Mauli v University of the South Pacific [2007] WSSC 23 (5 April 2007)

IN THE SUPREME COURT OF SAMOA
HELD AT APIA

BETWEEN

FALEULU MAULI
of Alafua, Accountant.
Plaintiff

AND

UNIVERSITY OF THE SOUTH PACIFIC (USP)
a body corporate established pursuant to the Charter of the University
dated the 4th day of February 1970.
First Defendant

AND

MICHAEL YEE-JOY, JOHN GAUKRODGER, BRUCE SUTTON, LISA APTED
all of Suva Fiji, Chartered Accountants practising under the style KPMG
Second Defendants

Counsel: T R S Toailoa for plaintiff
R Drake for first defendant
P A Fepuleai for second defendants

Judgement: 5 April 2007

JUDGMENT OF SAPOLU CJ

Background

The hearing of this case commenced on 25 to 28 October 2005. It was then adjourned part heard. The hearing resumed on 6 March 2006 and the evidence was completed on 7 March 2006. Written submissions were then filed for the first defendant on 15 March 2006, for the second defendant on 17 March 2006, and for the plaintiff on 24 March 2006.

The plaintiff, at the material times, was employed as the chief accountant in the finance department of the University of the South Pacific (USP), the first defendant, at its Alafua campus in Samoa. The second defendants are auditors and chartered accountants who practise in Fiji as KMPG. They were appointed by the USP in 2001 to be its internal auditors and were re-appointed in 2002. In that year the second defendants developed an internal audit strategic plan. Under that plan, the second defendants were required to carry out an internal audit of the various campuses of the USP in the region. One of those campuses is the Alafua campus where the USP school of agriculture is established.

From 28 May to 10 June 2002, the second defendants, as a team of auditors, carried out an internal audit of the various departments of the USP at its Alafua campus. One of those departments was the finance department which was headed by the plaintiff as chief accountant. When the second defendants completed their internal audit, they prepared a draft report which contained their opinions, findings and recommendations in respect of each department which had been the subject of their audit. This report was entitled "Management Assurance, Alafua Campus and Samoa Centre, June 2002." The report is divided up into sections. Each section relates to a particular area of operation or activity covered in the audit.

A copy of the draft report was then given by the second defendants to the bursar of the Alafua campus. The bursar gave a copy of the draft report to the pro vice chancellor to distribute to each department head. The pro vice chancellor then gave out to each department head a copy of each part of the draft report that was relevant to his/her department for review and comments. As head of the finance department, the plaintiff was provided with a copy of each part of the draft report that was relevant to the finance department for his comments. A senior management team of the USP at the Alafua campus then discussed the draft report together with the comments from the heads of departments and decided to send them to the second defendants in Fiji. Those comments and the draft report were then sent by the bursar to the second defendants in Fiji. The second defendants incorporated those comments into the draft report by inserting each comment or set of comments immediately after each part of the report to which it relates. The comments by the plaintiff were incorporated verbatim into the report and each set of those comments was inserted immediately after each part of the report to which it relates. The draft report with the comments by the various heads of departments incorporated in it and an "Executive Summary" of nine pages made up the final report which consists of 156 pages. A copy of that report was then given to the three member audit committee of the USP, the pro vice chancellor, and each of the heads of the departments at the Alafua campus. A copy of the Executive Summary of the report was also given to the staff committee of the USP in Fiji.

In November 2002 when the plaintiff’s contract of employment came up for review, the staff review committee decided not to renew the plaintiff’s employment with the USP. The evidence given for the plaintiff and for the second defendants on this part of the case are somewhat conflicting. Essentially what is alleged for the plaintiff on the basis of the evidence given by the witnesses called on his behalf is that the report by the second defendants contains statements defamatory of the plaintiff, that those statements were made negligently, and they influenced the decision by the staff review committee not to renew the plaintiff’s contract of employment. The second defendants are therefore said to be liable to the plaintiff in negligence. On the other hand, the evidence given for the second defendants is to the effect that the plaintiff’s contract of employment was not renewed because he was not performing his duties at an acceptable level. As it will appear in the course of this judgment, it is not necessary to resolve this conflict in the evidence or to go into it in detail.

Plaintiff’s causes of action

The plaintiff relies in his first amended statement of claim on two causes of action. The first cause of action is in defamation and the second cause of action is in negligence. I will deal first with the cause of action in defamation.

Statements alleged to be defamatory of the plaintiff

In the plaintiff’s first amended statement of claim, certain statements contained in the second defendant’s report entitled "Management Assurance, Alafua Campus and Samoa Centre, June 2002" are alleged to be defamatory of the plaintiff. Those statements, as pleaded, are that:

(a) The Chief Accountant is noted to have business interests which suggest a conflict with the discharging of his duties as the most senior financial officer at the campus.

(b) The procurement function of the Dining Hall (for food items only) is controlled by the Chief Accountant, and this has led to conflicts and other issues arising.

(c) We note that the Chief Accountant has various business interests that may conflict with the discharging of his responsibilities as an employee of the University.

(d) We believe that employees of the University should not be excluded from participating in family or other business/commercial ventures, however, these should not conflict with their primary responsibility to the University as an employer or conflict with services provided by the University.

(e) Matters noted which suggest a conflict of interest include:

• the regular absence of the CA from the University during working hours, during which period we understand he performed personal errands.
  
• the stopping of all outside catering by the Dining Hall, a service which is provided by the CA’s business interest.
  

It is then alleged that the matters complained of carry the imputation that the plaintiff was dishonest in the conduct of his duties as chief accountant and has taken advantage of his position for his personal gains and that of his family’s business interests.

Legal principles relevant to the defamation claim

For the purpose of deciding an action in defamation, it is suggested that the following approach will be a helpful one for the Judge to follow:

(a) Functions of the Judge

1. First determine whether the matter complained of carries the imputation pleaded by the plaintiff. This will essentially be a question of interpretation. If the Judge determines that the matter complained of does not carry the imputation pleaded by the plaintiff, then that imputation should be dismissed.
   
