Radio 2UE Sydney Pty Ltd v Chesterton

SPIGELMAN CJ: In this matter I have read the judgment of McColl JA in draft. I agree with her Honour that Mr Evatt’s submission that her Honour directed that the jury determine the business reputation imputations in accordance with a “community standards” approach should be rejected. I agree with her Honour that, considered as a whole, the direction to the jury would have been understood as not requiring the jury to assess whether the three business reputation imputations were defamatory in accordance with the standards of the general community.

Accordingly, it is necessary to determine whether this Court should follow the reasoning in Gacic v John Fairfax Publications Pty Ltd [2006] NSWCA 175; (2006) 66 NSWLR 675. McColl JA sets out the relevant passages together with the significant support for the reasoning of this Court in the two joint judgments of Gleeson CJ and Crennan J and Callinan and Heydon JJ on appeal in John Fairfax Publications Pty Ltd v Gacic [2007] HCA 28; (2007) 230 CLR 291.

The relevant passages were an essential part of the reasoning of this Court in Gacic. The Court should not depart from such previous authority unless it is clearly satisfied that the decision was erroneous. McColl JA has set out with force and clarity the reasons why such a conclusion should be drawn. Nevertheless, I have come to the view that the defects her Honour identifies are not sufficiently clear or determinative to justify the Court departing from a recent judgment of this Court which has, in relevant respects, attracted support from the High Court on appeal.

There is no single authoritative statement of the interests which the law of defamation protects nor of reasons why those interests are protected. There have been numerous attempts at definition, few of which distinguish between the process for determining what words mean from whether the meaning is defamatory. It is only the second question that arises here. The issue is whether it was necessary for the trial judge to explicitly direct the jury as to the standard by which they should determine whether the imputations in issue on this appeal were defamatory, and specifically, whether it was necessary to refer to community standards as constituting that standard.

There have been numerous attempts to express in words the concept of defamation and the standard by which it must be assessed. (See the numerous examples set out in Raymond E Brown The Law of Defamation in Canada, 2nd ed (1994) Carswell at par 4.2(2) and the critique in par 4.2(3)). The formulation perhaps most frequently relied upon in this jurisdiction is that of Jordan CJ in terms of a publication “which is likely to cause ordinary decent folk in the community, taken in general, to think less of [the plaintiff]”. (See Gardiner v John Fairfax & Sons Pty Ltd (1942) 42 SR(NSW) 171 at 72; Consolidated Trust Co Ltd v Browne (1948) 49 SR(NSW) 86 at 88.) There is no doubt that this is an appropriate test in numerous cases, perhaps in most.

Another broadly equivalent test is that of Lord Atkin in Sim v Stretch [1936] 2 All ER 1237 at 1240; (1936) 52 TLR 669 where his Honour referred to the effect upon “right-thinking members of society generally”. It is, however, instructive to set out the full context in which the frequently cited test of Lord Atkin appears. It is as follows: “The question, then, is whether the words in their ordinary signification are capable of being defamatory. Judges and textbook writers alike have found difficulty in defining with precision the word ‘defamatory’. The conventional phrase exposing the plaintiff to hatred, ridicule, or contempt is probably too narrow. The question is complicated by having to consider the person or class of persons whose reaction to the publication is the test of the wrongful character of the words used . I do not intend to ask your Lordships to lay down a formal definition, but after collating the opinions of many authorities I propose in the present case the test: would the words tend to lower the plaintiff in the estimation of right-thinking members of society generally?” (Emphasis added)

The publication in issue in Sim v Stretch was not a publication to the world at large, but a telegram addressed to the person alleged to have been defamed. It is in this context that the general test identified by Lord Atkin was found to be the appropriate one. Such a direction was necessary in that case because the jury may otherwise have been under the impression that a standard particular to the sole recipient of the telegram could have been appropriate.

It is of significance that his Lordship referred to the test in terms of what the authorities suggested was appropriate “in the present case”. His Lordship did not suggest that the test was applicable in every case. Indeed, the contrary is indicated by that part of his Lordship’s reasons which states that it is necessary: “to consider the person or class of persons whose reaction to the publication is the test of the wrongful character of the words used”.

Lord Atkin’s reference to the need to consider the persons whose reaction to a publication was referred to and applied by Willmer J in Drummond-Jackson v British Medical Association [1970] 1 WLR 688. That case concerned a publication in the British Medical Journal of an article criticising a technique developed by the plaintiff for use in dentistry. Willmer J said at 700H: “In the present case the plaintiff is an experienced dental surgeon, and the article complained of relates to dentistry; and this circumstance, I think, is sufficient to indicate the class of persons whose reaction to the publication is to be considered.”

As McColl JA notes, the approach of Willmer J in Drummond-Jackson v British Medical Association has been applied in some Australian cases. (Her Honour refers to Switzerland Australia Health Fund Pty Ltd v Shaw (1988) 81 ALR 111, FAI General Insurance Co Ltd v RAIA Insurance Brokers Limited (1992) 108 ALR 479 and Nixon v Slater & Gordon [2000] FCA 531; (2000) 175 ALR 15; Morgan v Mallard (1997) 68 SASR 184.) Such an approach receives significant support in the judgment of Callinan and Heydon JJ in Gacic , set out by McColl JA, where their Honours apply, at [190], the standards relevant to the business in question, being “restaurant standards” rather than “community standards”.

Injury to the reputation of a person in his or her trade, profession or business is also a matter which directs attention to a narrower section of the community than the whole. It is, in my opinion, arguable that, accordingly, the relevant test is not of the character for which the appellant contends.

No complaint is made on this appeal of any failure by her Honour to direct attention in some specific way to the relevant group. In any event, it may be taken to be subsumed within her Honour’s direction that the jury had to be satisfied that the relevant imputations did in fact damage the respondent “in his professional reputation” [62] or “damaged him … in the practice of his profession as a journalist” [60]. In each case the reference to “damage” directs attention to the conduct of those whose response could relevantly have that effect.

Notwithstanding the authorities set out by McColl JA, which suggest the contrary, there is, in my opinion, authority in support of the reasoning in Gacic. This Court should not give leave to the appellant to invite the Court to overrule it.

In the case of an imputation directed to the impact upon reputation generally – whether by means of lowering estimation or by means of shunning and avoiding – it will be appropriate and, on occasions, necessary to ensure that the jury is aware that community standards is the relevant test. In the case of impact upon the reputation of a person of a trade, professional or business character, it will, on the above analysis, usually be unnecessary to ensure that the jury is made explicitly aware that it is the standards of the persons who interact with the plaintiff in those respects which are pertinent.

In my opinion, the appeal should be dismissed with costs.

HODGSON JA : The judgment of McColl JA sets out the circumstances giving rise to this appeal and the issues it raises.

I am indebted to McColl JA for her careful review of the authorities, but I respectfully disagree with some of her conclusions.

In particular, in my respectful opinion, there is in her Honour’s discussion a conflation of two concepts that are similar but that are best kept distinct, particularly in consideration of issues concerning matter alleged to be defamatory in having a tendency to injure a person’s business reputation. These concepts are those of the ordinary reasonable reader (or as in this case, listener ) and of community standards . In my understanding, the decision of the Court of Appeal in Gacic v John Fairfax Publications Pty Ltd [2006] NSWCA 175; (2006) 66 NSWLR 675 turned on a distinction between these two concepts, and this approach was confirmed by most of the judges of the High Court on the appeal from that decision in John Fairfax Publications Pty Ltd v Gacic [2007] HCA 28; (2007) 230 CLR 291. In that regard, in my respectful opinion, these decisions were correct.

In my opinion, these decisions correctly support the following propositions: (1) The question whether published material conveys an alleged imputation is to be determined by the tribunal of fact by considering whether the imputation would be conveyed to the ordinary reasonable reader (in which I would include listener or viewer). Similarly the question of whether the imputation is defamatory, that is, whether it tends to injure the plaintiff’s reputation, is also to be determined by considering whether it tends to injure the plaintiff’s reputation in the view of the ordinary reasonable reader. (2) In a case where the plaintiff alleges that the tendency is to injure his or her reputation in the area of general character and conduct, then the ordinary reasonable reader must be considered as accepting community standards and viewing the matter in the light of those standards: that is, there must be a tendency to convey to the ordinary reasonable reader who accepts community standards that the plaintiff’s character or conduct falls short of the standards. (3) However, in a case where the plaintiff alleges that the tendency is to injure his or her business reputation, then the ordinary reasonable reader must be considered as viewing the matter in the light of the reader’s understanding of what are the requirements for fitness or competence for the plaintiff’s business: that is, there must be a tendency to convey to the ordinary reasonable reader that the plaintiff’s fitness and/or competence falls short of what, in the understanding of the ordinary reasonable reader, are the requirements for the plaintiff’s business.

In my opinion, these propositions are generally consistent with the authorities referred to by McColl JA, except to the extent that in some of them there are statements to the effect that the publication must tend to lower the plaintiff’s reputation in the eyes of “right-thinking men”. That expression is unexceptionable in circumstances where the plaintiff alleges a tendency to injure his or her reputation in the area of general character and conduct; but it could be seen as carrying the suggestion that the assessment of whether what is imputed falls short of some standard is always to be assessed having regard to community standards. In my opinion, to that extent, the expression could be misleading.

The case of Reader’s Digest Services Pty Ltd v Lamb [1982] HCA 4; (1982) 150 CLR 500 could be seen as contrary to the propositions I am advancing. However, the question being addressed by Brennan J at 505-7 was whether, where no true innuendo is pleaded, the question of defamation could be determined by reference to how the matter would be understood by a hypothetical reader within some narrower class than the community generally; and his Honour (with the concurrence of other members of the High Court) held that it could not. However, in the course of the judgment, Brennan J also referred to the sharing of a moral or social standard by which to judge the defamatory character of the imputation; and in that respect, in my opinion, the judgment should be considered as applying to defamation in relation to general character and conduct.

I do not see anything in the judgment of the majority of the High Court in Favell v Queensland Newspapers Pty Ltd [2005] HCA 52; (2005) 79 ALJR 1716, that is inconsistent with the propositions I am supporting.

McColl JA refers to some authorities that have, contrary it would seem to the view of the High Court in Reader’s Digest , supported the view that the question of defamation may be judged by reference to an hypothetical member of a narrower class than the community as a whole. It is not necessary to consider whether such an apparent departure from Reader’s Digest can be supported.

In my opinion, the propositions I have stated are supported by the judgments of the Court of Appeal in Gacic , including the statement by Beazley JA at [40] in that case to the effect that there “could be business defamation even though the defamatory statement did not lower the defamed person in the estimation of right-thinking members of the community”. I do not, with respect to McColl JA, read Beazley JA’s judgment as failing to recognise the necessity that imputations must reflect on the plaintiff’s reputation; nor do I see any inconsistency between the Court’s de-emphasis of community standards in relation to business defamation and its insistence on reference to what is conveyed to the ordinary reader.

In my opinion also, the propositions I have stated are supported by the judgment of Gleeson CJ and Crennan J in the High Court in that case, particularly in paras [2] and [6] quoted by McColl JA; and by the judgment of Callinan and Heydon JJ, particularly in paras [189]-[190] quoted by McColl JA.

The judgment of Gummow and Hayne JJ in that case is, in my opinion, not inconsistent with the propositions. The statement in para [53] of their judgment that it is sufficient that an imputation “be such as is likely to cause ordinary decent folk in the community, taken in general, to think less of [the plaintiff]” is to some extent against the propositions I am supporting, in bringing together the concept of the ordinary reasonable reader and community standards. However, the particular problem being addressed in this judgment was not then being addressed by them.

The question then is, was the primary judge in error in her directions to the jury. The relevant parts of her directions have been quoted by McColl JA in para [54] of her judgment.

I agree with McColl JA that there is an error in the last three lines of para [60] of those directions, if they are taken in isolation. The question is not whether the imputations damaged the plaintiff in the practice of his profession as a journalist, but rather whether they tended to damage him in respect of his reputation in his profession as a journalist. However, that the jury is being directed to consider the question of injury to reputation is indicated in the first two lines of the same paragraph, and is made quite clear in the following paras [61] and [62].

Apart from that matter, in the light of the propositions I support, I do not see any error in the primary judge’s directions to the jury.

For those reasons, in my opinion the appeal should be dismissed with costs.

McCOLL JA: This appeal concerns the question of the directions a trial judge should give to a jury hearing a defamation case about how to determine whether imputations found to have been conveyed by a publication tend to injure a person in his or her trade, business or professional reputation (“business reputation imputations”). Is the jury to be directed that that issue is to be determined in accordance with community standards, meaning thereby matter which has a tendency to make ordinary right-thinking people think less of the plaintiff? If not, what standard is the jury to apply?

I have concluded that in a case in which the plaintiff pleads business reputation imputations the jury should be directed that the question whether those imputations are defamatory turns on whether the hypothetical referee, whose standards are taken to reflect those of ordinary right-thinking people, would conclude that they tended to injure the plaintiff in his or her trade, business or professional reputation. Statement of the case

On 8 August 2005 the following words were broadcast on radio station 2UE on the John Laws Morning Show (the “matter complained of”): “Well that bombastic, beer-bellied buffoon Ray Chesterton, writes a column in the Telegraph called “The Final Word”. Well it’s not the final word today. What’s the matter with you, Ray? I mean, you know, I always knew you were a bit of a creep, but can’t you get over it? He was fired by 2UE and blames me for it. He’s never got over it and he talks about the Joey Johns saga and say [sic] Meanwhile the Johns saga is starting to run out of motivation. You know that when 70-year-old disc jockeys are drawn into the fray to support the argument. I talked to Joey Johns because I wanted to, because he is a friend of mine, a word you probably wouldn’t understand because I doubt you’d have any, and those that you do have call you ‘Ankles’ for a very good reason. I don’t know. Why can’t you get over it, Ray? I mean, you used to enjoy going to my farm and I used to give you the house and you used to take your family and your children up there. I was very happy that all took place. But why can’t you get over it? Well, I suppose you have some kind of inferiority complex. Well, I have to tell you, I have never met a man who deserved one more.”

Ray Chesterton, the respondent, a journalist who writes a column in the Daily Telegraph, brought proceedings against Radio 2UE Sydney Pty Limited, the licensee of the radio station and, therefore, the broadcaster of the matter complained of. He alleged that the matter complained of conveyed, in its natural and ordinary meaning, the following imputations: (a) The plaintiff is a creep in that he is an unpleasant and repellent person; (b) the plaintiff is a bombastic, beer bellied buffoon; (c) as a journalist the plaintiff is not to be taken seriously; (d) the plaintiff was fired from Radio 2UE; (e) the plaintiff falsely accuses John Laws of being responsible for his dismissal from Radio 2UE; and (f) the plaintiff is an ungrateful person in that he accepted the hospitality of John Laws and then attacked him.Although there was no pleading to this effect, in due course, the respondent’s counsel put his case to the jury on the basis that the three italicised imputations went to “his professional standing”. I shall refer to these as the business reputation imputations, although it should be observed that in this Court, Mr C A Evatt, who appeared for the respondent with Mr R K M Rasmussen at trial and on appeal, conceded that (b) was “a bit shaky” as an imputation going to the respondent’s reputation as a journalist.

