robertson.

MR ROBERTSON: If the Court please.

GLEESON CJ: Yes, Mr Sher.

MR SHER: If your Honours please, this is an attempt to appeal a pleading summons, which normally would require a very special circumstance. All these points can be raised after trial if they have been wrongly decided, but at this particular juncture, with a defamation that is now nearly three years old, the defendants are still attempting to raise arguments of law. There has been a trial fixed for next month, your Honours, but that trial date will have to be vacated because subsequent to this particular pleading summons the defendants delivered a further defence making further pleas, which were challenged, and his Honour is yet to rule on that particular argument. So the 5 November date will have to be vacated.

Now, your Honours, it is important to bear in mind, in our respectful submission, in considering this matter, what the Court of Appeal said when it refused leave to appeal about two matters. If I can ask your Honours to look, firstly, at page 102 of the Court book. Your Honours will find there reference to an aspect of this case which is, in our respectful submission, critical to a consideration of these issues. What the court there said at the top of the page was:

Further, the words of the article giving rise to the imputations relied on by the plaintiff have already been recognised by this Court as separate and discrete. It follows that the attempt made by Mr Robertson this morning, to claim the protection that might be available to the rest of the article if considered as relating to “political and governmental matters affecting the people of Australia”, fails.

Indeed, it is useful to look, your Honours, more closely at the defence to which reference has already been made in relation to the Polly Peck defence at page 21, particularly at line 31, where your Honours will see that the meaning sought to be relied on by way of defence and in relying on justification was dependent upon the article as a whole. Your Honours will there see that it is pleaded:

(the Article), which Article meant and was understood to mean -

So it is quite clear what the defendant is attempting to do here is to rely upon the whole of the article.

Now, the point my learned friend made about relying on part of what was complained of by the plaintiff is no answer - and was not an answer in Templeton v Jones, nor was it an answer in the recent decision in United Kingdom applying Polly Peck in Cruise. If your Honours have our list of authorities, I can quickly take your Honours to the relevant facts in each of those cases to show that where a plaintiff complains of a discrete matter arising from a larger matter, it is not to the point that there are other aspects of the larger matter that are necessarily referred to.

In Templeton v Jones, which is under tab 3 of our authorities, your Honours will find at page 450, towards the top of the page, the description of that part of the article which led to the allegation in that case that the plaintiff had been defamed. At line 6 it is set out, and the part complained of was within this part:

‘Among other things, Mr Templeton described Mr Jones as a man who despised bureaucrats, politicians, women, jews and professionals’ –

The only complaint the plaintiff made was of the allegation that he was anti-Semitic and that was, as your Honours will observe, part of the larger part of the article.

In the case of Cruise, which is under tab 2, the article, which is set out in some detail on page 937, contained wide-ranging allegations of an alleged defamatory nature against Tom Cruise and Nicole Kidman. They complained of many aspects of that article. The actual complaints they made are set out in the judgment, but relevantly for present purposes it is sufficient if I take your Honours to page 955 in the judgment of Lord Justice Brooke, because they had not complained of the fact that they were accused of being members of the Church of Scientology and certain disparaging things said about it. If I can take your Honours to the middle of the paragraph at about C, your Honours will see a sentence commencing with the words:

Their case is that the stings about their characters of which they complain are totally distinct from any sting the article may contain about their adherence to the Church of Scientology -

and his Lordship went on to consider other aspects. In the next paragraph, in paragraph E, his Lordship continued:

The judge was of the opinion that there was no common sting between the other allegations which were made and the allegation in relation to the Church of Scientology, and he therefore struck out paragraphs 6 and 7 of the defence. In my judgment he was entitled to do so. The stings contained in the meanings pleaded in paragraph 4 of the statement of claim are freestanding charges. If anybody thought it was defamatory to say of the plaintiffs that they were members of the Church of Scientology, the plaintiffs do not complain of it, and this allegation, if defamatory, is unconnected with the maters of which they do complain, which relate to their arrogance, their perfidiousness about the true state of their marriage, and so on. The judge was in my judgment correct to hold that this libel action should not be permitted to get out of control by allowing the defendants to justify or plead fair comment in respect of a quite separate and distinct sting, if indeed it be a sting at all, of which the plaintiffs make no complaint.