2. If the Judge determines that the matter complained of carries the imputation pleaded by the plaintiff, then he should determine whether the imputation is defamatory. This will essentially be a question of evaluation.
   
3. If the Judge determines that the matter complained of carries the imputation pleaded by the plaintiff and that the imputation is defamatory, then the next stage is to determine whether the matter complained of was published by the defendant.
   
4. If the Judge determines that the matter complained of carries the imputation pleaded by the plaintiff, that the imputation is defamatory, and that the matter complained of was published by the defendant, then the next stage is for the Judge to determine:
   
   • (a) whether any defence raised by the defendant (including all issues of fact and law relating to that defence) has been established, and
     
   • (b) the amount of damages (if any) that should be awarded to the plaintiff and all unresolved issues of fact and law relating to the determination of that amount.
     

See Charbel CJ Pty Ltd v Owners Corporation Strata Plan [2005] NSWCA 241 per Hunt AJA at para 23; John Fairfox Publications Pty Ltd v Rivkin [2003] HCA 30 per Callinan J at para 176 where the approach to be followed in a defamation case tried before a Judge and jury is set out.

(b) Whether the matter complained of carries the imputation pleaded by the plaintiff

In determining whether the matter complained of carries the imputation pleaded by the plaintiff, Hunt J who is recognised in Australia as an expert and experienced Judge in this area of the law stated in Farquhar v Bottom [1980] 2 NSWLR 380 at pp 385-386 in a passage which has been applied in a number of Australian cases:

"In deciding whether the matter complained is capable of conveying to the ordinary reasonable reader the imputations relied upon by the plaintiffs, I must be guided and directed by the test of reasonableness. I must reject any strained, or forced, or utterly unreasonable interpretation: Jones v Skelton [1963] S R (NSW) 644. I must proceed upon the basis that the ordinary reasonable reader is a person of fair, average intelligence: Statyer v Daily Telegraph Newspaper Co Ltd [1908] HCA 22; (1908) 6 CLR 1 at 7; who is neither perverse: ibid; nor morbid or suspicious of mind: Keogh v Incorporated Dental Hospital of Ireland (1910) 2 Ir R 577 at 586; nor avid for scandal: Lewis v Daily Telegraph Ltd [1964] AC 234 at 260.

"The ordinary reasonable reader does not, we are told, live in an ivory tower. He can, and does, read between the lines, in the light of his general knowledge and experience of worldly affairs: Lewis v Daily Telegraph Ltd (supra at 258); Jones v Skelton (supra at 650); Lang v Australia Consolidated Press Ltd [1970] 2 NSWLR 408 at 412. It is important to bear in mind that the ordinary reasonable reader is a layman, not a lawyer, and that his capacity for implication is much greater than that of the lawyer: Lewis v Daily Telegraph Ltd (supra at 277); Morgan v Odhams Press Ltd [1971] 2 A11ER 1156 at 1163; Lang v Australian Consolidated Press Ltd [1970] 2 NSWR 408 at 412; Middle East Airlines Airliban SAL v Sungravure Pty Ltd [1974] NSWLR 323 at 340..."

In Australia, New Zealand and England, defamation cases are tried before a jury. This is why, it is stated in some of the defamation cases from those jurisdictions that it is for the Judge to determine whether the matter complained of is capable of carrying the imputation pleaded by the plaintiff but it is for the jury to determine whether the matter complained of does, in fact, carry such imputation. Likewise, it is stated in some of the cases from those jurisdictions that it is for the Judge to determine whether the imputation pleaded by the plaintiff is capable of carrying a defamatory meaning but it is for the jury to determine whether the pleaded imputation is, in fact, defamatory. In Samoa, defamation cases, as with all other civil cases, are tried by a Judge alone. So it is for the Judge and not a jury to determine both questions whether the matter complained of actually carries the imputation pleaded by the plaintiff and whether that imputation is actually defamatory. So there is no two stage process between a Judge and a jury as it is in Australia, New Zealand and England where defamation cases are tried before a jury. It is important to bear this fact in mind when reading defamation cases from those jurisdictions.

In the case of John Fairfax Publications Pty Ltd v Rivkin (2003) HCA 50, McHugh J explained the characteristics of the hypothetical ordinary reasonable reader by saying at para. 26;

"[Although] a reasonable reader may engage in some loose thinking, he or she is not a person ‘avid for scandal’ (Lewis v Daily Telegraph Ltd [1964] AC 234 at 260). A reasonable reader considers the publication as a whole (Mirror Newspaper Ltd v World Hosts Pty Ltd (1979) 141 CLR 632 at 646; Australian Broadcasting Corporation v Comalco Ltd [1986] FCA 300; (1986) 12 FCR 510; Morosi v Broadcasting Station 2GB [1980] 2NSWLR 418 (n). Such a reader tries to strike a balance between the most extreme meaning that the words could have and the most innocent meaning (Lewis v Daily Telegraph Ltd [1964] AC 234 at 259-260). The reasonable reader considers the context as well as the words alleged to be defamatory (Neville v Fine Art and General Insurance Co Ltd [1896] UKLawRpAC 58; [1897] AC 68 at 72, 78; English and Scottish Co-operative Properties Mortgage & Investment Society Ltd v Odhams Press Ltd [1940] 1KB 440 at 452). In one part of the publication, something disreputable to the plaintiff is stated, but that is removed by the conclusion; the bane and antidote must be taken together.’ (Chalmers v Payne [1835] EngR 38; (1835) 2 Cr M&R 156 at 159 [150 E R 67 at 68]; Bik v Mirror Newspapers Ltd [1979] 2 NSWLR 679 at 682, 683-684; Monte v Mirror Newspaper Ltd [1979] 2 NSWLR 663 at 671). But this does not mean that the reasonable reader does or must give equal weight to every part of the publication (Mirror Newspaper Ltd v World Hosts Pty Ltd (1979) 141 CLR 632 at 646). The emphasis that the publisher supplies by inserting conspicuous headlines, headings and captions is a legitimate matter that readers do and are entitled to take into account (Mirror Newspaper Ltd v World Hosts Pty Ltd (1979) 141 CLR 632 at 646. Contrary statements in an article do not automatically negate the effect of other defamatory statements in the article (Savige v News Ltd [1932] SAStRp 1; [1932] SASR 240; Hopman v Mirror Newspaper Ltd (1960) 61 SR (NSW) 631; Sergi v Australian Broadcasting Commission [1983] 2 NSWLR 669)."