The respondent also alleged that the following imputations were conveyed by way of true innuendo: (g) The plaintiff is a liar in that he says that he is a teetotaller when in fact he has consumed sufficient alcohol to make him overweight; and (h) the plaintiff is a despicable person.

A trial pursuant to s 7A of the Defamation Act 1974 (the “1974 Act”) to determine whether the matter complained of carried the imputations pleaded by the respondent and, if it did, whether each imputation was defamatory of him took place before Simpson J and a jury of four commencing on 17 July 2007.

The Second Further Amended Statement of Claim, (in its form as it was at the time of the s 7A hearing) did not, as it ought, allege that any of the imputations was defamatory of the respondent (cf Uniform Civil Procedure Rules 2005 14.30(2)(b)) nor did it set out the relief sought. Furthermore, it did not set out the “time honoured formula” that the respondent had “been greatly injured in his credit and reputation and has been brought into scandal, odium and contempt and has suffered and continues to suffer loss and damage”: TK Tobin and MG Sexton , Defamation Law and Practice , LexisNexis [25, 100].

When he opened the case to the jury, Mr Evatt, said to the jury: “Defamation is about reputation. It is about what right-thinking members of the community think about a person or your business or, in this case, your reputation as a journalist. Are things said about you that would tell against your reputation, your business reputation as a journalist or your standing in the community among right-thinking members of the community. Defamation or defamatory meaning or defamatory allegation [sic, allegations] can severely injure a person’s reputation in his business or trade or profession, a journalist here. Any imputation or meaning which suggests unfitness or incompetence for a trade or profession is defamatory ….”

After the close of the respondent’s case, which included calling evidence which went to the true innuendoes, counsel addressed the jury. In the course of his address, Mr Evatt addressed the jury on the basis that it would find the business reputation imputations were defamatory “if [the jury] thought that would injure him and his professional reputation as a journalist”. In the case of the third business reputation imputation, he added “…and people would think less of a person who is fired. ” He also contended that: “Mr Laws used this programme and his wide listening audience to lodge a personal attack on Mr Chesterton conveying serious imputations, all of which are defamatory, all of which injure Mr Chesterton’s reputation, either as a journalist or in the eyes of right-thinking members of the community.”

When he concluded his address Mr R G McHugh of Senior Counsel, who appeared for the appellant at trial, addressed the jury. One of Mr McHugh’s arguments was that the matter complained of was not defamatory because it amounted to vulgar abuse: see Mundey v Askin [1982] 2 NSWLR 369 at 371 – 2. It will be necessary to return to this issue. In the course of his address Mr McHugh put submissions to the jury about the meaning of something being defamatory. He informed them: “The crucial point about ‘defamatory’ is that it means that ordinary reasonable people, the same ordinary reasonable listeners I have been talking to you about, would actually tend to think the less of the plaintiff as a result of hearing it. If you think about it, that’s quite a high standard. It’s: would you actually really, as an ordinary reasonable listener, tend to think less of the plaintiff because of it … would an ordinary reasonable listener think less of Chesterton as a result of hearing it? That’s important in this case and that’s where we say abuse comes in … ”

After Mr McHugh completed his address to the jury, Mr Evatt sought a number of directions. He asked the primary judge to direct the jury that there were two basic tests of defamation: will the words lower the esteem of the plaintiff in the minds of right-thinking members of the community or would the words have a tendency to injure the plaintiff in his business or trade or profession as a journalist?

Mr McHugh submitted that the respondent had not pleaded a claim that he had been hurt in his business reputation and that what he had put to the jury was consistent with the respondent’s case being advanced as an “orthodox defamation claim”. Mr McHugh contended that a direction to the jury that if the matter complained of was defamatory, it may impact upon the respondent’s professional reputation begged the question of whether the imputation was defamatory. He argued that the issue for the jury was whether a fair ordinary minded right-thinking person might think less of the respondent and that depended upon the standards of a cross section of the community.

Mr Evatt submitted that the direction he sought was consistent with the decision of this Court in Gacic v John Fairfax Publications Pty Ltd [2006] NSWCA 175; (2006) 66 NSWLR 675 and, on appeal, John Fairfax Publications Pty Ltd v Gacic [2007] HCA 28; (2007) 230 CLR 291. He contended that the High Court had been unanimous that injury to business reputation was capable of being defamatory.

These submissions were made at the end of the first day of the s 7A hearing. When the hearing resumed the next day Mr Evatt was absent but his junior, Mr R Rasmussen, handed to the primary judge written submissions concerning the legal points which had been debated the previous evening. Insofar as what they termed “business defamation” was concerned, the written submissions argued that the Court of Appeal in Gacic had upheld an appeal by the plaintiffs in a s 7A trial because, although the plaintiffs’ case had been based on injury to business reputation, counsel for the defendant had addressed only on whether the imputations would lower the plaintiff in the estimation of right-thinking members of the community. The submissions drew attention to Beazley JA’s statements in Gacic at [46], [50], and to Handley JA’s agreement with her Honour at [6] which, relevantly were: Beazley JA “[46] …However, the comment as a whole was both misleading and, in my opinion, incorrect. It did not draw the jury’s attention to the distinct nature of business defamation. In particular, the comment did not inform the jury that there could be business defamation even though the defamatory statement did not lower the defamed person in the estimation of right-thinking members of the community… [50] … In my opinion, the direction given by her Honour was wrong. It was incumbent upon her Honour to direct the jury that in the case of a business defamation, it did not matter whether the published material lowered the person in the eyes of right-thinking members of the community…. Handley JA [6] …I agree with Beazley JA that the failure to give firm clear directions to this effect occasioned a substantial miscarriage of justice and the verdicts for the defendant on these imputations must be set aside.”

Mr Rasmussen submitted that imputations (b), (c) and (d) were those which were advanced as affecting the respondent’s business reputation.

Mr McHugh made further submissions about the direction the primary judge ought to give the jury on this point. In substance he argued that even in the case of imputations which might be seen to affect a person’s business reputation, the question whether or not that injury was suffered had to be determined by reference to community standards. He argued that Mr Evatt’s submissions would have the effect that when one was dealing with imputations said to affect a person’s business reputation, community standards were irrelevant. He suggested that that would create a new category of defamation. He argued that to the extent the High Court judgment in Gacic touched upon the issue of business reputation, the statements by the various justices were obiter dicta .

Mr McHugh accepted that the Court of Appeal’s decision in Gacic (at [46]) was against him and that the primary judge was bound by it. However he argued that because of the way Gacic was run at trial and in the Court of Appeal, the decision of this Court was per incuriam .

Mr McHugh also argued that he would be prejudiced if her Honour directed the jury on the basis Mr Evatt sought as he had addressed the jury on the basis of the case pleaded and, he contended, advanced by Mr Evatt in his address, that this was not a case of business reputation. The primary judge observed that it was open to Mr McHugh to make an application, by which I understand her Honour to have suggested to Mr McHugh that he could, if he wished, make an application further to address the jury. Mr McHugh did not make any such application.

The primary judge rejected Mr McHugh’s submission. She accepted that she was bound by the decision of this Court in Gacic to inform the jury that in the case of imputations said to affect the respondent’s business reputation, it did not take into account community standards.

Her Honour sought assistance from Mr Rasmussen about what test she ought to instruct the jury to apply observing that as she read Gacic both in the Court of Appeal and the High Court, neither judgment suggested what the test was in relation to business reputation imputations. In response, Mr Rasmussen urged her Honour to adopt the statement from paragraph [2.7] of P Milmo and W V H Rogers, Gatley on Libel and Slander , 10th ed (2004) Sweet & Maxwell (“ Gatley ”) that: “To say of a person carrying on any trade or profession or holding any office that he is incompetent at it, may not even lower him in the estimation of others, but the words will be defamatory because of the injury to his reputation in his trade, profession or office …” The primary judge accepted that submission.

In summing-up the primary judge outlined the nature of the proceedings to the jury. When she explained the nature of an imputation she informed it that: “17 …The test of to whom the imputation is conveyed is the ordinary reasonable listener…”

In explaining the nature of defamation her Honour’s outline informed it: “[19] If you say yes in answer to that question to any of the imputations [conveyance] then you ask yourself was that imputation defamatory, that is did it damage the reputation of Mr Chesterton. In that respect the test to apply is the test of ordinary reasonable members of the community. If the ordinary reasonable member of the community considered that the imputation was defamatory of the Plaintiff, Mr Chesterton, then that imputation is defamatory of him. I will refine that in a little while, but that is the general test.”

The primary judge then turned her attention to the specific issues the case posed for resolution. First she dealt with the issue of whether the imputations were conveyed by the broadcast. She explained the concept of the “ordinary reasonable listener”. It is unnecessary to set out her Honour’s directions on this aspect in detail. Suffice it to say that after emphasising that that listener was “a hypothetical person” and not either herself, a member of the jury or counsel, she outlined that person’s qualities as “reflect[ing] community views, standards, attributes and behaviour”. She elaborated on that person in traditional terms (summing-up at [23]–[24]) which it is unnecessary to repeat: see John Fairfax Publications Pty Ltd v Rivkin [2003] HCA 50; (2003) 77 ALJR 1657 (at [23]–[26]) per McHugh J; Amalgamated Television Services Pty Ltd v Marsden (1998) 43 NSWLR 158 (at 165) per Hunt CJ at CL; Lewis v Daily Telegraph Ltd [1964] AC 234.

Her Honour then explained how the jury should determine whether any of the imputations found to have been conveyed was defamatory. She said: “[25] Now I told you that I would say some more about the meaning of defamatory and I can do that fairly quickly. It means something that is disparaging, something that is derogatory, something that is damaging to reputation and this is important, something that would make ordinary decent members of the community think less of the plaintiff. [After dealing with other issues, her Honour returned to this issue] [54] ... I have mentioned something that is defamatory is something that is disparaging or derogatory to reputation and you measure that against community standards. That is, what would ordinary decent people in the community think? That is the test that you apply in relation to the sixth imputation contained in question A. * [ * It is tolerably plain that this is a transcription error and that her Honour instructed the jury that this was the test it would apply in relation to the six imputations contained in question A, which related to the six false innuendoes, three of which were the business reputation imputations.] [55] You listen to the broadcast. You ask yourselves what that would have conveyed to ordinary reasonable listeners, and in doing so you apply the standards of the community. What would ordinary decent people in the community have drawn from that? And you also apply that to whether or not it was defamatory, you apply the standards of ordinary decent members of the community. [56] In other words, by reference to those people, would any of these imputations, if conveyed, have damaged Mr Chesterton’s reputation? [57] There are two different ways in which a person can be defamed. One is in his personal reputation. Somebody might publish something about a person that injures him in his personal reputation; in other words, right-thinking members of the community would think the less of him because of what was published. [58] There is another way in which a person can be defamed. It was adverted to by Mr Evatt as ‘business reputation’. In fact, in this case, it probably would be more accurate to say Mr Chesterton claims to have been defamed in relation to the practice of his profession as a journalist. These imputations really divide into those two categories. [59] Imputations (a), (b) [ ** sic, the reference should be to (e)], (f), (g) and (h) are all of the first kind, that is they are imputations of something personal about Mr Chesterton’s personal reputation. If you decide that any of those imputations would have been conveyed by the broadcast, then you ask whether that imputation would be regarded by ordinary right-thinking members of the community as defamatory, as damaging to his reputation. [ ** It was agreed on appeal that this was a transcription error and “(b)” should be read as “(e)”.] [60] Imputations (b), (c) and (d) are imputations concerned with Mr Chesterton’s reputation in his profession as a journalist and in that respect you ask yourselves whether the imputations, if conveyed, damaged him in that respect, that is in the practice of his profession as a journalist. [61] Let me give you an illustration of this: a person might say ‘X’ is a thoroughly decent person, but he is getting old, his eyesight is poor and his hands tremble. You probably would not think any less of ‘X’ if you heard that said about him. But, if you knew that ‘X’ was a surgeon who depended on good eyesight and a steady hand, you might think, well, that does not do his professional reputation any good, I would not want that person operating on me. [62] So what is then said about him is something that damages him in his professional reputation, although it would not have damaged him in his personal reputation. That is the distinction between the two classes of imputations that you have here. [63] You have got three that I have mentioned, (b), (c) and (d) that are concerned with Mr Chesterton in his professional reputation and you have got the remaining five that are to do with his personal reputation. They do not say anything about him in his professional reputation, but they go directly to his personal reputation. [64] On the other hand, to say that as a journalist he is not to be taken seriously, is very much to do with his professional reputation ...”

Her Honour then dealt with issues concerning the true innuendos. At the conclusion of the summing-up the primary judge asked counsel whether they sought any further direction. Mr McHugh replied that her Honour had heard his submissions. Mr Rasmussen made further submissions which her Honour did not accept. Mr McHugh informed the Court on appeal, without demur from the respondent’s counsel, that the jury returned with answers to the questions in 45 minutes.

The jury found that all the respondent’s imputations were conveyed and were defamatory. Grounds of appeal

The appellant complains that the primary judge erred in directing the jury in the manner set out in par [57]–[62] above. It also complains that her Honour erred in directing the jury in accordance with this Court’s decision in Gacic which it asserts was wrongly decided. Finally it complains that the jury erred in finding that each of the imputations pleaded was conveyed and was defamatory. This last ground of appeal was not pursued orally or in writing. If successful, the appellant seeks an order setting aside all the jury’s findings given on 18 July 2007 and a new s 7A trial. Submissions

Mr McHugh, who appeared for the appellant on appeal with Ms J L Chambers, seeks leave, if leave be required, to re-argue this Court’s decision in Gacic. He submits that Gacic is incorrect, does not rest upon a principle carefully worked out in a significant succession of cases, has wide consequences and is clearly contrary to earlier decisions of this Court and the High Court: see Clutha Developments Pty Ltd v Barry (1989) 18 NSWLR 86 (at 100–101) per Gleeson CJ (Samuels and Priestley JJA and Hope AJA agreeing).

Mr McHugh submitted that at common law, there is no separate category or sub-variety of defamation relating to “business defamation” with a separate test as to defamatory meaning. He argued that under the 1974 Act the applicable law governing the issue of defamatory meaning is the common law: s 4(2). He contended that the orthodox test of defamatory meaning was stated in Gardiner v John Fairfax & Sons Pty Ltd (1942) 42 SR (NSW) 171 (at 172) per Jordan CJ.

Next Mr McHugh argued that the passage from Gatley quoted in Gacic (at [32]) does not correctly state the law, is not supported by the authorities cited, and appears to be inconsistent with other passages in Gatley , in particular paragraph [2.27]. He contended that nothing in Gatley supported a separate test for defamation that involved no more than a tendency to “injure the plaintiffs in their trade or business” (cf Gacic at [2] (per Handley JA) and the trial judge’s direction in Gacic quoted at [41] (per Beazley JA)).

Accordingly Mr McHugh contended the submissions of the respondent to the jury and the primary judge’s directions were wrong as a matter of law, were highly prejudicial and caused the s 7A trial to miscarry in its entirety.