Now, here the plaintiffs complain of a particular aspect of the article, of a part of the article. It is separate and distinct. It has been so held. That point has not been appealed, and it was a consideration which moved the Court of Appeal in refusing leave to appeal in this instant matter.

Now, your Honours, that being the case, why should the applicants now be given leave to appeal to challenge the correctness of the decision in Hore-Lacy which, even if it were not the law, would not have protected this pleading. This pleading would have fallen foul of Polly Peck, as did the pleading in the case of Cruise. It is, in our respectful submission, not to the point that Hore-Lacy may or may not be correctly decided because on either view of the law, Hore-Lacy or Polly Peck, its defence was correctly struck out.

As to the question of the status of Hore-Lacy, it is accepted in practice in the State of Victoria. It has not been said by any appellate court to be wrongly decided. Three judges in Western Australia – Justices Anderson, Steytler and Hasluck – have followed it. One judge, Justice McLure, has on a pleading summons expressed some disagreement with Justice Ormiston’s judgment in Hore-Lacy insofar as it affects a plaintiff’s ability to go beyond the pleaded meanings. But if there is a problem in Western Australia, the Western Australian Full Court can sort that out.

In New South Wales two judges have referred to it. Justice Simpson has followed it and Justice Levine has suggested there is a state of flux. With respect, Justice Levine is incorrect. But in our respectful submission Hore-Lacy is good law. It was applied here correctly. Even if it were not applied, the defence would still have been struck out. This case is, therefore, not an appropriate vehicle for this issue to be resolved on appeal.

The second point that was raised concerning the Lange qualified privilege defence – my learned friend has complained in his written submissions and orally that in some way the decision in Hore-Lacy has had some effect upon the defence of qualified privilege. Well, they are ships passing in the night. Hore-Lacy is about justification. It is not about qualified privilege. The reason why there cannot be in this case a reference to the matters of which my learned friends want to refer to is not because of Hore-Lacy but because of the ruling in Templeton v Jones. That is what prevents them from going beyond the matters complained of by the plaintiff, not the rules relating to pleading justification.

To go back to Lange, assume for the purposes of argument that his Honour did incorrectly attach importance to the concept of representative government in determining whether this was a government or political matter. It would have made no difference, in our respectful submission, and that is the view adopted by the Court of Appeal. Can I take your Honours back to their judgment at page 101 and to line 34. Now, in dealing with this particular ground of appeal, that is, the view his Honour formed about the application of the Lange qualified privilege defence, their Honours said this in line 34:

Here the defendant’s argument depends upon the extended concept of qualified privilege expounded in Lange v ABC, for the particulars assert that the article containing the words complained of by the plaintiff related to subjects of public interest which were also “political and governmental matters affecting the people of Australia”. This claim was rejected by the judge and although the defendant now argues that the judge applied an irrelevant test by referring to “the concepts of representative government”, we consider that the result was still beyond argument.

That, with respect, is clearly correct. If I can take your Honours to the Lange plea, which my learned friend referred you to, at page 23 of the application book, we can see that what happened to the defendant here was that it fell at the first hurdle. The plea was that there was a discussion of political and government matters and it was asserted that:

(i) the Article as published related to subjects of public interest which were also political and government matters affecting the people of Australia –

The government interest plea is irrelevant. The question is whether the discussion was of a political or government matter. Now, to suggest that to say of a person that they are a tax evader and a money launderer raises a political and government matter because governments make laws in relation to tax evasion and money laundering would, in effect, apply a test which would mean that there would be nothing virtually beyond the State and federal governments – and Lange applies to State governments as well –which would not make any discussion of anything that could be done by government a political or government matter. That is why this proposition that my learned friend has put was clearly wrong and that is why they fell at this particular hurdle.

It is not to the point whether or not his Honour might have incorrectly said something about government or political matter being the nexus. The fact of the matter is that what was alleged here could not conceivably, on any sensible view, be a government or political matter and no factual inquiry would be needed. It was on its face, by reference to the article itself, the subject matter of it and the imputations it conveyed clearly not a political and government matter. So giving leave to appeal to raise the question of the correctness of the judge’s approach would, in our respectful submission, lead to no different result.