Further on the characteristics of the hypothetical ordinary reasonable reader, Lord Bridge who delivered the leading judgement in Charleston v News Group Newspapers Ltd [1995] UKHL 6; [1995] 2 AC 65 said at p. 73:

"I have no doubt that Mr Craig is right in his assertion that many ‘News of the World’ readers who saw the offending publication would have looked at the headlines and photographs and nothing more. But if these readers, without taking the trouble to discover what the article was all about, carried away [an impression that was defamatory of the plaintiffs], they could hardly be described as ordinary, reasonable, fair-minded readers."

The New Zealand approach to the question of whether the matter complained of conveys the imputation (meaning) pleaded by the plaintiff is differently expressed from the Australian approach, but basically the two approaches are the same. The real question is what would the hypothetical ordinary reasonable person understand the matter complained of to mean. This is usually referred to as the natural and ordinary meaning of the matter which is the subject of complaint. Does the hypothetical ordinary reasonable person understand the matter complained of to convey the imputation (meaning) pleaded by the plaintiff? The New Zealand approach to this question is reflected in the case of The New Zealand Magazines Ltd v Hadlee (CA 74/96, 24 October 1996), cited by counsel for the first defendant, where Blanchard J said:

"(a) The test is objective: under the circumstances in which the words were published, what would the ordinary reasonable person understand by them?

(b) The reasonable person reading the publication is taken to be one of ordinary intelligence, general knowledge and experience of worldly affairs.

(c) The Court is not concerned with the literal meaning of the words or the meaning which might be extracted on close analysis by a lawyer or academic linguist. What matters is the meaning which the ordinary reasonable person would as a matter of impression carry away in his or her head after reading the publication.

(d) The meaning necessarily includes what the ordinary reasonable person would infer from the words used in the publication. The ordinary person has considerable capacity for reading between the lines.

(e) But the Court will reject those meanings which can only emerge as the product of some strained or forced interpretation or groundless speculation...,

(f) The words complained of must be read in context. They must therefore be construed as a whole with appropriate regard to the mode of publication and surrounding circumstances in which they appear....."

(c) Whether the imputation pleaded by the plaintiff is defamatory

If it is determined that the matter complained of conveys the imputation pleaded by the plaintiff, then the next stage is to determine whether the imputation is defamatory. Here the question is what is the impact of the imputation on a hypothetical audience of ordinary reasonable people. All three counsel have referred in their written submissions to the various definitions of the term "defamatory" given in the English cases. For present purposes, I refer to Mirror Newspaper Ltd v World Hosts Pty Ltd (1979) 141 CLR 632 where Mason and Jacobs JJ, in their joint judgment, said at p.638:

"[The] plaintiff had to prove at common law 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."

A similar view was expressed in Mount Cook Group v Johnstone Motors [1990] NZHC 137; [1990] 2 NZLR 488 where Tipping J said at p.497:

"What it comes down to in my view is that the plaintiff must establish that ordinary people of reasonable intelligence, seeing the poster and making the link with Mount Cook, would tend to think less of Mount Cook from the point of view of its commercial ethics and standards."

It follows from these authorities that an imputation would be defamatory of the plaintiff if it is likely to lead hypothetical ordinary reasonable people to think the less of him.

From what has been said, I would accept the submission for the plaintiff that in determining whether the matter complained of carries the imputation pleaded by the plaintiff and whether that imputation is defamatory, the intention of the defendant is irrelevant. The real question is what ordinary reasonable people understood the matter complained of to convey and whether the meaning conveyed is defamatory. What matters is not what the defendant intended to convey, but what ordinary reasonable people understood the matter complained of to convey and whether the meaning conveyed is defamatory.

(d) Whether the matter complained of was published by the defendant

Where it has been determined that the matter complained of conveys the imputation pleaded by the plaintiff and that imputation is defamatory, the next stage is to determine whether the matter complained of was published by the defendant. Publication is usually not an issue between the parties but where it is an issue, it becomes a question of fact for the Judge to decide.

At common law, publication is the making known of a defamatory matter to some person other than the person defamed. The case of Pullman v Hill and Co [1891] 1QB 524 is usually cited as authority for that proposition. So to communicate a defamatory matter to some person other than the plaintiff would be publication of that defamatory matter and the publisher may be liable in defamation.

The general rule at common law is that the original publisher of a defamatory matter is not liable for the republication of the defamatory matter by someone else: Gatley on Libel and Slander 9th edition paragraph 6.3. The exceptions to that general rule by which the original publisher may be liable for republication of the defamatory matter by someone else were set out by Lopes J in Speight v Gosnay (1891) 60 L J Q B 231 at 232. They are:

(a) where the original publisher authorised or intended the republication;

(b) where the republication was the natural and probable consequences of the original publication; and

(c) where the person to whom the original publication was made was under a duty to repeat it to someone else.

If the plaintiff intends to make the defendant liable for the original publication of a defamatory matter then that should be pleaded. Likewise, if the plaintiff intends to make the defendant liable for the republication by someone else of the original publication then that should also pleaded.

(e) Defences raised by the defendants

If it is determined that the matter complained of conveys the imputation pleaded by the plaintiff, that the imputation is defamatory, and that the matter complained of was published by the defendant, the next stage is to determine any defence raised by the defendant. In respect of possible defences, if the defendant intends to rely on a special defence, for example, absolute privilege, qualified privilege or justification (truth), then such defence should be pleaded. It is not enough that such defence is only raised in the concluding submissions of counsel. This has been the problem in this case with the defence of qualified privilege raised in the concluding written submissions for the second defendants but was not pleaded in their statement of defence. No amendment to the statement of defence has also been sought.