Mr McHugh submitted that if the Court upheld his primary contention, there should be a new trial on all imputations. He argued that the distinction drawn in the primary judge’s directions between “personal” and “business” reputation imputations was bound to confuse the jury in their task in relation to all imputations. He contended that any retrial not involving all imputations would involve a manifest injustice to the appellant.

In his written submissions Mr Evatt accepted that the “prevailing test for defamatory meaning for injury to personal reputation and business reputation appears to be community standards”, although he suggested that Callinan and Heydon JJ may have rejected the community standards test in Gacic (at [189]–[190]). He submitted, in any event, that the primary judge had applied the community standards test for which the appellant contended. When pressed in oral argument, Mr Evatt accepted that the community standards test was the standard to be applied to “business defamation”, a submission which was starkly at odds with that which he advanced at the trial and for which he successfully contended in Gacic in this Court.

Mr Evatt argued that in Gacic (at [50]), Beazley JA had referred, in the sense I understand of approving, to the application of community standards. Next he contended that community standards had a role in determining whether business reputation imputations were defamatory, albeit that the importance of that role could vary depending on the type of imputation involved and the degree of community standards required. He contrasted an imputation attacking the plaintiff’s reputation as a scientist with one imputing a person was a child molester or a serial killer. He contended that community standards may play a lesser role in the former than the latter case. He did not elaborate on this submission.

Finally Mr Evatt submitted that the appellant’s submission that there was no separate category of business defamation was incorrect. In support of this proposition he cited T Starkie, A Treatise on the Law of Slander and Libel , 2nd ed (1830) J & W T Clarke (the 1832 edition to which Mr Evatt refers is the New York publication of the same work) and G Spencer Bower, The Law of Actionable Defamation , 2nd ed (1923) Butterworth (republished by Legal Books in 1990). The effect of the summing-up

It is first necessary to consider Mr Evatt’s submission that despite the primary judge acceding to his submissions, her Honour had, nevertheless, directed the jury in accordance with a “community standards” approach.

The primary judge informed the jury that the general test to be applied in determining whether an imputation was defamatory, which she explained as meaning whether “it [d]amaged the reputation of Mr Chesterton”, was whether ordinary reasonable members of the community considered the imputation was defamatory, a proposition she said she would refine: summing-up at [19]. She repeated that direction, in substance, at [54]–[56]. However her Honour then turned to explain what she described as the “two different ways in which a person could be defamed.” The first was in relation to a person’s “personal reputation” and the other was in relation to “business reputation” which she explained in the case of the respondent by reference to his claim “to have been defamed in relation to the practice of his profession as a journalist”: summing-up at [58].

Her Honour then informed the jury that the imputations divided into those two categories, identifying imputations (a), (e), (f), (g) and (h) as being personal reputation imputations. She directed the jury that if it found any of those imputations conveyed, it then asked “whether that imputation would be regarded by ordinary right-thinking members of the community as defamatory, as damaging to his reputation”: summing-up at [59].

Her Honour then turned to the business reputation imputations, which she identified as (b), (c) and (d). She directed the jury that it asked “whether the imputations, if conveyed, damaged him in that respect, that is in the practice of his profession as a journalist”: summing-up at [60]. Her Honour illustrated an imputation which might damage a person in the practice of a profession (summing-up at [61]) and explained (summing-up at [62]) that it was the respondent’s submission that those imputations damaged him in his professional reputation, although not in his personal reputation, and that “that is the distinction between the two classes of imputations that you have here.”

In my view, taken as a whole, while the summing-up invited the jury to consider the question of whether something was defamatory by considering what “ordinary decent people in the community thought”, the distinction her Honour drew between the personal reputation imputations and the business reputation imputations was such as to invite the jury to consider that in relation to the latter, the only test was whether the imputations, if conveyed, damaged the respondent’s professional reputation as a journalist.

Because her Honour contrasted those imputations with the personal reputation imputations and specifically directed the jury that in the latter case the test to be applied was whether ordinary right-thinking members of the community would regard the imputation as defamatory, a reasonable interpretation of the summing-up is that the jury was not directed to apply that standard to the business reputation imputations. That is the view I take of the summing-up. It is consistent with her Honour accepting Mr Evatt’s submissions and applying Gacic as he argued it. Alternatively the summing-up was confusing to the extent that it referred both to the community standards test, but distinguished between two classes of imputations in a manner which had the potential to lead the jury to believe the community standards test did not apply to the business reputation imputations. Either way if the direction that community standards did not apply to the business reputation imputations was incorrect, or if the summing-up was confusing in this respect, it is possible the jury's verdict might have been different so that a substantial wrong or miscarriage will have been occasioned to the appellant which would warrant a new trial: Uniform Civil Procedure Rules, 51.53(1); AK v The State of Western Australia [2008] HCA 8 (at [59]) per Gummow and Hayne JJ.

This conclusion means it is necessary to consider the substantive appeal. The tort of defamation

The tort of defamation principally consists in the operation of defamatory matter as an actual disparagement of the plaintiff’s reputation: Slatyer v Daily Telegraph Newspaper Co Ltd [1908] HCA 22; (1908) 6 CLR 1 (at 8) per Isaacs J; Lee v Wilson and Mackinnon [1934] HCA 60; (1934) 51 CLR 276 (at 290) per Dixon J; Mirror Newspapers Ltd v World Hosts Pty Ltd [1979] HCA 3; (1979) 141 CLR 632 (at 639) per Mason and Jacobs JJ (with whom Stephen J agreed). It is the remedy provided by the law for words which injure a person’s reputation: Joyce v Sengupta [1993] 1 WLR 337 (at 341); [1993] 1 All ER 897 (at 901), cited with approval by Gummow J in Palmer Bruyn & Parker Pty Ltd v Parsons [2001] HCA 69; (2001) 208 CLR 388 (at [58]); see also Gatley (at [1.1]); J G Fleming, The Law of Torts , 9th ed (1998) LBC Information Services (at 580) (“ Fleming ”). As Stephens J said in Sungravure Pty Ltd v Middle East Airlines Airliban SAL [1975] HCA 6; (1975) 134 CLR 1 (at 16), “[t]o impute a condition to a man's business which neither reflects upon his personal character or reputation nor carries any suggestion that he is in any way responsible for that condition is … a long way short of being defamatory at common law”.

The classic definition of what is defamatory in the reputational sense was given by Lord Wensleydale in Parmiter v Coupland (1840) 6 M & W 105 (at 108); (1840) 151 ER 340 (at 341–342): “A publication, without justification or lawful excuse, which is calculated to injure the reputation of another, by exposing him to hatred, contempt, or ridicule, is a libel. Whether the particular publication, the subject of inquiry, is of that character, and would be likely to produce that effect, is a question upon which a jury are to exercise their judgment and pronounce their opinion as a question of fact."

In Capital & Counties Bank v Henty Ltd (1882) 7 App Cas 741 (at 762), after citing this passage, Lord Penzance added that while Lord Wensleydale was “only speaking of libels which affect reputation and character …[he was] not aware that those which affect a man’s credit in his trade stand on any different footing”; see also Tournier v National Provincial & Union Bank of England [1924] 1 KB 461 (at 477) per Scrutton LJ.

A person who is defamed gets damages because he or she was injured in his or her reputation, that is because he or she was publicly defamed. Damages in a defamation action vindicate the plaintiff to the public, and are consolation for a wrong done: Uren v John Fairfax & Sons Pty Ltd [1966] HCA 40; (1966) 117 CLR 118 (at 150) per Windeyer J.

According to Spencer Bower (at 3) reputation, in the case of a natural person: “…means and includes (a) in the case of a natural person- the esteem in which he is held, or the goodwill entertained towards him, or the confidence reposed in him by other persons whether in respect of his personal character, his private or domestic life, his public, social professional, or business qualifications, qualities, competence, dealings, conduct or status or his financial credit…”

As is apparent from Spencer Bower’s statement, a person's reputation is not confined to general character and standing but extends to his or her trade, business or profession, and words will be defamatory if they impute lack of qualification, knowledge, skill, capacity, judgment or efficiency in the conduct of that trade, business or professional activity: Halsbury's Laws of England, 4th ed, vol 28 (reissue), par [42], Gorman v Barber [2004] NSWCA 402; (2004) 61 NSWLR 543 (at [32]) per Mason P (Beazley and Santow JJA at 69 agreeing); Drummond-Jackson v British Medical Association [1970] 1 All ER 1094 at 1104; [1970] 1 WLR 688 (at 699) per Pearson LJ; see also Scott v Sampson (1882) 8 QBD 491 at 503 per Cave J; Berkoff v Burchill [1996] 4 All ER 1008. I will return to this issue.

It has been said that “[t]here is no complete or comprehensive definition of what constitutes a defamatory statement, since the word 'defamatory' is nowhere precisely defined” ( Halsbury, op cit ). However, as a general rule it is illegal, under the law of defamation, (and subject to defences) to publish about a person anything which is likely to cause ordinary decent folk in the community, taken in general, to think the less of that person: Gardiner v John Fairfax & Sons Pty Ltd per Jordan CJ (at 172).

Gardiner was followed in Boyd v Mirror Newspapers Ltd [1980] 2 NSWLR 449 (at 452), where Hunt J (as his Honour then was) said (footnotes omitted): “(11) To be defamatory of the plaintiff, the imputation relied upon must be such as is likely to cause ordinary decent folk in the community, taken in general, to think the less of him: Gardiner v John Fairfax & Sons Pty Ltd ; Consolidated Trust Co Ltd v Browne . At common law, in general, an imputation, to be defamatory of the plaintiff, must be disparaging of him. This much is clear from the judgments of the High Court in Hall-Gibbs Mercantile Agency Ltd v Dun and in Sungravure Pty Ltd v Middle East Airlines Airliban SAL , in which the contrary position in relation to the statutory extension to the definition of defamatory matter in the codes was contrasted with the common law position. I say that this is ‘in general’ the position, as the common law also recognizes as defamatory an imputation which, although not disparaging, tends to make other persons ‘shun or avoid’ the plaintiff, for example, by attributing to him that he is insane: Morgan v Lingen ; or by attributing to her that she has been raped: Youssoupoff v Metro-Goldwyn-Mayer Pictures Ltd , as well as an imputation that displays the plaintiff in a ridiculous light, notwithstanding the absence of any moral blame on his part: Cook v Ward ; Dunlop Rubber Co Ltd v Dunlop ; Burton v Crowell Pub Co . See also Zbyszko v New York American Inc .”

In Reader's Digest Services Pty Ltd v Lamb [1982] HCA 4; (1982) 150 CLR 500 (at 505–506) Brennan J (as his Honour then was and with whom Gibbs CJ, Stephen and Wilson JJ agreed and Murphy J generally agreed) drew together the authorities about whether or not a publication was defamatory. He said: “Where no true innuendo is pleaded and the published words clearly related to the plaintiff, the issue of libel or no libel can be determined by asking whether hypothetical referees - Lord Selborne's reasonable men (Capital and Counties Bank v Henty (1882) LR 7 App Cas 741, at 745) or Lord Atkin's right-thinking members of society generally (Sim v Stretch (1936) 52 TLR 669, at p 671) or Lord Reid's ordinary men not avid for scandal (Lewis v Daily Telegraph Ltd (1964) AC, at 260) - would understand the published words in a defamatory sense. That simple question embraces two elements of the cause of action: the meaning of the words used (the imputation) and the defamatory character of the imputation. Whether the alleged libel is established depends upon the understanding of the hypothetical referees who are taken to have a uniform view of the meaning of the language used, and upon the standards, moral or social, by which they evaluate the imputation they understand to have been made. They are taken to share a moral or social standard by which to judge the defamatory character of that imputation (Byrne v Deane (1937) 1 KB 818, at 833), being a standard common to society generally (Miller v David (1874) LR 9 CP 118; Myroft v Sleight (1921) 90 LJKB 883; Tolley v J S Fry & Sons Ltd (1930) 1 KB 467, at p 479).” (emphasis added)

As will be apparent from Brennan J’s statement of the understanding of the hypothetical referee “being a standard common to society generally”, the publication must lower the plaintiff’s reputation “in the eyes of right-thinking men generally”. A publication which only disparages a person “in the eyes of a particular section of the community but … not…in the eyes of the average right-thinking man is not actionable within the law of defamation”: Tolley v J S Fry & Sons Ltd [1930] 1 KB 467 (at 479) per Greer J.

In Favell v Queensland Newspapers Pty Ltd [2005] HCA 52; (2005) 79 ALJR 1716 (at [9]) Gleeson CJ, McHugh, Gummow and Heydon JJ considered whether a newspaper article, published by the first respondent and written by the second respondent, was capable of bearing certain defamatory meanings. In considering how a judge should approach the exercise of determining as a matter of law whether the matter complained of was capable of bearing a defamatory meaning, their Honours approved the statement by the Privy Council in Jones v Skelton [1964] NSWR 485 (at 491); [1963] 1 WLR 1362 (at 1370 – 1) that the “test of reasonableness guides and directs the Court in its function of deciding whether it is open to a jury in any particular case to hold that reasonable persons would understand the words complained of in a defamatory sense”. They added (at [10]) that in determining what reasonable persons could understand the matter complained of to mean, the court should bear in mind that the “ordinary” person “does not live in an ivory tower … is not inhibited by a knowledge of the rules of construction [and] … can and does read between the lines in the light of his general knowledge and experience of worldly affairs”. They held (at [18]) that the imputations were capable of being conveyed.

Kirby J generally agreed with the majority’s reasons (at [19]), but criticised (at [23]–[26]) their invocation of the “fiction of the ‘ordinary reasonable reader’ to reinforce the conclusion” that the imputations were capable of being conveyed. His Honour made somewhat similar observations in Chakravarti v Advertiser Newspapers Ltd [1998] HCA 37; (1998) 193 CLR 519 (at [134]) where he accepted that “[t]he basic question … is whether the matter complained of, understood in its natural and ordinary meaning, would tend to lower the subject in the estimate of such an evocation of the ordinary, reasonable, member of society”. I do not understand his Honour’s criticisms of the invocation of the ordinary reasonable reader to strike at the standards the jury considering the question whether the imputations are defamatory should be directed to apply.

A publication is capable of being defamatory even though it arguably does no more than expose the plaintiff to ridicule, but that exposure has to be such as to tend to injure the plaintiff’s reputation. Berkoff v Burchill was such a case. There the question arose whether the following words published in a review of a film version of “Frankenstein” were capable of being defamatory of Mr Berkoff: “The Creature is made as a vessel for Waldman’s brain, and rejected in disgust when it comes out scarred and primeval. It's a very new look for the Creature—no bolts in the neck or flat-top hairdo—and I think it works; it's a lot like Stephen Berkoff, only marginally better-looking.”