Now, your Honours, this is a defamation case. The plaintiff is anxious to get to trial. It is now three years later. This is a different occasion than the last, in which your Honours gave special leave to consider a very important, so far as appellate courts were concerned, undecided point about publication on the Internet. This application concerns aspects of two defences, commonly discussed in courts at first instance and occasionally at appellate level. In our respectful submission, it is not appropriate for this Court to intervene in this matter at this stage. If the Court pleases.

GLEESON CJ: Yes, Mr Robertson.

MR ROBERTSON: May it please the Court. The submissions that we make depend upon the correctness of his Honour’s finding that the plaintiff was able to sever the matter complained of in the way he did. We have sought to address the availability of the two defences which have been struck out on that assumption.

What underlies the complaint concerning the qualified privilege defence is an assertion – and I think my learned friend made it in his submissions – that the imputation pleaded by the plaintiff is not a subject matter relating to political or governmental affairs. In one sense no imputation can be because the imputation is the act or condition which it is said the defendant has attributed to the plaintiff that lowers the plaintiff’s reputation. The whole process of imputation pleading is to personalise the imputation so that it is on a different plane to the subject matter of the article. It is an implication, an inference affecting reputation.

So in one sense there would be very few defamation cases where a defence of qualified privilege could be raised. But that is not, we respectfully submit, the law. The defence of qualified privilege is to the occasion of publication. It is plain from the very words of which complaint is made, and which are picked up in one of the plaintiff’s imputations, that the subject matter of the Goldberg allegations relates to a matter which is central to political or governmental affairs. That is set out, if you like, at page 17 in the article, where it quotes Judge Strong, who said at line 40:

Because the Goldbergs refused to give evidence on their wealthy clients, Judge Strong growled, “the principal beneficiaries of this fraud are not before this court. There are a number of such persons at large in the community today because of the prisoners’ unwillingness to identify them. They are masquerading as reputable citizens, but they are in fact thieves.”

That is picked up by the plaintiff in his imputation (c) at page 12, paragraph 5:

the words meant and were understood to mean that the plaintiff –

. . .

(c) was masquerading as a reputable citizen when he was, in fact, a tax evader who had laundered large amounts of money through Nachum Goldberg –

The subject matter of that publication is not the imputation, it is the article, that made a very direct criticism, it might be taken, of the fact that the beneficiaries of Goldberg’s fraudulent activities had gone unpunished. That, we respectfully submit, relates directly to a depredation upon the exchequer of the Commonwealth. That must go centrally to a matter of importance for political or governmental affairs. If it please the Court.

GLEESON CJ: We will adjourn for a short time to consider the course we will take.

AT 11.20 AM SHORT ADJOURNMENT

UPON RESUMING AT 11.24 AM:

GLEESON CJ: The applicant seeks special leave to appeal to challenge interlocutory orders made striking out two paragraphs of its defence to a claim of libel. The respondent sought to plead and justify defamatory meanings different from those alleged by the applicant. The meanings alleged by the applicant depend upon what the Court of Appeal considered to be separate and discrete parts of its article, different from the parts of the article about which the respondent complains.

This case is not a suitable one in which to examine the limits of the Polly Peck (Holdings) PLC v Trelford [1986] QB 1000 defence considered in Chakravarti v Advertiser Newspapers (1998) 193 CLR 519. Even if principles wider than those stated by the Court of Appeal in David Syme & Co Ltd v Hore-Lacy [2000] VSCA 24; (2000) 1 VR 667 were to be adopted, an appeal against the order striking out the respondent’s defence in this respect would enjoy insufficient prospects of success to warrant a grant of special leave. Likewise, for the reasons given by the Court of Appeal, an appeal against that part of the order striking out the defence based on Lange v Australian Broadcasting Corporation [1997] HCA 25; (1997) 189 CLR 520 would enjoy insufficient prospects of success to warrant a grant of special leave. The application is dismissed with costs.

We will adjourn for a short time to reconstitute.

AT 11.27 AM THE MATTER WAS CONCLUDED