The first defence raised by both the first defendant and the second defendants is that the matter complained of does not carry the imputation pleaded by the plaintiff. This will essentially be a question of interpretation whether the words complained of convey the meaning pleaded by the plaintiff. Both the first defendant and the second defendants also claim that the audit report by the second defendants is not defamatory. I think what is really meant here is that the matter complained of does not carry the imputation pleaded by the plaintiff or any defamatory imputation. The meaning derived by the plaintiff from the words complained of is that he was dishonest in the conduct of his duties as chief accountant of the USP at its Alafua campus and that he had taken advantage of his position for personal gains and for his family’s business interests. Such an imputation which includes dishonesty and misuse of position is clearly defamatory. So by saying that the audit report is not defamatory, I do not understand the defendants to mean that the imputation pleaded by the plaintiff is not defamatory for it is clearly defamatory if correct. What I understand the defendants to mean is that the words complained do not convey the defamatory meaning pleaded by the plaintiff. In addition, counsel for the first defendant says in her written submissions that when the parts of the report complained of are read together with the related comments of the plaintiff, any bane in the parts of the report complained of has been effectively neutralised or removed by the antidote which is the comments of the plaintiff. This means that if the matter complained of is defamatory, the comments by the plaintiff have rendered it non-defamatory. The antidote has wholly neutralised the bane.

The principle of bane and antidote was explained in Charleston v News Group Newspapers Ltd [1995] UKHL 6; [1995] 2 AC 65 where Lord Bridge, in the House of Lords, stated at p.70:

"The first formidable obstacle which Mr. Craig’s argument encounters is a long and unbroken line of authority the effect of which is accurately summarised in Duncan & Neill on Defamation, 2nd edition (1983), p.13, para.4.11 as follows:

"In order to determine the natural and ordinary meaning of the words of which the plaintiff complains it is necessary to take into account the context in which the words were used and the mode of publication. Thus a plaintiff cannot select an isolated passage in an article and complain of that alone if other parts of the article throw a different light on that passage."

"The locus classicus is a passage from the judgement of Alderson B. in Chalmers v Payne [1835] EngR 38; (1835) 2 C. M. & R. 156, 159, who said:

"But the question here is, whether the matter be slanderous or not, which is a question for the jury; who are to take the whole together, and say whether the result of the whole is calculated to injure the plaintiff’s character. In one part of this publication, something disreputable to the plaintiff is stated, but that is removed by the conclusion, the bane and antidote must be taken together.

"This passage has been so often quoted that it has become almost legal jargon among libel lawyers to speak of the bane and the antidote."

In another English case, Mark v Associated Newspaper Ltd [2002] EWCA 772, Simon Brown LJ, in the Court of Appeal, stated in para.37:

"The current approach is not in doubt. If the defamatory sting of an article is wholly removed by surrounding words, then, to use Baron Alderson’s famous phrase in Chalmers v Payne [1835] EngR 38; (1835) 2 CM & R 156, 159: ‘The bane and antidote must be taken together’. Nor could it be doubted that the principle applies to repetition cases – see again, Stern v Piper. As Hutley JA observed in Sergi v Australia Broadcasting Commission [1983] 2 NSWLR 669, 670: ‘ the bane and antidote theory....is surely a vivid way of stating that the whole publication must be considered, not a segment of it. One asks, therefore, in this as in any other case where the principle is invoked, whether considered as a whole the publication is damaging to the claimant’s reputation. That, at least, is the question ultimately to be asked."

In Gatley on Libel and Slander (1998) 9th edition at 3.29, the learned authors state:

"It will be a question in each case whether the antidote is sufficient to offset the bane; the mere presence of a denial of a defamatory charge does not necessarily prevent the article being defamatory for the reader may be left in the position of having to choose between inconsistent assertions."

In Australia in the case earlier cited of Farquhar v Bottom [1980] 2 NSWLR 380, Hunt J said:

"It was argued on behalf of the defendants to construe the matter complained of as a whole, and to conclude that the bane created by the author’s assertion had been outweighed by the antidote of the defendant’s denial: Chalmers v Payne [1835] EngR 38; (1835) 2 CM & R 156. The mere presence of a denied defamatory charge does not make the matter complained of as a whole incapable, nevertheless, of conveying the defamatory imputation so denied for, in such a situation, the reader is presented with two conflicting assertions, with the choice of accepting either: Savige v News Ltd [1932] SAStRp 1; [1932] SASR 240; Hopman v Mirror Nespapers Ltd [1961] SR (NSW) 631.

There are cases, of course, in which a refutation is of such a nature that, taken as a whole, the matter complained of is incapable of conveying the imputation refuted, for example, where the imputation arises by way of inference only, and the matter complained of itself contains an express disclaimer of any intention to convey such an imputation: Stubbs Ltd v Russell [1913] UKLawRpAC 13; [1913] AC 386; or where the refutation consists of a statement of fact destructive of the entire basis upon which the imputation relies: Bik v Mirror Newspapers Ltd [1979] 2 NSWLR 679.

But such cases are comparatively rare: Morosi v Broadcasting Station 2GB Pty Ltd [1980] 2 NSWLR 418."

In Sergi v Australian Broadcasting Commission (1983) 2 NSWLR 669, Hutley JA said at p.670:

"There being no doubt that if portions of the material published stood alone, the plaintiff/appellant would have been defamed, it is only if the whole of the material published does not permit of a defamatory meaning that there is no case to go to jury. The bane and antidote theory upon which Hunt J relied is merely a vivid way of stating that the whole publication must be considered, not a segment of it:cf World Hosts Pty Ltd v Mirror Newspaper Ltd [1976] NSWLR 712, at 719, 725. It must follow that it is only rarely that it will be possible for a Judge to remove from the jury the issue whether the whole publication is defamatory where a publication contains clearly defamatory statements if they had been published in their own. As Samuels JA said: ‘cases (i.e., when a publication which seeks to refute a calumny which it expressly states may be held incapable of conveying any defamatory meaning) must be comparatively rare: Morosi v Broadcasting Station 2GB Pty Ltd [1980]2 NSWLR 418(n), at 419."