Although the Court divided as to the capacity of the matter complained of to convey, as a question of law, a defamatory imputation, O’Neill LJ and Phillips LJ holding it could, Millett LJ dissenting, all were of the view that to be capable of being defamatory the matter complained of had to tend to injure the plaintiff’s reputation. After reviewing a number of authorities on what constituted defamation, O’Neill LJ concluded (at 1013): “It will be seen from this collection of definitions that words may be defamatory, even though they neither impute disgraceful conduct to the plaintiff nor any lack of skill or efficiency in the conduct of his trade or business or professional activity, if they hold him up to contempt, scorn or ridicule or tend to exclude him from society. On the other hand, insults which do not diminish a man's standing among other people do not found an action for libel or slander. The exact borderline may often be difficult to define.” (emphasis added) and (at 1018): “It is trite law that the meaning of words in a libel action is determined by the reaction of the ordinary reader … it would, in my view, be open to a jury to conclude that in the context the remarks about Mr Berkoff gave the impression that he was not merely physically unattractive in appearance but actually repulsive. It seems to me that to say this of someone in the public eye who makes his living, in part at least, as an actor, is capable of lowering his standing in the estimation of the public and of making him an object of ridicule .” (emphasis added)

Phillips LJ recognised (at 1020) that the law of defamation protects reputation and that reputation was not generally dependent upon physical appearance. He acknowledged that “with one possible exception, [there was] no precedent for holding it defamatory to describe a person as ugly”. While he concluded (at 1021) that “a statement that a person is hideously ugly does not fall into that category of statements that are defamatory because they tend to make people shun or avoid the plaintiff”, he was also of the view that the words described the plaintiff as hideously ugly by way of ridicule and that the question whether they exposed him to ridicule to the extent that his reputation has been damaged must be answered by the jury.

In a strongly worded dissent, Millett LJ observed (at 1019) that defamation had never been satisfactorily defined, that “[a]ll attempted definitions are illustrative [and not] exhaustive [and that] [a]ll can be misleading if they cause one to forget that defamation is an attack on reputation, that is on a man’s standing in the world.” While he did not doubt “that the words complained of were intended to ridicule Mr Berkoff, [he did] not think they made him look ridiculous or lowered his reputation in the eyes of ordinary people”.

It is not necessary to consider this aspect of defamation law further. For present purposes Berkoff underscores the proposition that even in the case of an imputation which exposes a person to ridicule, the Court was of the view that the plaintiff’s standing (O’Neill LJ) or reputation (Phillips LJ and Millett LJ) had to be lowered before the imputation was capable of being defamatory.

Finally I would note that, as I said at the outset of this section of my reasons, “the tort of defamation principally consists in the operation of defamatory matter as an actual disparagement of the plaintiff’s reputation”. There is an exception to this “rule” in the case where the defamatory character of the imputations rests on their tendency to exclude the plaintiff from society rather than on their capacity to work an injury to reputation: Sungravure (at 24) per Mason J. Thus a non-disparaging imputation could be defamatory if it caused other persons to shun the plaintiff. Such cases are ordinarily confined to allegations of mental illness, instability, rape and matters connected with personal characteristics: Khor v Nationwide News Pty Ltd [1999] VSC 38 (at [9]) per Hedigan J; see also Boyd (at 453) per Hunt J; Ettingshausen v Australian Consolidated Press Ltd (1991) 23 NSWLR 443 (at 447 ff) per Hunt J; McDonald v North Queensland Newspaper Company Ltd [1997] 1 Qd R 62. Injury to business reputation at common law

The common law recognises that a person has both a personal and a business reputation. A statement which tends to injure a person in the way of his or her office, profession or trade is defamatory if it involves some disparaging reflection upon that person’s personal character or upon the mode in which that person carries on business, that is to say his or her business reputation: Sungravure (at 13) per Stephen J; see also World Hosts (at 638) per Mason and Jacobs JJ (with whom Stephen J agreed); Gorman v Barber (at [32]). Thus the common law gave a remedy in defamation for words which did not impute any moral fault or defect of personal character to a trader, business or professional person but imputed lack of qualification, knowledge, skill, capacity, judgment or efficiency in the conduct of his trade or business or professional activity: Drummond-Jackson v British Medical Association (at 1104) per Pearson LJ.

Statements which disparage a person’s business reputation are defamatory if right-thinking members of the community would conclude that they had that tendency. Thus, in Potts v Moran (1976) 16 SASR 284 (at 302), Bray CJ (with whom Wells and Sangster JJ agreed) observed; “It is clear that it is defamatory to impute to a man inefficiency or incapacity in his occupation unless that occupation is unlawful. To do so defames him, not only in the eyes of those of the same occupation or those connected with him in his occupation, but in the eyes of the community generally, or the reasonable members of it .” (emphasis added)

The fact that to be defamatory at common law, words which reflect upon the mode in which a person carried on business must disparage either that person’s personal or business reputation was emphasised in cases dealing with injurious falsehood and with s 4 of the Defamation Act 1889 (Qld), which in turn became s 366 of the Queensland Criminal Code 1899 (Qld) and later s 5 of the Defamation Act 1958 (NSW). Those cases explained the change s 366 wrought to the common law concept of a defamatory statement which injured a person’s business reputation. Section 366 provided, relevantly: “Any imputation concerning any person … by which the reputation of that person is likely to be injured, or by which he is likely to be injured in his profession or trade … is called defamatory …”

By way of background it is necessary to understand the law of injurious falsehood as it stood at the time s 366 was enacted.

In Ratcliffe v Evans [1892] 2 QB 524 the defendant published the false statement that the plaintiff had ceased to carry on his business and that his firm did not exist. In proceedings framed as an action for a false and malicious publication about his trade, the jury found the words did not reflect upon his character and were not libellous. It also found the statement that the plaintiff’s firm no longer existed was not published bôna fide. The plaintiff had proved a general loss of business since the publications, but no special damages. The jury awarded him £120. On appeal Bowen LJ said (at 527): “That an action will lie for written or oral falsehoods, not actionable per se nor even defamatory, where they are maliciously published, where they are calculated in the ordinary course of things to produce, and where they do produce, actual damage, is established law . Such an action is not one of libel or of slander, but an action on the case for damage wilfully and intentionally done without just occasion or excuse, analogous to an action for slander of title. To support it, actual damage must be shown, for it is an action which will only lie in respect of such damage as has actually occurred.” (emphasis added)

His Lordship pointed out (at 529) that the falsehood published by the defendant was “not actionable as a personal libel … [and was] not defamatory in itself”. He concluded (at 533) that in the circumstances of the publication evidence of a general loss of business was admissible.

This passage was taken to be an accurate statement of the law respecting injurious falsehood by the High Court in Hall-Gibbs Mercantile Agency Ltd v Dun [1910] HCA 66; (1910) 12 CLR 84 and in Sungravure : Palmer Bruyn (at [57]) per Gummow J. In Palmer Bruyn Gleeson CJ explained (at [14]) that “injurious falsehood may involve the making of statements which, although untrue, are not defamatory of the person about whom, or about whose property or business, they are made”. As Sir Donald Nicholls V-C explained, in the passage from Joyce v Sengupta Gummow J cited ( Palmer Bruyn , at [58]), injurious falsehood or trade libel provides a remedy for the publication of words which injure a person without damaging his or her reputation.

Further, as Gummow J observed ( Palmer Bruyn, at [58]), “the same factual matrix may found actions in both defamation and injurious falsehood”. Gacic , for example, is an illustration of a case where the plaintiffs sued both in defamation and injurious falsehood, although, to date it appears only the defamation aspect of the case has come to a hearing in the s 7A trial. There is no plea of injurious falsehood in the present case.

Hall-Gibbs established that it was an actionable wrong under s 366 if the plaintiff demonstrated that the publication in question imputed some act or condition to the plaintiff, and that the imputation was likely to injure the plaintiff in his or her trade: see Griffith CJ (at 92). Griffith CJ also made it clear (at 91–92) that the word “imputation” in s 366 was not to be qualified by principles applicable to libel and slander where “the word ‘imputation’ was generally (and naturally) used in a disparaging sense”. Barton J explained (at 95), that “the action belong[ed] to a class which before the passage of the Act of 1889 was not included among actions for defamation … [u]p to [which] time the law in Queensland was in this respect identical with that laid down … in Ratcliffe v Evans ”.

O’Connor J (at 102) explained the law of Queensland at the time the Act was passed: “Written words published of a person, discrediting him in his conduct or character, were punishable civilly and criminally whether they affected him in his business or not. Words, however, might be spoken or written of him in his business and might be likely to injure him in his business, yet they were not actionable or punishable unless they were defamatory of him, that is to say, charged something discrediting his conduct or character . In such a case , however, if it were shown that the statement complained of was in fact untrue, was published by the defendant of the plaintiff's business, and with intent to injure him in his business, or with a reckless disregard of whether he injured him or not, and actual damage to the plaintiff was occasioned thereby, the defendant was liable, not for defamation, but in another form of action, usually described as an action on the case for damages.” (emphasis added)

In World Hosts the appellant published an item under the headline “Caprice Owner Declared Bankrupt by Court” in which it was stated that a restaurateur, who was named, had been declared bankrupt, and that the named man carried on business at the Caprice restaurant. The man was in fact the manager and not the owner. The owner sued the newspaper for defamation under the 1958 Act which, as I have said, contained in s 5 a provision in substantially the same terms as s 366 of the Queensland Criminal Code (Qld). The appellant challenged the proposition that it had published an “imputation concerning any person” within s 5. Mason J explained the distinction between the common law of defamation and the regime which prevailed under s 5. He said (at 638 – 640): “Before the Defamation Act , 1958 (NSW) altered the law of defamation …[t]he essence of the [common law] action in defamation was that the publication of defamatory matter operated as a disparagement of the plaintiff's reputation … Consequently, malicious statements which injured a man's business or his goods but did not disparage his reputation were not actionable in defamation though they were actionable as injurious falsehoods … But a plaintiff whose reputation was disparaged by a defamatory statement could recover as damages any business loss sustained in consequence of the publication of the defamatory statement. … But the decision of this Court in Sungravure Pty Ltd v Middle East Airlines Airliban SAL shows that the Defamation Act , 1958 did not require that an imputation to be actionable should disparage the plaintiff's reputation. It was enough that there was an imputation concerning the plaintiff and that it was likely to injure his reputation, to injure him in his profession or trade, or that it was likely to cause others to shun or avoid or ridicule or despise him (s 5).” (emphasis added) (footnotes omitted)

Aickin J also considered the changes wrought by the 1958 Act. He said (at 643): “…[T]he Defamation Act 1958 (NSW) effected some fundamental changes in the law of New South Wales as appears from the decision of this Court in Sungravure Pty Ltd v Middle East Airlines Airliban SAL … At common law the essence of defamation was the publication of a statement containing imputations which reflected adversely on the plaintiff's reputation or character either personally or in his trade, profession or business. … In this context the word ‘imputation’ in relation to particular characteristics or conduct had a derogatory significance and indeed the primary meaning of the word ‘imputation’ was a charge of some crime, fault or failing, or some accusation. All this, however, is somewhat changed by the Defamation Act 1958 (NSW). … In Hall-Gibbs Mercantile Agency Ltd v Dun Griffith CJ, speaking of the identical provisions in the Queensland Criminal Code said that ‘imputation’ did not necessarily mean anything disparaging and meant simply a statement or attribution of an act or condition. The decision in the Middle East Airlines Case applied this reasoning to the New South Wales Act. It shows that to be defamatory a statement must be about the plaintiff, though it need not necessarily be a disparaging statement affecting his personal or business reputation. It must, however, be more than a statement which merely injures the plaintiff. At common law the position had been that statements which injured a man's business, but did not reflect on his reputation might in appropriate cases be actionable as ‘injurious falsehood’, but were not defamatory. Under the Defamation Act 1958 what had previously been the common law torts ‘defamation’ and ‘injurious falsehood’ were subsumed under a single statement in s 5….” (emphasis added) (footnotes omitted) The Defamation Act 1974

The 1974 Act restored the common law of defamation in New South Wales as if the 1958 Act had not been passed: s 4(2). Pursuant to s 9(2) where a person publishes any matter to any recipient and by means of that publication makes an imputation defamatory of another person, the person defamed has, in respect of that imputation, a cause of action against the publisher for the publication of that matter to that recipient. The same scheme is substantially repeated in the Defamation Act 2005, albeit that a plaintiff no longer has a cause of action in relation to each imputation: see s 6(3), s 8.

Begg J explained the effect of the restoration of the common law wrought by the 1974 Act in Dawson Bloodstock Agency Pty Ltd v Mirror Newspapers Ltd [1979] 1 NSWLR 16. In Dawson the defendant published an article dealing with a virus disease affecting bloodstock horses which represented a serious threat to the breeding injury and which, it was alleged, caused the closure of the plaintiffs’ stud. The statement of claim alleged the publication of an imputation whereby the plaintiffs were “likely to be injured in [their] profession or trade”. The defendant was successful in an application to strike out the statement of claim. Begg J held that, as a consequence of s 4(2) of the 1974 Act the common law applied to the question of defamatory meaning, thus (at 18): “I agree with the submission made by Mr. Nicholas, for the defendant, that it is now no longer actionable merely to publish an imputation of a person by which he ‘is likely to be injured in his profession or trade’; and that the common law notion of ‘disparaging imputation’…is the relevant law…it is not actionable merely to assert that the breeding stud was forced to close by reason of a highly contagious and dangerous virus. It would be necessary to allege carelessness or incompetence on the part of the owners or managers, that is, to be actionable there must be a publication of material which is disparaging to the reputation of the persons concerned. Their reputation must be injured by the calling into question of their character of their actions.” (emphasis added)

Begg J’s view was confirmed, if confirmation be necessary, by Hunt J in Boyd (at 452) where his Honour observed that the common law position that “in general, an imputation, to be defamatory of the plaintiff, must be disparaging of him … [was] clear from the judgments … in Hall-Gibbs Mercantile Agency Ltd v Dun and in Sungravure Pty Ltd v Middle East Airlines Airliban SAL , in which the contrary position in relation to the statutory extension to the definition of defamatory matter in the codes was contrasted with the common law position”; see also Liquor Marketing Group Ltd v Sadler [2000] NSWCA 161 (at [44] per Davies AJA (Giles JA agreeing)). The standards by which a jury determines whether an imputation is defamatory

At common law the plaintiff in a defamation case had to prove that the defendant published to a third party a statement about the plaintiff of a kind likely to lead the recipient as an ordinary person to think the less of him: World Hosts (at 638) per Mason and Jacobs JJ (with whom Stephen J agreed).

The approach the jury takes to determining whether words are such as to lead an ordinary person to think the less of the plaintiff was considered in Reader’s Digest . The plaintiff was a journalist who alleged that the matter complained of, in its natural and ordinary meaning, conveyed defamatory imputations. At the trial evidence of the ethical standards of journalists was admitted over objection by the defendant. That evidence suggested that the conduct attributed to the plaintiff by the matter complained of amounted to a breach of the journalists’ ethical code or of the required standard of journalists’ ethical behaviour. Brennan J held that the challenged evidence was not admissible to show the meaning reasonable men would place upon the words or to show that the imputations were defamatory. Of this his Honour said (at 506 – 507): “[T]he moral or social standard by which the defamatory character of an imputation is determined is not amenable to evidentiary proof; it is pre-eminently a matter for the jury to give effect to a standard which they consider to accord with the attitude of society generally … In making its assessment [of general damages], a jury is properly assisted by evidence that the making of the defamatory imputation found by them had an especially adverse impact upon the plaintiff’s reputation in the eyes of some group or class in the community. Of course, care must be taken to ensure that evidence of the attitude of particular groups of classes is not misused: it is neither material to, nor admissible upon, the issue of the defamatory nature of the imputation made. The defamatory nature of an imputation is ascertained by reference to general community standards, not by reference to sectional attitudes . But if the imputation is defamatory according to the standards of the community generally, a particular impact of the defamatory imputation may be proved.” (emphasis added)

It is plain that Brennan J’s reference to “to general community standards” in this passage was a compendium of his exegesis about the hypothetical referee. “Community standards” thus incorporates the “standards, moral or social” of the hypothetical referees who are understood to represent the community and by which the jury evaluates the imputations it understands to have been conveyed. In Reader’s Digest , for example, the imputations arguably went to the plaintiff’s reputation as a journalist e.g. the imputation that “for journalistic ends, he had obstructed the course of the police inquiry concerning the disappearance of the friend's wife”. The trial judge had directed the jury to apply an objective test to determine whether the imputations were defamatory. He had not referred to the challenged evidence when directing the jury on this issue. Brennan J (at 506 – 507) approved that approach.

The identification of right-thinking people as representatives of community standards has been criticised as failing to reflect that “there are many subjects in a pluralist society upon which contradictory attitudes exist … and that it would be futile for judges to arbitrate between them”: Hepburn v TCN Channel Nine Pty Ltd [1983] 2 NSWLR 682 (at 693–694) per Glass JA (imputation that the plaintiff was an abortionist); see also Fleming (at 582–583). However the right-thinking member of the community approach commands acceptance in the authorities and has been applied in cases dealing with business reputation imputations.

In Nevill v Fine Art & General Insurance Co Ltd [1897] AC 68 the plaintiff brought an action for libel against a company for which he had acted as an insurance agent, which had sent to persons who insured through him a circular stating that his agency had “been closed by the directors”. He alleged that the circular meant that he had “been dismissed by the respondents from his employment as their agent for some reason discreditable to him”. The judge ruled that the statement was capable of a defamatory meaning but that the occasion was privileged. The jury found a verdict for the plaintiff, that the statement was a libel, that it was untrue, and that the defendants had exceeded the privilege, but did not find actual malice.

On appeal the House of Lords held that the statement was not capable of a defamatory meaning. Lord Halsbury LC (at 72) said it was relevant in determining whether “any ordinary reasonable man would understand the words” in a defamatory sense “to take into consideration, not only the actual words used, but the context of the words, and the persons to whom the communications were made”. His Lordship took into account that the statement was “a business communication for a business purpose”. He rejected (at 72 – 73) the proposition that an “ordinary reasonable man could have construed … one sentence in a business letter as being the smallest reflection on Lord William Nevill’s capacity as a business man, or upon his honour, or how it could in any respect expose him to hatred, contempt or ridicule”.

In Gardiner the plaintiff, an author, took exception to a review John Fairfax published concerning her work. At the trial of her action for defamation, the jury entered a verdict by direction for the defendant, the trial judge having apparently taken the view that a defence of comment must succeed. She moved the Full Court for an order for a new trial. She argued, inter alia, that it was open to the jury to find that the matter complained of was defamatory of her not only as an author, but personally.

Jordan CJ rejected the plaintiff’s submission that the matter complained of defamed her personally, saying (at 175): “I am of opinion that the learned trial judge took the correct course. There is ample material to warrant the conclusion that the matter complained of is defamatory as being likely to lead anyone who read it to think less of the plaintiff as a writer ; but it is clearly only … comment … It is not suggested that there is anything in the book which would warrant any reflection upon the plaintiff otherwise than as its author, but I am clearly of opinion that there is nothing in the article complained of that is capable of being treated as a reflection on her in any other character.” (emphasis added)

Thus even though Gardiner was a case concerning damage to the plaintiff’s business reputation, Jordan CJ treated the test of whether or not the review was defamatory as turning on the “general rule”, that is to say, the reaction of “ordinary decent folk”.

As I have explained, business reputation imputations recognise that a plaintiff’s reputation may be damaged even by words which do not impute moral obliquity. An illustration of a case in which the community standards issue was considered which did concern moral obliquity was Cairns v John Fairfax & Sons Ltd [1983] 2 NSWLR 708 to which Beazley JA referred in Gacic. In Cairns the defendant published an interview with an investment banker in the course of which he said he had wanted to discuss an issue concerning managing foreign loans raised for the Australian Government in the international money market and, to that end, had gone to Canberra to try to see Dr Cairns, then the Treasurer, but “[h]is girl friend, Morosi, said he was too busy, he couldn't see me.” Both Dr Cairns and Ms Morosi brought defamation proceedings asserting, in substance that that sentence conveyed a defamatory imputation “the [each] was improperly involved with [the other] in a romantic or sexual association contrary to the obligations of [their] marriage[s]”. The imputation was pleaded both as a false and true innuendo. The trial judge held that the imputation was not capable of being conveyed as a false innuendo. The jury found that the imputation was conveyed to persons with knowledge of the extrinsic facts the plaintiffs each relied upon, but that it would not have been understood to be defamatory by the ordinary reasonable reader, with knowledge of those extrinsic facts to whom it was published.

The plaintiffs appealed. It was accepted that to succeed they had to show that upon the most favourable meaning of the imputation the second finding of the jury was perverse: see Hutley JA (at 710). The appeal was dismissed by majority (Hutley JA and Mahoney JA, Samuels JA dissenting).

Hutley JA (at 710) concluded that the jury’s conclusion while “unusual, [was] not perverse” and that “[t]he judgment of a jury as to what is the effect on reputations of misconduct in the field of correct sexual morality is not lightly to be rejected”.

Mahoney JA said (at 719) that the imputation had to be understood as conveying that, in the case of Dr Cairns, he acted inconsistently with the obligations of his marriage; and that he did this by a sexual association with a married woman. The question whether a statement which conveyed these two things was “necessarily defamatory” of him had to be judged, applying the Reader's Digest test, “according to the standards of the ordinary reasonable reader of the defendant's paper”. It was for the jury to determine “what, in the relevant society, is the view of reasonable and right-thinking people on such a matter”. While, in his Honour’s view (at 720) a sexual association with another person’s spouse would be seen as contrary to the current religious or ethical principles “it would be open to the jury to conclude … that the general community standards by which a sexual association is to be judged are not those of current religious or ethical principles” and that such “principles, as currently understood or propounded, impose too high or too rigid a standard of sexual morality and that the standards by which the community judges sexual associations are, if not lower and more flexible, at least different.” He concluded (at 721) that it was open to the jury to regard the current community standard as being that a sexual relationship between unmarried persons was not necessarily discreditable, having regard to changes in the attitude to sexual relationships.

Samuels JA (at 717) concluded that the jury’s answer to the second question was unreasonable. He could not understand how “ordinary members of the community applying current community standards could fail to regard” an imputation alleging “an [improper] association … contrary to obligations undertaken to a marriage partner” as defamatory.

Cairns was decided within a month of Hepburn. While community attitudes to sexual mores might be thought to be precisely the sort of subject as to which contemporary views might differ, no member of the Court suggested that the “ordinary reasonable reader” approach which the jury had been directed to apply (see Mahoney JA at 719) was incorrect. However, Mahoney JA appeared to recognise (at 720–721) that it was up to the jury to determine contemporary community standards and, in so doing, to take into account the evolution of societal attitudes.

Cairns was referred to in Cinevest Ltd v Yirandi Productions Ltd [2001] NSWCA 68; (2001) Aust Torts Reports ¶81–610 (at [29] ff) by Spigelman CJ, (with whom Meagher and Handley JJA agreed). One of the issues which arose in that case was whether a jury’s decision that an imputation that “Cinevest was incompetent in that it failed to return money to investors in any of the fifteen films it had produced”, was not defamatory, was perverse or unreasonable. Spigelman CJ referred with apparent approval (at [37]–[40]) to paragraphs [2.7] and [2.26]–[2.27] from Gatley . His Honour concluded (at [47]) that the jury’s decision was perverse because the “particular of the conduct relied on concerned the business affairs of the corporation in its dealings with ‘investors’ [and] [t]hat must have an effect on the reputation of that corporation in its business affairs”. His Honour clearly meant a detrimental effect on Cinevest’s reputation. This conclusion supports the appellant’s submission that the passage in Gatley (at [2.7]) concerning “injury to his reputation in his trade, profession or office…” when understood by reference to the development of that point in pars [2.26]–[2.27], invokes the classic test for a defamatory statement, that it be disparaging of the plaintiff’s reputation.

Cairns emphasises the weight the courts accord to a jury’s assessment of what represents the views of the hypothetical referees. It is important to recollect that those hypothetical referees represent the community as a whole, and not sectional attitudes: Reader’s Digest (at 506–507). The classic illustration of this proposition is that it is not defamatory to say a person had informed the police of a crime, even though among “certain classes who were either themselves criminal, or who sympathised with crime, it would expose a person to great odium to represent him as an informer or a prosecutor, or otherwise aiding in the detection of crime”: Mawe v Pigott (1869) IR 4 CL 54 (at 62). Such statements are not defamatory because they would not be so regarded by “a good and worthy subject of the King”: Byrne v Deane [1937] 1 KB 818 (at 833) per Slesser LJ.

However the latter proposition has been qualified in the case of some publications to a limited, or target, class.

Thus in Drummond-Jackson v British Medical Association the plaintiff (a dental surgeon) sued in respect of a scientific paper discussing techniques of dental surgery which was long, highly technical and illustrated with diagrams, and was published as an article in the British Medical Journal. The defendants sought to strike out the action on the ground that the statement of claim disclosed no reasonable cause of action. Lord Denning MR in his dissenting judgment (at 1009) opined that the question whether the article was reasonably capable of being understood as being defamatory of the plaintiff should be tested in the light of “the sort of people likely to read them … the medical men who read the British Medical Journal”. Willmer J made a similar, although somewhat more enigmatic, observation (at 1106), “the plaintiff is an experienced dental surgeon, and the article complained of relates to dentistry; and this circumstance, I think, is sufficient to indicate the class of persons whose reaction to the publication is to be considered”.

This line of reasoning has been applied in some Australian cases. In Switzerland Australia Health Fund Pty Ltd v Shaw (1988) 81 ALR 111 defamation proceedings were taken in respect of a letter written to the administrators of the hospitals who were members of the Private Hospitals Association of Victoria. Woodward J (at 119) held that the test of whether the letter was defamatory was whether it “could reasonably be taken in a defamatory sense by reasonable, informed, private hospital administrators”. Foster J applied this reasoning in FAI General Insurance Co Ltd v RAIA Insurance Brokers Ltd (1992) 108 ALR 479 (at 496) (allegedly defamatory document appraising an architect’s indemnity plan sent to seven architects) to hold that the question whether the appraisal was defamatory had to be determined by asking whether architects, who he described as “knowledgeable in their profession, of a level of intelligence and acumen consistent with their membership of it, and, by virtue of their request for the material, interested in reading it with care and attention, even if not studying and analysing it with precision”, would reasonably derive, inter alia, the imputations relied upon.

In Nixon v Slater & Gordon [2000] FCA 531; (2000) 175 ALR 15 (at [42]), which concerned two booklets published and distributed by a law firm to 8,531 medical practitioners in Victoria explaining the law firm's approach and ethics in relation to medical malpractice claims, Merkel J applied Drummond-Jackson to treat the hypothetical referee as the hypothetical member of the medical profession.

In Morgan v Mallard (1997) 68 SASR 184 (at 193 – 194), Olsson J described this line of authority as reflecting “plain common sense” and opined it was “little short of ludicrous to apply the test of the reaction of the ordinary person in the street to the restricted publication of an article to a specific group of readers for whom it is discretely intended”. However I note that in Gorman v Barber (at [16]), which concerned an article published in the Australian Doctor , a magazine distributed to general practitioners in private practice and some specialists, Mason P approved Grove J’s direction to the jury “that an imputation is defamatory if its publication would cause ordinary decent people in the community to think less of the plaintiff”. It does not appear that the question of whether the imputations would have been defamatory to the class of those to whom the article was published was raised, counsel for the defendant having come “as close to capitulation as it is possible to imagine” on the question whether the imputations were defamatory.

None of these cases consider how the tribunal of fact would determine the standards of the discrete target. Nor do they suggest that such cases be pleaded as true innuendos, with extrinsic fact evidence being called of the particular attitude which might be taken by the target class to the behaviour imputed to the plaintiff: see Krahe v TCN Channel Nine Pty Ltd (1986) 4 NSWLR 536 (at 544) per Hunt J.

The true innuendo approach was taken in Liquor Marketing Group v Sadler , which concerned a letter published only to hoteliers who were members of Bottlemart and Pubmart. Sheller JA (at [2]) said that the question whether an imputation pleaded as true innuendo was capable of being defamatory turned on whether a reasonable person with the knowledge of the relevant extrinsic fact would understand the imputation as tending to damage the plaintiff’s reputation. He added that “[t]he defamatory sting arises because the hypothetical audience is aware of the extrinsic fact”, a point I note was not reflected in the questions to the jury in this case. His Honour did not identify the “reasonable person” as having to be an hotelier, although the extrinsic fact relied upon (“that the plaintiff was at the date of publication the general manager of ‘Pub Mart’ which carried on business as a seller of wholesale liquor”) might tend to provide that focus. Gatley on Libel and Slander

As I earlier noted, Mr McHugh submitted that paragraph [2.7] from Gatley quoted in Gacic (at [32]) does not correctly state the law, is not supported by the authorities cited, and appears inconsistent with other passages in Gatley , in particular [2.27]. Paragraph [2.7] states: “ Words lowering a person in the estimation of others. An imputation may be defamatory without falling within any of the specific heads so far set out. Any imputation is defamatory if it would tend to lower the claimant in the estimation of right-thinking members of society generally or would be likely to affect a person adversely in the estimation of reasonable people generally. For instance to say of someone that he is ungrateful would scarcely expose him to hatred, ridicule or contempt, or cause him to be avoided, yet it has been held defamatory. To say of a person carrying on any trade or profession or holding any office that he is incompetent at it, may not even lower him in the estimation of others, but the words will be defamatory because of the injury to his reputation in his trade, profession or office …” (footnotes omitted) (emphasis added) The footnote to the last passage directed the reader to paragraphs [2.26] et seq.

Just as context is relevant to the interpretation of statutes and contracts, so too is it important in reading texts. Paragraph [2.7] of Gatley appears in Section 1 (What is Defamatory) of Chapter 2 (Defamatory Imputations). Section 2 of that Chapter deals with “Standards of Opinion”. It makes it clear par ([2.10]) that “to be defamatory … an imputation must lower the claimant in the estimation of right-thinking members of society generally”, for which proposition it cites Tolley v J S Fry & Sons Ltd (at 479). Although Gatley goes on (par [2.12] footnote 19) to suggest that “some English cases are not easy to reconcile with the ‘persons generally’ ” requirement, it points out (footnote 20) that the English test was stated in Reader’s Digest. There is no suggestion in this Section that a different standard of opinion applies to imputations which injure a plaintiff’s reputation in his or her trade, profession or office.