In New Zealand in the unreported case of New Zealand Magazines Ltd v Hadlee (1996) (CA 74/96, 24 October 1996), Blanchard J in the Court of Appeal said:

"What is involved where someone has repeated a rumour, whilst at the same time saying that it is not so, is a weighing up or comparison of ‘bane’ and ‘antidote’ to adopt Alderson B’s expression in Chalmers v Payne (1835)2 CM & R 156; [1835] EngR 38; 150 ER 67. It is a question of degree and competing emphasis but it may be easier to arrive at an answer where the publication contains an express disclaimer or ‘where the antidote consists in a statement of fact destructive of the ingredients from which the bane has been brewed: Morosi v Broadcasting Station 2GB Pty Ltd [1980]2 NSWLR 418n, 420(Samuels JA)."

In England, as it is in Australia and New Zealand, the question of whether an imputation pleaded by the plaintiff is capable of being defamatory is to be determined by the Judge. But the question of whether the imputation is in fact defamatory is to be decided by the jury. The cases cited on the principle of bane and antidote were concerned with preliminary proceedings to strike out a pleaded imputation as not being capable of being defamatory and therefore should not be permitted to be put before the jury whose function it is to decide whether the imputation is actually defamatory. The cases cited were not concerned with how the jury decided whether an imputation which is capable of being defamatory was in fact defamatory. This is a matter to be borne in mind when reading English, Australian and New Zealand cases on the formula of bane and antidote because defamation cases in Samoa are tried before a Judge alone who has to determine whether the imputation is actually defamatory.

I leave aside the question of damages. But I should mention here that there is a reference in the plaintiff’s first amended statement of claim to an innuendo. That reference to an innuendo was not pursued during the trial. I say this because the plaintiff relies only on what he claims to be the natural and ordinary meaning of the words complained of. There was also no special meaning pleaded. The plaintiff also did not call any witness to say that because of his special knowledge of the plaintiff, statements about the plaintiff which appear innocuous bear a defamatory meaning to him because of his special knowledge of the plaintiff. I therefore say no more about the alleged innuendo.

Legal principles relevant to the negligence claim

The attitude of the New Zealand Courts has been to keep the tort of defamation and the tort of negligence apart and to avoid the two being merged by permitting a plaintiff to sue in negligence on a statement alleged to be defamatory and to have been made negligently. In Bell-Booth Group Ltd v Attorney-General [1989]3 NZLR 148 where the plaintiff sued in both defamation and negligence, Cooke P in delivering the judgment of the New Zealand Court of Appeal stated at pp 155-156:

"As far at least as the law of torts is concerned, the common understanding is almost certainly as expressed by Hallet J in Foaminol Laboratories Ltd v British Artid Plastics Ltd [1941] 2 A11 ER 393, 399: ‘a claim for mere loss of reputation is the proper subject of an action for defamation, and cannot ordinarily be sustained by means of any other form of action."

Further on at p.156 Cooke P stated:

"The common law rules, and their statutory modifications, regarding defamation and injurious falsehood represent compromises gradually worked out by the Courts over the years, with some legislative adjustments, between competing values. Personal reputation and freedom to trade on the one hand have to be balanced against freedom to speak or criticise on the other.

In the result the present rules are in broad terms well-known and reasonably clear. To an action for defamation truth is an absolute defence. Privilege, where applicable, is in a few cases an absolute but in most a qualified defence. Fair comment is a qualified defence subject to rather different rules. In injurious falsehood, on the other hand, the plaintiff has the burden of proving both falsity and malice. These evolved compromises may not draw the lines in places that will always be found generally acceptable in the community. Some argue, for instance, for greater media freedom or license; statutory changes have been recommended but not enacted. It is a controversial area. The important point for present purposes is that the law as to injury to reputation and freedom of speech is a field of its own. To impose the law of negligence upon it by accepting that there may be common law duties of care not to publish the truth would be to introduce a distorting element.

"It was argued for the appellant, inter alia, that neither defamation nor slander of goods requires a background duty or breach; and if injury does or may involve those separate elements, there is no ground for depriving the plaintiff of a separate cause of action. That is really no more than a semantic point. The duty in defamation may be described as a duty not to defame without justification or privilege or otherwise than by way of fair comment. The duty in injuries falsehood may be defined as a duty not to disparage goods untruthfully and maliciously. In substance the appellant would add to these duties a duty in such a case as this to take care not to injure the plaintiff’s reputation by the statements. All the arguments for the appellant, though put skilfully in various ways by counsel, reduce to that proposition. In our opinion, to accept it would be to introduce negligence law into a field for which it was not designed and is not appropriate." (emphasis mine).

In the case of Balfour v Attorney General [1990] NZCA 364; [1991] 1 NZLR 519, Hardie Buys J, in delivering the judgment of the New Zealand Court of Appeal, stated at p.529:

"Any attempt to merge defamation and negligence is to be resisted. Both these branches of the law represent the result of much endeavour to reconcile competing interests in ways appropriate to the quite distinct areas with which they are concerned, but not necessarily appropriate to each other:see Bell-Borth Group Ltd v Attorney-General [1989]3 NZLR 148, 155-157. An inability in a particular case to bring it within the criteria of a defamation suit is not to be made good by the formulation of a duty of care not to defame."

In the next New Zealand case of South Pacific Manufacturing Co v New Zealand Security Consultants; Mortensen v Laing [1992] 2 NZLR 282, Cooke P stated at pp 301-302:

"Any shortcomings in the investigation of a fire insurance claim are unlikely in themselves to harm the insured. If there is real harm it will probably arise from the report by the investigators to the insurer. To the extent that the report reflects adversely on the insured by suggesting that he may have been guilty of arson the insured will prima facie have a cause of action in defamation. Initially at least, the publication may be very limited; yet it could have most serious consequences for the insured and warrant substantial general or special damages.... It will be a defence, however, if the investigators can prove the truth of the imputation. And more importantly in the present context, the report of the investigators made pursuant to their contractual duty to the insurer will be the subject of qualified privilege.

Qualified privilege can be defeated by proof of malice, but not by proof of mere negligence. The suggested cause of action in negligence would therefore impose a greater restriction on freedom of speech and its limitations. By a side wind the law of defamation would be overthrown...Qualified privilege is conferred because of reciprocal duty and interest between a writer or speaker and those with whom he communicates. To cut down the practical scope of the protection would run counter to public policy in this field."

In the more recent decision of the New Zealand Court of Appeal in Midland Metals Overseas Pte v The Christchurch Press Co [2001] NZCA 321, Gault J in a joint judgment with Keith and McGrath JJ said at para 25:

"Nor are we persuaded that there is a need to superimpose on the existing torts of defamation and slander of goods, a tort of negligent untrue statements causing damage to reputation. Certainly in the Spring case their Lordships were careful in various ways to limit the views expressed to the circumstances of the case before them. Lord Keith of Kinkel, who dissented, referred to the three New Zealand cases and concluded (p. 313):

"The views expressed in these three cases decided in "a jurisdiction which is well-known to be tender in its "approach to claims in negligence involving pure "economic loss are of great importance. The process "of reasoning which they contain is in my opinion "entirely sound and apt to be followed and applied in "the present case."

At para 65, Tipping J said:

"There are also major policy reasons why the law should decline to recognise a duty of care in these circumstances. These policy reasons relate to the undesirability of upsetting the careful balance between private interests and freedom of speech which the law of defamation and the associated torts have struck. In this respect I entirely agree with what was said by this Court in Bell Booth Group Ltd v Attorney-General [1989] NZCA 9; [1989] 3 NZLR 148, 156. The common law rules relating to defamation and the associated torts, and the use of negligent words, represent compromises gradually worked out by the Courts over the years between the competing values of personal reputation and economic interest on the one hand, and freedom of speech on the other. They should not lightly be altered."

In Australia, the Courts there have accepted the position stated by Cooke P in Bell-Borill Group Ltd v Attorney-General [1989] NZCA 9; [1989] 3 NZLR 148 as opposed to the different position taken by the majority of the House of Lords in Spring v Guardian Assurance Plc [1995] 2 AC 296 that an employer owed a duty to take care when writing a reference for an ex-employee which turned out to be incorrect and defamatory. In the case of Sattin v Nationwide News Pty Ltd (1996) 39 NSWLR 32, Levine J in the Supreme Court of New South Wales reviewed the relevant New Zealand authorities and Spring v Guardian Assurance Plc [1995]2 AC 296 and then said p.43:

"Publication in instruments of mass communication involve competing questions of freedom of speech and protection of reputation and as the learned President put it in Bell-Booth Group Ltd the law deals with those competing questions by means of ‘compromises.’ The resolution of that tension between the two competing interests is represented by the law of defamation at common law and its statutory modifications.

I myself find it difficult to disagree with the learned President when he says that ‘ the law as to injury to reputation and freedom of speech is a field of its own’ and the introduction into the law of defamation especially involving instruments of mass communication of some common law duty of care in effect to ‘get a publication right’ would amount to an unacceptable distortion of the principles of common law (as affected by statute) in the law of defamation relating to the balancing of freedom of speech and protection of reputation."

Further on at pp 44-45, Levine J said:

"The falsity was damaging to the plaintiff’s reputation (at least, for present purposes) and thereby gives rise to a cause of action in defamation. I have not been persuaded that the remedy the plaintiff seeks lies elsewhere. I am satisfied that as a matter of principle the proposed amendment to plead the cause of action in negligence cannot be allowed."

Other Australian cases which have accepted the views expressed by Cooke P in Bell-Booth Group Ltd include Gould v TCN Channel 9 [2000] NSWSC 707; Griffith & Ors v ABC [2004] NSWSC 582; Cornwall & Ors v Rawan [2004] SASC 384. A similar view to that expressed by Cooke P in Bell-Booth Group Ltd was also expressed by the High Court of Australia in Sullivan v Moody (2001) HCA 59 where it was observed at paras 53-55:

"Developments in the law of negligence over the last 30 or more years reveal the difficulty of identifying unifying principles that would allow ready solution of novel problems. Nonetheless that does not mean that novel cases are to be decided by reference only to some intuitive sense of what is ‘fair’ or ‘unfair’. There are cases, and this one, where to find a duty of care would so cut across other legal principles as to impair their proper application and thus lead to the conclusion that there is no duty of care of the kind asserted. The present cases can be seen as focusing as much on the communication of information by the respondents to the appellants and to third parties as upon the competence with which the examinations or other procedures were conducted. The core of the complaint by each appellant is that he was injured as a result of what he, and others, were told. At once, then, it can be seen that there is an intersection with the law of defamation which resolves the competing interests of the parties through well developed principles about privilege and the like. To apply the law of negligence in the present case would be to resolve that competition on an altogether different basis. It would allow recovery of damages for publishing statements to the discredit of a person where the law of defamation would not.

More fundamentally, however, these cases present a question about coherence of the law".

In the next High Court case of Tame v The State of New South Wales (2002) HCA 35 Gleeson CJ said at para 28:

"Furthermore, as in Sullivan v Moody, this is a case where the appellant claims to have been injured in consequence of what others were told about her. There is the same intersection with the law of defamation and the same need to preserve legal coherence. In the events that occurred Mrs Tame’s reputation was not harmed. But supposing it had been. Then the law would have engaged in the exercise of balancing the rights and responsibilities of Mrs Tame and Acting Sergeant Beardslay by reference to considerations many of which would be rendered irrelevant by the application of the law of negligence."

In Spring v Guardian Assurance Plc [1995] 2 AC 296, the plaintiff, a former employee, requested from the defendant, his former employer, a written reference which the former employer supplied to prospective employers. The reference contained statements which were incorrect and defamatory of the plaintiff. It was alleged, inter alia, by the plaintiff that the reference was written without reasonable care. The plaintiff brought a claim in both defamation and negligence.