Paragraph 2.26 and 2.27 appear in Section 3, “Instances of Defamatory Imputations”. They relevantly state: “ 2.26 Reputation in business, trade or profession . Any imputation which may tend to injure a person’s reputation in a business, employment, trade, profession, calling or office carried on or held by him is defamatory. To be actionable, words must impute to the claimant some quality which would be detrimental, or the absence of some quality which is essential, to the successful carrying on his office, profession or trade. The mere fact that words tend to injure the claimant in the way of his office, profession or trade is insufficient. If they do not involve any reflection upon the personal character, or official, professional or trading reputation of the claimant, they are not defamatory. 2.27 Insufficient that words damage claimant in business, etc. To be defamatory the statement complained of must be reasonably capable of conveying a ‘personal imputation upon them, either upon their character, or upon the mode in which their business is carried on’ ** …It is not defamatory to publish of a tradesman that he has ceased to carry on his business or that his business has been or is about to be, acquired or absorbed by another firm, for such statement, though likely to injure him in his business, does not reflect on him in his conduct of it. Nor was it in itself defamatory for an association of manufacturers to place on a ‘stop list’ the name of a retailer for selling proprietary articles of their members at prices different from those contained in the ‘protected price list’ published by the association. It is not without more defamatory of a bank to say that accounts it manages have been used without its knowledge to fund terrorism. To state that a trader’s goods lack desirable qualities may be very damaging but it is only defamatory if it imputes some deficiency in the way that he runs the business. It is not, however, necessary that there should be an imputation of conduct which is morally wrong: an imputation of incompetence will do, for: ‘words may be defamatory of a trader or a business man or professional man, though they do not impute any known fault or defect of personal character. They can be defamatory of him if they impute lack of qualifications, knowledge, skill, capability, judgment or efficiency in the conduct of his trade or business or professional activity’ …” (emphasis added) (footnotes omitted) ** The footnote to this passage in Gatley refers to Griffiths v Benn (1911) 27 TLR 346 (at 350) where Cozens-Hardy MR made the statement attributed to him. However he did so in the context of having said in the same paragraph: “…words used, though directly disparaging goods, may also impute such carelessness, misconduct, or want of skill in the conduct of his business by the trader as to justify an action for libel” The footnote also added, after the reference to Griffiths v Benn: “A malicious falsehood not defamatory but causing damage may in some circumstances be the foundation for an action on the case for damages, but unless the untruth is calculated to injure the reputation and character of the person of whom it is written, it cannot give rise to an action for defamation: Slatyer v Daily Telegraph Newspaper Co Ltd (1907) 7 NSWSR 488 at 498; Carelse v Van de Schyff [1928] CPD at 94 ; Dawson Bloodstock Agency Pty Ltd v Mirror Newspapers Ltd [1979] 1 NSWLR 16.”

There is a tension between Gatley at paragraph [2.7] and at paragraphs [2.26]–[2.27]. The last sentence of [2.7] tends to obscure the fact that to be defamatory, a business reputation imputation must tend to lower the plaintiff’s reputation in the relevant business respect. To take the example Gatley gives (at [2.7]) and applying the test posed at paragraph [2.26], to say of a person carrying on any trade or profession or holding any office that he or she is incompetent at it, or of a surgeon that he or she “is showing signs of age; his eyesight is poor, and his hands tremble” ( Gacic in the High Court at [2]) will be defamatory because it imputes to that person a “quality which would be detrimental, or the absence of some quality which is essential, to the successful carrying on of his office, profession or trade”.

More importantly, for present purposes, paragraphs [2.7] and [2.26]–[2.27], do not address the standards by which the tribunal of fact determines whether or not a business reputation imputation is defamatory. That is dealt with in Section 2 of the same Chapter in a manner which does not differentiate between personal and business reputation imputations in applying the community standards test. Once one comes to paragraphs [2.26]–[2.27], however, the use of the expression “defamatory” elides the two questions of whether an imputation tends to injure a person’s reputation in the relevant sense (i.e. personal or business reputation) and whether the imputation would lower the plaintiff’s business reputation in the estimation of the hypothetical referee. Summary

This review of authority establishes, in my view, that: (a) the essence of the tort of defamation is the publication of defamatory matter which operates to disparage the plaintiff's reputation; (b) a person's reputation is not confined to general character and standing but extends to his to her trade, business or profession so that words will be defamatory even if they do not impute any moral fault or defect of personal character to the plaintiff, but impute in a disparaging manner, lack of qualification, knowledge, skill, capacity, judgment or efficiency in the conduct of that person’s trade, business or professional activity; (c) to be defamatory words which reflect upon the mode in which a person carried on business must disparage either that person’s personal or business reputation; words which are merely likely to injure a person in his or her business are not actionable or punishable save in an action on the case for injurious falsehood in which malice and actual damage must be proved; and (d) whether words are found to be defamatory depends upon the jury determining whether they would cause hypothetical referees who are taken to have a uniform view of the meaning of the language used and uniform standards, moral or social, to think less of the plaintiff. Gacic v John Fairfax Publications Pty Ltd

In Gacic the second respondent, Matthew Evans, wrote an article critically reviewing a restaurant, Coco Roco, which was published in the Sydney Morning Herald, a newspaper owned by the first respondent. The appellants, who owned the restaurant, commenced proceedings claiming that the article conveyed a number of defamatory imputations, relevantly, first that they respectively sold unpalatable food at Coco Roco (imputation (a)), secondly that they provided some bad service at Coco Roco (imputation (c)) and thirdly that they were incompetent as restaurant owners because they employed a chef who made poor quality food (imputation (d)). Further, according to Beazley JA (at [33]): “The appellants had specifically pleaded a case of business defamation in paragraph 6 of the Statement of Claim and this was the basis upon which their counsel addressed the jury. No case of general defamation was pleaded or pursued before the jury.”

Following a trial conducted pursuant to s 7A of the 1974 Act before Bell J and a jury of four, the jury found that the first two imputations were conveyed but were not defamatory and that the third imputation was not conveyed. The primary judge accordingly entered verdicts for the respondents in relation to each imputation.

In the Court of Appeal the appellants argued that the s 7A trial miscarried for two reasons. First they complained that senior counsel for the respondent misled the jury in relation to defamatory meaning when he addressed them to the effect that when considering whether the imputations were defamatory, they should ask: “Is the ordinary reader going to think, or decent people, going to think the less of somebody? I should tell you that it is only fair to say that it can also be defamatory of somebody if you impugn their professional competence in their job.”

Counsel for the appellants had complained in the s 7A trial that the test for whether the imputations were defamatory which senior counsel for the respondent had explained to the jury was not applicable. After legal debate and after securing the agreement of counsel for both parties, Bell J directed the jury (see Gacic at [41]): “Let me now turn to the question of whether or not the imputations that are pleaded are defamatory … Generally, defamatory means having the tendency to lower a person in the estimate of ordinary, right-thinking members of the community. But there is another way in which an article or publication may be defamatory and it is the way that the [appellants] put their case here. It is important you understand that the question of whether or not the imputations were defamatory of the [appellants] takes up the concept of whether they may have the tendency to injure a person in his or her profession or trade by the suggestion of unfitness or incompetence or the like. Just to make that clear. Generally, defamatory means having the tendency to lower a person in the estimate of ordinary right-thinking members of the community but equally, and importantly for this case, defamatory has the meaning of having a tendency to injure the [appellant] in his or her profession or trade by the suggestion of unfitness or incompetence.” (emphasis in original)

The appellants also argued that Bell J failed to give adequate directions to the jury in her summing-up in relation to their “business defamation claim” and, further, failed to give adequate directions so as to correct any misapprehension the jury may have been under as a result of the matters put by senior counsel for the respondent in his address.

Finally, the appellants contended that the respondents' counsel misled the jury by submitting that the third imputation involved an inference on an inference and as such could not be conveyed by the article and that the primary judge erred in permitting that issue to be left to the jury.

In considering the appellants’ first argument Beazley JA (with whom Handley and Ipp JJA relevantly agreed) quoted (at [32]) paragraph [2.7] from Gatley . Her Honour set out (at [45]) the appellants’ submissions: “The appellants submit that even though senior counsel for the respondents made reference to business defamation in this part of his address to jury, his statement did not correctly state the law. Their case was that the article defamed them in their business. They contend that the effect of what senior counsel for the respondent said at this point was that, if decent members of the community thought less of someone because the matter complained of impugned their professional competence, it would be defamatory. Counsel for the appellants pointed out that there is a significant distinction between putting the matter that way, which retains the underlying concept that, to be defamatory, the reputation of the individual person must be lowered in the eyes of decent members of the community in the case where there is an attack on a person’s business. Where there is such an attack, it is defamatory to say that a person is incompetent at that person’s business, even if the statement does not lower that person in the estimation of others. As is stated in Gatley at para 2.7, in the passage set out above, ‘[t]he words will be defamatory because of the injury to his reputation in his trade, profession or office’. ” (emphasis in original)

Her Honour then said: “46 Taken in isolation, the last sentence in the comment made by senior counsel for the respondents correctly stated the meaning of business defamation. However, the comment as a whole was both misleading and, in my opinion, incorrect. It did not draw the jury’s attention to the distinct nature of business defamation. In particular, the comment did not inform the jury that there could be business defamation even though the defamatory statement did not lower the defamed person in the estimation of right-thinking members of the community. Accordingly, although I do not agree that the meaning of what the respondents’ senior counsel said to the jury was quite as alleged by the appellant, the jury needed careful directions to ensure that they were not left with an erroneous or misleading understanding, either of the law or the way in which the appellants put their case. … 48 The deficiency in her Honour's directions, on the appellants’ submission, was that, having explained to the jury the usual meaning of ‘defamatory’, that is, that generally a statement is defamatory if it has the tendency ‘to lower a person in the estimate of ordinary right-thinking members of the community’, her Honour then stated that ‘equally’, ‘defamatory’ bore a meaning of ‘having a tendency to injure the plaintiff in his or her profession or trade by the suggestion of unfitness or incompetence’ (emphasis added). Counsel for the appellants submitted that, by the use of the word ‘equally’, her Honour left it open to the jury to find that, in this case, they could find the matter in the alternative, so that, if they concluded that the appellants were not lowered in the estimate of ordinary right-thinking members of the community by the imputations in the article, then they would fail. 49 Senior counsel for the respondents contended that the appellants were precluded from complaining about the direction because, her Honour having indicated the direction that she proposed to give to the jury following Mr Evatt’s request and, having given a direction in respect of which Mr Evatt then made no complaint, the appellants were precluded from now raising the matter: see Alford v Magee (1952) 85 CLR 437. The respondents also contended that the direction given by her Honour was not materially different from that which she had proposed during the course of discussion with counsel. Finally, they argued that, in any event, the direction was not erroneous. The respondents submitted that it was open to them to defend the case on the basis that defamatory meaning in this case could, if the jury so decided, bear its general meaning of lowering a person in the estimation of right-thinking persons, so that it was correct for her Honour to direct the jury as to both meanings. Finally, senior counsel for the respondents submitted that, in any event, her Honour had pointed out that not only were the two meanings ‘equally’ available, but also said, ‘importantly’, for the purposes of this case, business defamation was alleged. 50 It is convenient to deal first with these last two submissions. In my opinion, the direction given by her Honour was wrong. It was incumbent upon her Honour to direct the jury that in the case of a business defamation, it did not matter whether the published material lowered the person in the eyes of right-thinking members of the community. Her Honour did not give that direction. Indeed, by directing the jury first as to the general meaning of defamation and then by ‘equally’ referring to a business defamation, without adding the important qualification to which I have just referred, her Honour gave a direction that was wrong in law. In the present case, the error was likely to have been more serious because of the strong and almost uncompromising address by senior counsel for the respondents in his focus upon non-business defamation. As I have already explained, his reference to business defamation at the end of his address was itself erroneous in any event, and did not diminish the persistent reliance upon the irrelevant form of defamatory meaning in this case.” (emphasis added)

Beazley JA also held that s 108 of the Supreme Court Act 1970 empowered the Court to enter a verdict where an imputation was plainly defamatory and no jury, properly directed, could reasonably reach any other verdict. She concluded (at [56], [57] and [70]) that imputations (a) and (c) were defamatory and that the jury verdicts to the contrary were unreasonable.

Her Honour dealt with an argument concerning the application of community standards in determining whether the imputations were defamatory raised, I apprehend, by the respondent to dissuade the Court from determining this issue itself as follows: “71 However, Mr Blackburn, senior counsel for the respondents, argued that the imputations alleged in this case raised questions of community standards (transcript 52) and that questions of community standards were peculiarly jury questions. Indeed, Mr Blackburn argued that ‘any decision by a jury as to whether a particular meaning found by them is defamatory raises community standards’ (transcript 52-53). That might be so, but only in the broadest of senses . A jury is enjoined to apply their commonsense and experience as ordinary members of the community. They are asked to determine whether right-minded members of the community would find a publication to be defamatory. However, if Mr Blackburn’s submission were correct, the decision of this Court in Gorman v Barber and the principles stated in Charlwood Industries would be completely undermined.” (emphasis added)

Her Honour’s last remark was clearly directed to the conclusions in the two cases to which she referred that the Court could exercise its power under s 108(3) of the Supreme Court Act “if the imputation was plainly defamatory and if any other decision would be perverse”: see Gacic (at [63], [68]).

Her Honour distinguished (at [72]–[73]) Cairns v John Fairfax & Sons Ltd (at 720) as a case concerned with what conclusions were open to a jury in relation to general community standards in respect of sexual morality or immorality, saying: “73 … The question whether a restaurant serves unpalatable food or provides some bad service does not raise questions of community standards of the type discussed in Cairns v John Fairfax .”

Beazley JA concluded (at [74]) that had the jury been properly directed, the only verdict it could have returned was that the imputations were defamatory and, accordingly, there was no reason why the Court ought not enter verdicts in respect of imputations (a) and (c).

Handley JA who, (subject to his reasons, agreed with Beazley JA) said (at [2]) that the trial Judge erred in directing the jury that they could consider whether the first and second imputations were defamatory on either the basis that they tended to lower the plaintiffs in the estimation of ordinary right-thinking members of the community or that they tended to injure the plaintiffs in their trade or business. In his view, Bell J should not have left the first alternative to the jury as the appellants had pleaded their case only on the second basis, their counsel had addressed the jury accordingly and “[t]he first basis was entirely irrelevant”. His Honour agreed (at [6]) with Beazley JA that the trial Judge’s failure to give clear directions to the jury about whether these imputations tended to injure the appellant in their trade and business occasioned a substantial miscarriage of justice and the verdicts for the respondent on these imputations must be set aside. Although his Honour doubted that s 108(3) of the Supreme Court Act had altered the law that it was not competent for a trial Judge to direct the jury to enter a verdict in favour of the party with the legal onus on a question of fact and that an appellate court could not enter such a verdict either, he concluded that the decisions of this Court to the contrary to which Beazley JA referred were “recent and were not appropriately and directly challenged by counsel for the respondent until the oral argument”. He then said: “[10] … If an exception to those principles were ever to be recognised in defamation cases this could occur in relation to imputations which tend to injure the plaintiff in his trade or business where general community standards are less important …” (emphasis added)

The appellants argued in relation to the third imputation, that counsel for the respondent had misled the jury by submitting that it involved an inference on an inference and therefore did not give rise to a defamatory imputation and that the trial judge had erred in permitting this matter to go to the jury.