The majority of the House of Lords in Spring held that the concurrent cause of action in negligence was maintable and the plaintiff was held to be liable in negligence. Lord Goff reasoned that liability in negligence could be founded on the principle established in Hedley Byrne & Co Ltd v Heller & Partners Ltd [1963] UKHL 4; [1964] AC 465. Lord Slynn and Lord Woolf distinguished the New Zealand line of cases which include Bell Booth Group Ltd v Attorney General [1989] NZCA 9; [1989] 3 NZLR 148. Lord Lowry also upheld the cause of action in negligence. Lord Keith, who dissented, adopted the New Zealand line of cases.

In a developing common law jurisdiction like Samoa, it is no easy task to decide whether or not to adopt an important legal principle on which the highest Courts in the developed common law jurisdictions appear to hold inconsistent views. At the present stage, I am inclined to follow the position (earlier referred to) taken in the New Zealand cases of Bell Booth Group Ltd v Attorney General [1989] NZCA 9; [1989] 3 NZLR 148; Balfour v Attorney General [1990] NZCA 364; [1991] 1 NZLR 519; South Pacific Manufacturing Co. v New Zealand Security Consultants; Mortenson v Laing [1992] 2 NZLR 262; as further explained in Midland Metals Overseas Pte v The Christchurch Press Co [2001] NZCA 321. This is in order to maintain coherence in the law. The Zealand position has also been adopted and applied by some of the Australian Courts earlier referred to and similar views have been expressed in the High Court of Australia in the cases of Sullivan v Moody (2001) HCA 59 and Tame v The State of New South Wales (2002) HCA 35.

In England, the Courts appear to have taken a somewhat restrictive interpretation of the position taken by the majority in Spring v Guardian Assurance Plc [1995] AC 296. For example, in the case of Kapfunde v Abbey National Plc and Dr Daniel [1998] EWCA 535, (cited by counsel for the second defendants), the English Court of Appeal was concerned with an appeal where the appellant had sued in negligence a doctor who prepared a medical report on the appellant at the request of a prospective employer. It was alleged by the appellant that as a result of the medical report her application for employment was declined by the prospective employer. Millet LJ, as he then was, said:

"8. That decision (Spring v Guardian Assurance Plc [1995] 2 AC 296) has encouraged the appellant to argue that Dr Daniels is similarly liable to her if her report was prepared negligently. There is, it is submitted, no rational distinction between an employment reference which is provided to a prospective employer to assist him in deciding whether to employ the subject of the reference and a medical report provided to a prospective employer for the same purpose.

"But the reasoning of their Lordships in Spring v Guardian Assurance, far from supporting the appellant’s case, is destructive of it. Their Lordships did not derive the duty of care from the relationship between the maker of a statement and the subject of the statement. They found it in the pre-existing relationship between an employer and his former employee. Three of their Lordships (Lord Goff, Lord Slynn and Lord Woolf) held that it was an implied term of the plaintiff’s contract of employment that his employer would take reasonable care in the preparation and giving of a reference; that such a term might be implied despite the absence of any legal obligation to provide a reference; and that it applied even after the plaintiff had left his employment"with the employer.

"9...

"10. The decision was firmly based on the pre-existing relationship of employer and employee. It was the existence of this relationship which made it possible for their Lordships to treat the reference as provided, not (or not solely) at the request of the prospective employer, but rather at the request of the former employee and as such an incident of his former employment. Lord Goff described the provision of references as ‘a service regularly provided by employers to their employees.’"

Millet LJ then referred to X (Minors) v Bedfordshire County Council [1995] UKHL 9; [1995] 2 AC 633 where a psychiatrist was retained by a local authority to advise whether a child should be taken into the care of the local authority. The House of Lords in that case held that the psychiatrist owed no duty of care when advising the local authority. After quoting from X (Minors) v Bedfordshire County Council [1995] UKHL 9; [1995] 2 AC 633, Millet LJ said:

"The effect of these cases is that the existence of a duty of care on the part of the person who makes a negligent mis-statement and the identity of the person to whom the duty is owed depend upon the circumstances in which the statement is made. A duty of care will generally be owed to the person to whom it is made and who relies on it. In the case of a bank reference or medical report, this is normally the person who asks for it or commissions it. A reference by an employer, however, is likely to be regarded as provided to the former employee who is subject to the reference for his use as a passport to future employment rather than as a service to any particular prospective new employer."

It would appear that Spring v Guardian Assurance Plc [1995] 2 AC 296 stands as authority in England for the proposition that an employer owes a duty of care to an employee or ex-employee when preparing a reference for him. If the reference is negligently prepared, the employee or ex-employee may bring an action in negligence against his employer. But compare Balfour v Attorney General [1990] NZCA 364; [1991] 1 NZLR 519 where the New Zealand Court of Appeal came to a different decision on circumstances somewhat similar to those in Spring.

Discussion

1. Defamation
   
   • (a) Do the passages in the report complained of carry the imputation pleaded by the plaintiff
     

As mentioned earlier, the report which is the subject of these proceedings is entitled "Management Assurance Alafua Campus and Samoa Centre June 2002." It consists of 156 pages and is made up of the draft audit report prepared by the second defendants, comments on the draft report made by the various heads of departments at the Alafua campus, and an "Executive Summary" of nine pages. The Executive Summary is a summary of the audit report with the comments of the various heads of departments at the Alafua campus incorporated into it.

The first issue for determination is whether the passages in the report which are complained of carry the imputation pleaded by the plaintiff. The pleaded imputation is that the passages of the report which are complained of in their natural and meaning meant and were understood to mean that the plaintiff was dishonest in the conduct of his duties as chief accountant and that he has taken advantage of his position as such for his personal gains and that of his family’s business interests.

The first passage in the report which is the subject of complaint appears in the Executive Summary and it reads:

"The Chief Accountant is noted to have business interests which suggest a conflict with the discharging of his duties as the most senior financial officer at the Campus."

As an ordinary reasonable reader would be expected to read and consider the publication as a whole e.g. John Fairfax Publications Pty Ltd v Rivkin (2003) HCA 50 per McHugh J at para. 26 and would read the words complained of in context e.g. The New Zealand Magazines Ltd v Hadlee (CA 74/96, 24 October 1996) per Blanchard J, I will refer to the relevant passages in the full report. I would also bear in mind that generally the reader of an audit report would be expected to read it with more care and attention than say the reader of a newspaper. The relevant passages in the full report read:

"Conflicts of interest

"Key Business Risks

"We note that the Chief Accountant has various business interests that may conflict with the discharging of his responsibilities as an employee of the University. We understand that the CA is a director and a shareholder in a company of which two motels and a service station are divisions. We also understand that the CA is involved in managing a nightclub and a band."