Beazley JA held (at [101], [103]) that the third imputation did not involve an inference upon an inference and that that question should not have been left to the jury. As the imputation had not been determined by a jury (meaning thereby as I understand the question whether the imputation was conveyed) she concluded it should be remitted for s 7A determination, even though, in her view, it was defamatory and any other verdict would be unreasonable.

Handley JA agreed with Beazley JA that the third imputation should be remitted for a further s 7A trial, but for different reasons. He noted (at [11]) that at a preliminary hearing Nicholas J had ruled that this imputation was capable of being conveyed by the matter complained of and could therefore go to the jury. It appeared that in so doing his Honour had rejected the respondent’s argument that, as a matter of law, the ordinary reasonable reader could only derive that imputation from the matter complained of by drawing an inference from an inference. In his Honour’s view (at [20]) the question whether the third imputation was not conveyed because it was an inference on an inference was a matter of law for a judge and not a question for a jury. He concluded that Hunt CJ at CL’s observations to the contrary in Amalgamated Television Services Pty Ltd v Marsden (at 171) were dicta which he could reconsider. His Honour referred approvingly (at [24]–[25]) to passages in Lewis v Daily Telegraph Limited in the speeches of Lord Morris of Borth-Y-Gest (at 265) and Lord Devlin (at 285) to the effect that the fundamental question as to meaning is what “the words convey to the ordinary man”. His Honour then said, relevantly: “27 Within the range of possible meanings available to the jury the question for them is a question of fact; which depends upon their understanding of what the words would convey to ordinary men and women in the community. The jury are expected to decide this by the application by [sic, of] their ordinary experience and commonsense...”

It will be recalled that the third imputation was also alleged to have affected the appellants in their business reputation. It is significant, in my view, accordingly that Handley JA regarded the question of whether that imputation was conveyed as one to be determined by the views of ordinary members of the community. I shall return to this question.

Ipp JA agreed (at [106]) with Beazley JA’s reasons but added his own observations as to the issue of the third imputation. He also concluded (at [110]) that Hunt CJ at CL’s views on this issue in Marsden were dicta and expressed a different view. In his view (at [113]), “while reasoning based on an inference drawn from an inference should be looked at with caution, there is no absolute rule of law that precludes such reasoning in an appropriate case”.

His Honour considered (at [114]–[120]) Lewis v Daily Telegraph Ltd . It is unnecessary to deal with his Honour’s analysis of that case. However it is salient to note his Honour’s reference (at [118]) to Lord Devlin’s statement (at 285) that: “One always gets back to the fundamental question: what is the meaning that the words convey to the ordinary man: you cannot make a rule about that.” as to which Ipp JA commented: “119 I would emphasise and follow these remarks. The court should always focus on the ‘fundamental question’. There are no subsidiary rules of law governing the means by which this fundamental question is to be resolved. This, in my respectful opinion, is right and proper. The question as to the meaning that the words convey to the ordinary person should be a simple and straightforward one, as befits a law that governs the everyday life and actions of all levels of persons in the community. The question should not be obscured by overly complex and subtle metaphysical distinctions that stand as a formidably esoteric barrier to what should be an easily comprehensible reasoning process akin to common sense.” The effect of Gacic

It is necessary to read the Court of Appeal’s decision in Gacic closely to determine precisely what it determined in relation to the directions which should be given to a jury in a case involving business reputation imputations. In particular, does it mean as Mr Evatt submitted to the primary judge in this case, that the question whether the business reputation imputations were conveyed turned on whether the words had a tendency to injure the plaintiff in his business or trade or profession as a journalist and not whether they lowered the defamed person in the estimation of right-thinking members of the community?

As I understand Gacic, the Court concluded that Bell J had not directed the jury properly because her Honour had directed it both as to the test for whether personal reputation imputations were defamatory and “equally” directed the jury as to whether imputations which had a tendency to injure a person in his or her profession or trade by the suggestion of unfitness or incompetence were defamatory. The Court perceived this to be a misdirection in circumstances where the plaintiffs’ only case was that the matter complained of conveyed business reputation imputations.

Beazley JA did not criticise that part of Bell J’s direction to the jury to the effect that “…defamatory has the meaning of having a tendency to injure the [appellant] in his or her profession or trade by the suggestion of unfitness or incompetence”. I infer, therefore that her Honour regarded that as a sufficient direction. Further she twice (pars [46] and [50]) identified the vice of Bell J’s direction as being that “in the case of a business defamation, it did not matter whether the published material lowered the person in the eyes of right-thinking members of the community”.

The difficulty with this approach, with respect, is that it appeared to approve a direction in relation to business reputation imputations appropriate to the test under s 5 of the 1958 Act, but which does not recognise the necessity that, at common law, to be defamatory such imputations must reflect on the plaintiff’s reputation. Further her Honour’s statement that Bell J erred in not directing the jury that in the case of a business defamation, it did not matter whether the published material lowered the person in the estimation of right-thinking members of the community, is directly at odds with the authorities to which I have referred, none of which appear to have been drawn to the Court’s attention.

There also appears to be some inconsistency between this aspect of Beazley JA’s judgment and that part (at [70]–[74]) in which her Honour accepted that “community standards” were relevant to the question whether the imputations were defamatory, albeit “only in the broadest of senses”. Ipp JA agreed with her Honour in this respect and also confirmed (at [118]–[119]), in dealing with the inference on an inference point, the importance of the meaning the words convey to “the ordinary man”. Handley JA recognised (at [10]) a role for community standards “in relation to imputations which tended to injure the plaintiff in his trade or business” albeit that he said, without elaboration, “general community standards are less important”. His Honour also acknowledged (at [27]) in dealing with the inference on an inference point, the importance of the jury’s understanding of what the words would convey to ordinary men and women in the community.

It is difficult, with respect, to understand precisely how Beazley JA and Handley JA understood “community standards” to apply in the case of business reputation imputations. As I have noted, Beazley JA, for example, (at [50]) said that Bell J ought to have directed the jury “that it did not matter whether the published material lowered the person in the eyes of right-thinking members of the community” in the case of a “business defamation”. I cannot, with respect, rationalise that passage in her Honour’s judgment with her later acceptance that community standards had some broad relevance to the question whether the imputations were defamatory.

Significantly for the purposes of the present case, it is not apparent that the ratio of Gacic is that community standards have no relevance to the question whether business reputation imputations are defamatory. Rather, the manner in which they do was accepted, but not in a manner which affords guidance to trial courts. Gacic in the High Court

The respondent obtained a grant of special leave to appeal to the High Court substantially confined, it would appear, to consideration of the power given to this Court by s 108(3) of the Supreme Court Act and its exercise: see Gleeson CJ and Crennan J (at [1], [8], [10]), Gummow and Hayne JJ (at [19]) and Kirby J (at [56]). The inference on an inference issue did not arise: Gleeson CJ and Crennan J (at [4]). Kirby J noted (at [82]) that the appellants did not contest the Court of Appeal’s conclusion “that the primary judge had misdirected the jury (by elaborating before them the test for general defamation); and had erred in the way in which she redirected the jury on that subject”.

Callinan and Heydon JJ (at [177]) also identified the ambit of s 108(3) as one of the grounds of appeal. However their Honours noted that the appellants submitted it was erroneous for the Court of Appeal to hold that “community standards” were of little or no relevance to cases of injury to plaintiffs in respect of their trade or business. It appears that that submission was made as part of the appellants’ argument (dealt with by Beazley JA at [71]) that even if this Court had the power under s 108(3) to enter a verdict in the respondents’ favour on the imputations, it ought not have exercised it having regard to the importance of the jury’s role as representatives of the community in determining whether the imputations were defamatory.

According to Gleeson CJ and Crennan J (at [2]), the case concerned “that form of defamation which involves injury to business reputation; that is, the publication of imputations that have a tendency to injure a person in his or her business, trade or profession”. In their Honours’ view: “[2] That the law of defamation affords such protection is not surprising. Suppose someone says: ‘X is a thoroughly decent person, but he is showing signs of age; his eyesight is poor, and his hands tremble’. That would not be a reflection on X’s character. It would be likely to evoke sympathy rather than hatred, ridicule or contempt. If, however, X were a surgeon, the statement could be damaging. To say that someone is a good person, but a dangerously incompetent surgeon, is clearly likely to injure the person’s professional reputation. That is an established form of defamation, and it was not called in question by the parties to the present appeal.”

Their Honours noted (at [6]) the grounds of appeal in the Court of Appeal. It was not necessary, in their view, to go into the detail of the first ground, which they recorded as having been that the jury had been misled by the way in which counsel had addressed on the subject of defamatory meaning, and that the trial judge's directions were inadequate to correct what had been put in address. However they did say with apparent approval: “[6]… In brief, the Court of Appeal held that the combined effect of counsel's address and the trial judge's directions was to mis-state the nature of business defamation, and to leave the jury with the impression that, if the matter published would not lower the respondents in the estimation of right-thinking members of the community, then the respondents were not defamed. To relate the point to the example given above, it was not made clear to the jury that it could be defamatory to say that X, a surgeon, although a good man, had deteriorated physically, even though that would not reflect badly on his character or his personal conduct. To say that a restaurant sells unpalatable food or provides bad service does not necessarily reflect badly on the owners personally. They might be worthy people who are themselves victims of circumstances, or incompetent staff. However, it has a tendency to damage their business reputation . That point, the Court of Appeal held, was not conveyed, or not conveyed with sufficient clarity, to the jury…” (emphasis added)

Their Honours then discussed the s 108 issue, concluding (at [11]) that the Court of Appeal had been right to hold that it had power under s 108(3) to enter verdicts in favour of the respondents on the s 7A issues in relation to the first and second imputations. They approved (at [9]) Beazley JA’s reasoning in Gacic (at [55]–[57]) in which her Honour said, relevantly: “56…To say of a restaurateur of such an establishment that they sold 'unpalatable' food injures that person in their business or calling and because of that, is defamatory. In my opinion, no reasonable jury properly directed could reach any other verdict. 57… To say, therefore, that the appellants provided 'some bad service' at Coco Roco, even though the damnation was not total, would injure a person in their business or calling as a restaurateur and was likewise defamatory. No reasonable jury properly directed could reach any other verdict.”

In concluding that the Court of Appeal had properly exercised the discretion to enter a verdict itself or simply order a new trial by a jury (a discretion whose availability their Honours thought paradoxical (at [12])), Gleeson CJ and Crennan J said: “[13]…The Court of Appeal was itself in a position to answer the second question without doing any injustice to either party. The evidence was bare and undisputed. There were not, as was argued, ‘community standards’, bearing upon the question whether to say that a restaurant has unpalatable food and bad service has a tendency to injure the proprietors in their business, of such a kind as to require the evaluation of a jury . The decision of the Court of Appeal was correct.” (emphasis added)

Gummow and Hayne JJ in their joint judgment were of the view (at [29]–[30]) that once the preconditions for a party’s entitlement to a verdict in s 108(3) were satisfied, the Court of Appeal had no discretion whether to exercise its s 108(3) power, but was obliged to direct that verdict.

In considering the exercise of the s 108(3) power, their Honours observed: “[51] … [T]he jury could not adopt any explanation of the matter complained of which was incompatible with its due consideration of the questions whether the imputations were carried by that matter and, that being so, whether they tended to injure the respondents in their trade or business. Put another way, could a reasonable jury, properly instructed, have given the answer that while the article conveyed the imputations (a) and (c), respecting unpalatable food and some bad service, that it did not have that tendency to injure?” (emphasis added)

Their Honours referred to pars [56]–[57] in Beazley JA’s judgment and said: “[53] In this Court, the appellants have not demonstrated any error in those critical passages. The respondents properly emphasise that the fundamental difficulty here in the path of the appellants lies in the concept of ‘tendency’ which pitches the common law test at a fairly low threshold. It is sufficient that the imputation ‘be such as is likely to cause ordinary decent folk in the community, taken in general, to think the less of [the plaintiff]’.” Their Honours’ footnote to this paragraph cited the passage in Boyd to which I have referred.

Kirby J said (at [74]) that it was: “Common ground that a class of defamation exists (described as ‘business defamation’) where published material conveys defamatory imputations that injure a plaintiff in the plaintiff's business, trade or profession.” The footnote to his Honour’s reference to “business defamation” was to Brighton Ceiling Pty Ltd v Pocrnja [2005] NSWCA 175, an ex tempore decision of this Court which concerned the extent of an employer's indemnity for worker's compensation benefits paid to a worker injured by the negligence of a third party pursuant to s 151Z of the Workers Compensation Act 1987. It did not, with respect, touch on any issue of defamation.

Kirby J (at [76]) was also critical of the “notion that there is a special sub-variety of the tort of defamation concerned with a particular aspect of the damage suffered by an individual in consequence of a ‘business defamation’.” That notion, in his Honour’s view, had the vice of elevating “a particular category … into a species of the wrong as distinct from simply an instance of the wrong's operation”. He noted that: “[75] Upon one view, an injury to a business (being to a plaintiff in respect of its business or occupation) amounts to nothing more than a particular form of damage suffered in consequence of the general wrong of defamation. The tort itself is constituted by the lowering of the subject of the publication in the estimation of ordinary persons with whom the subject has dealings, whether such dealings are personal, societal, occupational or otherwise.”

Having regard to the common ground between the parties on the “business defamation” issue, Kirby J did not see it as appropriate to re-express the law of defamation at common law upon which the respondents relied. Rather, he said (at [81]), “[a]ny such re-expression or re-conceptualisation must await a case in which the grounds of appeal require this Court to address the relevance to the cause of action (as distinct from the damage) of the particular capacity or relationship in which the harm to reputation is said to have been done.” Although he also noted (at [82]) that “[t]he manner in which counsel for the appellants at trial addressed the jury, and the primary judge instructed them, on the test for concluding that the imputations, specifically (a) and (c), bore a ‘defamatory meaning’, were arguably consistent with the way the respondents had pleaded their cause of action in defamation” he was of the view that “because of the way the parties have defined the issues, this Court can disregard such questions.”

Having said that, his Honour concluded on this point (footnotes inserted): “[83] One particular problem presented by accepting a particular category of ‘business defamation’ is identifying the relevant audience in whose eyes the complaining party's reputation has then been diminished. Does it remain all ordinary people in the community, ‘taken in general’ [ Gardiner v John Fairfax & Sons Pty Ltd (1942) 42 SR (NSW) 171 at 172. See also Fleming , pp 582-583.]? Or, in the case of business defamation, is it confined to those who have, or might have had, business dealings with the plaintiff? This question is unanswered by those who propound the special category. [84] In a sense, the address to the jury by the appellants' counsel, and the directions of the trial judge complained of before the Court of Appeal, left it to the jury to determine whether the imputations which they found were conveyed by the article damaged the appellants' business reputation and were therefore defamatory. They were to do so having regard to the effect of the publication on ordinary decent people [See Fleming, p 583.] in general who might have become aware of the matter complained, which appeared in both the print and online versions of the first appellant's newspaper, The Sydney Morning Herald. On the premise that has been adopted, I accept, as the appellants do, that a misdirection occurred. It was not made sufficiently clear to the jury that some statements will be defamatory not by virtue of their impact on people generally, but, rather, based on the damage caused to their business reputation. It was therefore incorrect to speak generally of the effect of the publication on ordinary people at large and not also of (or alternatively of) the effect on the business reputation of the respondents or their business. [See reasons of Gleeson CJ and Crennan J at [6].]” (emphasis in original)

Kirby J held (at [126]) that the Court of Appeal had power to answer the questions presented for the determination of the jury in a way different from the answers given by the jury. However he determined (at [130]) that the Court’s exercise of that power miscarried because Beazley JA concluded that "the only verdict that could have been returned by the jury was that the imputations were defamatory". His Honour did not accept Beazley JA’s view that “[t]he question whether a restaurant serves unpalatable food or provides some bad service does not raise questions of community standards of the type discussed in Cairns v John Fairfax. ” He said (footnote inserted): “[142] Juries and community standards : I cannot agree that the function of the jury in reflecting ‘community standards’ was somehow immaterial, or of little relevance, to a decision in a case of ‘business defamation’, such as the present. [cf reasons of Gleeson CJ and Crennan J at [13].] Some judges may feel themselves better able to decide imputations damaging to a business than, for example, imputations concerned with sexual morality. However, it is not the case that ‘community standards’ are irrelevant in such matters. To say that would be to deny the legislative scheme that preserves the touchstone of community standards provided by a civil jury. It is far from inconceivable to me that a contemporary jury of Australian citizens might reasonably conclude that the review of the respondents’ restaurant was not defamatory of the respondents. They might take the view that it was basically an example of media entertainment in which any publicity is good publicity. Or that high price restaurateurs have to exhibit a thicker skin. Or that defamation should be reserved to more serious complaints because ‘free speech’ and the ‘free press’ really matter. Or that any defamation was of the respondents’ chef and waiting staff and not of them. [143] Moreover, on subjects such as a criticism of a restaurant’s food and service, lay jurors are much more likely to reflect community standards than judges, many of whom, like myself, have no special interest in culinary matters, expensive restaurants or cuisine generally. Astonishing as it may seem, judges may occasionally lack a sense of irony or humour. Some may undervalue ‘free speech’ or sometimes even feel hostility to a ‘free press’. In such matters, therefore, there is safety in the numbers of a jury. It was an error of the Court of Appeal to consider that community standards were insignificant in judging the suggested defamatory character of the review of the respondents' restaurant. With all respect, such an attitude contradicts the legislative preservation by s 7A(3) of the function of a jury. That function is not unreviewable. It does not exclude a proper role for the Court of Appeal. But the jury’s function is still very important. Because Parliament exceptionally provided for it, it is to be respected in defamation actions.” (emphasis added)

Callinan and Heydon JJ (at [169]) saw the key to the Court of Appeal’s decision as identifying the failure in the trial judge’s directions “to draw the necessary distinction between business defamation and personal defamation: directions appropriate to the latter were not to the point in a case of damage to business people claiming injury of a business kind”. They noted without criticism (at [170]) Handley JA’s views about s 108(3) including his observation that “[in] cases of business defamation in particular, in which community standards are of less significance than in others, an appellate court may not be as reluctant to enter a verdict without remitting the issues to another jury”.

Callinan and Heydon JJ identified as one of the issues on appeal the appellants’ submission “that it was erroneous for the Court of Appeal to hold that ‘community standards’ were of little or no relevance to cases of injury to plaintiffs in respect of their trades or businesses”. They concluded (at [187]) that “having regard to the clear meaning of the words of imputation (a) and (c), and the jury's unreasonable determinations in respect of them”, the Court of Appeal was bound to reverse the jury's decision.

Their Honours then dealt with the issue of community standards, saying: “(b) The relevance of community standards [189] The appellants submitted that a community standard or standards could properly bear upon the question, indeed effectively determine, whether the imputation that the respondents, as restaurateurs, sell unpalatable food and provided some bad service at their restaurant was conveyed, not conveyed, or conveyed and defamatory. [190] We would reject that submission. Business capacity and reputation are different from personal reputation. Harm to the former can be, as here, inflicted more directly and narrowly than harm to a person's reputation. A person who does not have an admirable character may be a very good restaurateur. It might be possible to say things about him or her personally that are not defamatory, but not about that person as a restaurateur in relation to the conduct of the restaurant. Restaurant standards rather than community ones are the relevant standards in that situation. No community standard or value could obliterate or alter the defamatory meaning of the imputations in this case. It is unimaginable, in any event, that the estimation of the respondents in the mind of any adult person, let alone a reasonable reader, would not be lowered by a statement that they sold unpalatable food and provided bad service at their restaurant, and did so for considerable sums of money. The reinforcement, by the trial judge in her redirections, of the present appellants' submission to the jury that they should have regard to community values and standards in assessing the defamatory nature or otherwise of the imputations, was, as the Court of Appeal held, erroneous.” (emphasis added) The reference to the respondents, in substance, carrying on their business “for considerable sums of money” appears to refer to imputation (b), the imputation the jury had found was not conveyed, a finding which was not challenged by the respondents in the Court of Appeal.

It is apparent from this analysis that the High Court did not speak with one voice on the issue of the relevance of community standards. Further, with respect to those who decried their relevance, it is not apparent in what sense they understood the expression. It is not clear, for example, that they understood the expression to mean matter which has a tendency to make ordinary right-thinking people think less of the plaintiff, albeit, in the case of business reputation imputations, to think less of the plaintiff’s reputation in the relevant business.

Gleeson CJ and Crennan J’s analysis (at [6]) recognised that the vice of business reputation imputations was their tendency to damage the plaintiff’s business reputation. They did not, however, directly address the issue of what direction a jury should be given in such a case to determine whether the imputations had the relevant tendency.

Gummow and Hayne JJ were clearly of the view (at [53]) that the question whether the Gacic imputations were defamatory turned on the orthodox test of whether the imputations “were such as is likely to cause ordinary decent folk in the community, taken in general, to think the less of [the plaintiff]”.

The issue of the proper directions to be given to a jury in the case of business reputation imputations was not a ground of appeal to the High Court. To the extent the issue of community standards was raised it was relevant to the issue of the exercise of the s 108 discretion. None of the authorities to which I have referred was mentioned by any of the members of the Court who rejected the relevance of community standards. Gleeson CJ and Heydon J had participated in the Favell judgment, which recognised the relevance of the “reasonable persons” approach.

As a member of an intermediate appellate court I am bound by the ratio of a decision of the High Court even if it has been decided per incuriam : Proctor v Jetway Aviation Pty Ltd [1984] 1 NSWLR 166 (at 177) per Moffitt P. However the question of the directions to be given to a jury as to how to determine whether business reputation imputations are defamatory was not a ground of appeal in Gacic . To the extent that Gleeson CJ and Crennan J and Callinan and Heydon JJ appear to have rejected the applicability of “community standards”, the former did not elaborate on their reasons for doing so, and the latter gave reasons which appeared to both embrace and reject the conventional notion of the reasonable reader test. In my view Gacic does not expose a ratio which binds this Court to reject the application of a test of whether business reputation imputations are defamatory which invokes the question whether they tend to cause ordinary right-thinking people to think less of the plaintiff in the relevant business respect.

What Gacic does emphasise, both in this Court and the High Court, is the necessity to explain clearly to the jury the different nature of the reputations a plaintiff may possess, an exercise the primary judge in this case sought to undertake. Business defamation: a separate tort?

Finally I would respectfully observe that the apparent recognition in Gacic of a category of “business defamation” distinct from “general defamation” appears, as Kirby J said ( Gacic , at [76]) to “elevate a particular category, based on past decisions and specific relationships and damage, into a species of the wrong as distinct from simply an instance of the wrong's operation”.

The only references to “business defamation” I have identified are the those in Gacic in this Court and in the High Court, in Middle East Airlines Airliban S.A.L. v Sungravure Pty Ltd [1974] 1 NSWLR 323, which concerned s 5 of the 1958 Act (at 334, per Hutley JA), in Isaacs J’s dissenting judgment in Howe & McColough v Lees [1910] HCA 67; (1910) 11 CLR 361 (at 380) and a reference to that term in Fausett v American Resources Management Corp 542 F Supp 1234 (1982), apparently a decision of the Central Division of the Utah District Court, quoted by Giles JA in State Bank of New South Wales Ltd v Currabubula Holdings Pty Ltd [2001] NSWCA 47; (2001) 51 NSWLR 399 (at [118]). With the exception, arguably of Gacic , and Middle East Airlines Airliban (which of course concerned the statutory tort created by the 1958 Act) none of the references suggested that whatever “business defamation” was, it attracted a different test for determining whether a publication said to fall under that rubric was defamatory.

Gleeson CJ and Crennan J referred to “business defamation” in Gacic (at [6]). That was, in my view, a shorthand reference to what their Honours had described (at [2]) as “that form of defamation which involves injury to business reputation; that is, the publication of imputations that have a tendency to injure a person in his or her business, trade, or profession”. I do not understand their Honours to have endorsed the notion that there is a category of business defamation distinct from “general defamation”.

I earlier referred to Mr Evatt’s contention that the appellant’s submission that there was no separate category of business defamation was incorrect. Of this submission two observations can be made. First, to the extent that Starkie stated that “all words tending to injure a merchant or tradesman are actionable” his work did not reflect the “general opinion of the profession”: Professor WL Morison, “The New Law of Verbal Injury”, (1959) 3 Sydney Law Review 4 (at 7). Secondly, I do not read Chapter III of Starkie which Mr Evatt provided to the Court as recognising a separate category of business defamation. Rather, as is apparent from Starkie (at 10) and the heading to Chapter III, that section of the book was directed to illustrating the imputations actionable in defamation which “affect a Person in his office, Profession, or Business”. Thirdly, Mr Evatt developed his primary proposition by submitting that “injury to business, professional and trade reputation has long been a part of common law defamation”, a statement in direct contradiction of his assertion that a separate category of “business defamation” exists.

There is no principled reason why statements which tend to injure a person in his or her trade, business or professional reputation should be separately categorised as “business defamation”. The adoption of categorisation which apparently distinguishes such cases from “general defamation” runs the risk of distracting attention from the fundamental test of what is defamatory, common to all cases of defamation, that that question turns on the standards of the hypothetical referees referred to in Reader’s Digest and whether, in their view, the imputations pleaded tend to injure the plaintiff’s reputation in the relevant personal or business respect. Conclusion

In a case in which the plaintiff asserts the matter complained of tends to injure his or her trade, business or professional reputation, the jury should, in my view, be directed that the question whether the imputations are defamatory turns on whether the hypothetical referee, whose standards are taken to reflect those of ordinary right-thinking people, would conclude that they tend to injure the plaintiff’s reputation in the relevant trade, business or professional respect.

The primary judge was, accordingly, in error in directing the jury that it asked whether, if conveyed, the business reputation imputations “damaged [the respondent] …in the practice of his profession as a journalist” without also directing the jury that in determining whether the imputations had that effect, it applied the standards of the hypothetical referees to whom I have referred. Orders

Mr McHugh submitted that if the Court upheld the appeal there should be a new trial on all imputations. I can see no warrant for that course. Each of the respondent’s imputations was a separate cause of action: s 9, 1974 Act. There are no inter-connected issues of fact relevant to the question whether the personal reputation imputations and the business reputation imputations are conveyed, and, if they are, whether they are defamatory: see Ipp JA’s discussion of the approach to the ordering of a new trial on some, but not all imputations in Gacic (at [135] ff). His Honour’s conclusion that it was appropriate in the case of a s 7A trial to return only some, but not all, imputations for a second jury trial, accords with the approach the High Court took in John Fairfax Publications Pty Ltd v Rivkin (at [170]) per Kirby J, (at [213]–[214]) per Callinan J (Gleeson CJ generally agreeing at [1]), Heydon J agreeing (at [223]–[224]).

Mr McHugh argued that the effect of the primary judge’s directions undermined an argument he advanced that the matter complained of was not defamatory because it amounted to no more than vulgar abuse. He argued that the effect of the jury not being properly directed as to the business reputation imputations would have been to confuse the jury considering his argument in respect of all the imputations that they were not conveyed because they would not lead ordinary reasonable people to think the less of the respondent, but, rather, ordinary reasonable people would understand the matter complained of as mere vulgar abuse.

I cannot accept this submission. First, the primary judge (at [17]) directed the jury that the question whether the imputations were conveyed was determined by applying the “ordinary reasonable listener”. That was the critical question to which the vulgar abuse submission was directed. Secondly, as I have explained the effect of the summing-up was to distinguish clearly between the test to be applied by the jury in considering whether the personal as opposed to the business reputation imputations were defamatory. The primary judge clearly directed the jury to apply the community standards test in relation to the personal reputation imputations. There is no reason in my view to conclude that in relation to the former category of imputations the jury applied an inappropriate test in considering the vulgar abuse argument.

Accordingly no error has been demonstrated in the jury’s performance of its s 7A duty in respect of the personal reputation imputations. It would be unjust to expose the respondent to a new trial on issues clearly separate from the business reputation imputations and not tainted by the misdirection identified in these reasons: Pateman v Higgin [1957] HCA 62; (1957) 97 CLR 521 (at 527) per Kitto J.

The appellant seeks an order that the respondent pay its cost of the entire s 7A hearing. This is not appropriate in circumstances where the Court is only setting aside the outcome of that hearing to the extent that it involved the business reputation imputations. Further, as Campbell JA (Mason P and Beazley JA agreeing) said in Monie v Commonwealth of Australia (No 2) [2008] NSWCA 15 (at [54] ff), it is the “usual rule” when a new trial is ordered, to order the costs of the first trial to follow the event in the new trial. That rule may be departed from in circumstances where conduct by one party caused the trial to miscarry, even though that conduct involved making a submission that the trial judge mistakenly accepts, rather than misconduct: Monie (at [57]).

In this case Mr Evatt persuaded the primary judge to direct the jury in accordance with what he submitted was the proper interpretation of Gacic , a submission he effectively abandoned in this Court. In my view, in such circumstances, it is appropriate to order that the respondent pay the costs of the first s 7A trial to the extent they related to the business reputation imputations.

I propose the following orders: (1) Appeal allowed. (2) Set aside the jury’s findings given on 18 July 2007 in respect of imputations (b), (c) and (d). (3) Order that there be a new trial pursuant to s 7A of the Defamation Act 1974 in respect of imputations (b), (c) and (d). (4) Respondent to pay the costs of appeal. (5) Respondent to pay the costs of the first s 7A trial to the extent they related to the business reputation imputations.