The above passage is immediately followed on the same page by comments by the plaintiff. Those comments read:

"My wife Tatiana Brenda Mauli is the Managing Director of her Tatiana Investments business. She has her own accountant, supervisor etc who helped her run the business. Naturally all good loving husbands have to help their wives after hours including weekends and also advise their wives on anything that improve their business or career. I love music and I productively use my leisure time in writing music for the Band instead of wasting it on the golf course or parties. This is now my favourite past time hobby and a community service to our country, which give recognition to USP where I work. I love my job as Chief Accountant of USP and am the longest service senior staff of the Bursary remaining. I had been looking after the interest of the USP well all these years during the difficult times of many coups in Fiji from 1987 when a lot of senior staff deserted USP and also during the time when no PVC was in place for some considerable time at Alafua campus. I feel I have contributed positively and productively to the University both in Suva and now at Alafua for the last 21 years under many Bursars, VCs and Pro VCs. It is unfortunate and sad to note that some people do not understand and appreciate those great services and commitments."

In determining whether the particular passage complained of here when read as a whole with other relevant parts of the report and in context carry the imputation pleaded by the plaintiff, my function is essentially one of interpretation. In carrying out that function, I must be guided by the test of reasonableness and reject any strained, or forced, or utterly unreasonable interpretation: Jones v Skelton [1963] SR (NSW) 644 cited by Hunt J in Farquhar v Bottom [1980] 2 NSWLR 380 at 385 or any meaning that is the product of some strained or forced interpretation or groundless speculation: The New Zealand Magazines Ltd v Hadlee (CA74/96, 24 October 1996) per Blanchard J.

The evidence that was given by the plaintiff under cross-examination is that he, his wife and children own the Tatiana Investments Ltd. This is a company which owns and operates two motels and a gas service station. The same company also operates the RSA Club and a band. The plaintiff also said that he is a shareholder and director of the said company and that he is the company secretary. The evidence given for the second defendants is that a company search revealed that the Tatiana Investments Ltd is 1/3 owned by the plaintiff. The company also owns motels which provides accommodation, the type of service which is also provided by the Alafua campus of the USP by way of providing accommodation facilities to lecturers and workshop participants from IRETA. The comments by the plaintiff in the report also shows that he helps his wife with the running of the business after working hours and weekends. He is also involved in writing music for the band during his leisure time.

Looking at the passage complained of in the context of the other relevant parts of the report which a reasonable ordinary reader would be expected to read, I am not able to accept that the particular passage of the report complained of here carries the imputation pleaded by the plaintiff, namely, that the plaintiff was dishonest in the conduct of his duties as chief accountant and has taken advantage of his position as such for his personal gains and that of his family’s business interest. In my opinion, the words in the Executive Summary that "the chief accountant is noted to have business interests which suggest a conflict with the discharging of his duties as the must senior financial officer at the Campus" do not mean or can be understood to me that the plaintiff was dishonest in the performance of his duties as chief accountant. I am also of the opinion that the same words do not convey the meaning that the plaintiff has taken advantage of his position as chief accountant for his personal gains or that of his family’s business interests. Standing alone, the passage complained of makes no reference to the business interests of the plaintiff’s family. Only the business interests of the plaintiff are mentioned in a general and non-specific way.

Any one reading the words complained of would also notice that they are contained in the Executive Summary which is a summary. An ordinary reasonable reader, in these circumstances, would be expected to go on to read the full report of which the Executive Summary is a summary. When the relevant parts of the full report are read together with the passage complained of, they do not carry the imputation pleaded by the plaintiff.

The second passage complained of also appears in the Executive Summary. It reads:

"The procurement function of the Dining Hall (for food items only) is controlled by the Chief Accountant, and this has led to conflicts and other issues arising."

Other relevant passages in the Executive Summary which immediately follow the above passage read:

"Purchases are made by the Storeman who physically goes to the market instead of leaving that responsibility to the SWO (Students Welfare Officer). The CA (chief accountant) appears to override the responsibility of the SWO;

Produce is purchased from the market and day goods from wholesalers. There are no pre-qualified suppliers;

The split of income between the Halls of Residence and the Dining Hall may not be appropriate; and

There was no evidence of any financial analysis being performed prior to the decision being taken to cease outside catering."

The relevant parts of the full report read:

"Purchasing Function

"Key Business Risks

"The following matters were noted in respect of the purchasing function of the Dining Hall, which suggest that internal controls may not be effective or may not be appropriate.

"☻The procurement of food items for the Dining Hall is controlled by the Accounts Section, with actual purchases being made by the General Stores Storeman. The removal of the purchasing responsibility from the Dining Hall has caused friction between the CA and the SWO, as the latter believes that purchasing decisions should be that of the Dining Hall.

"☻This removal of responsibility has resulted in issues relating to the quality of food items purchased.

"It should be noted that the responsibility for purchasing non-food items for the Dining Hall remains with the SWO and this suggests some inconsistency in procurement responsibility allocation.

"☻Purchases are made by the storeman who physically goes to the markets or wholesalers. Preferred or pre-qualified suppliers that deliver purchases are not used and accordingly a significant amount of time and other resources (such as University vehicles) are consumed in the purchasing process. The quantities and prices on purchase orders that are raised are not reviewed by SWO.

"☻ Prices rotated on the purchase orders do not appear to be the actual prices. A comparison of current purchase orders against orders raised last year revealed that the prices of virtually all food items have not changed. In many cases, the prices of goods on the order are higher than the actual market price, suggesting possible over payments for products, particularly those in respect of cash purchases.

"An instance was noted where the storeman purchased double the required items as noted on the Store Requisition Order (5 bunches of Aufai (bananas) ordered on 11 March 2002 but 10 were purchased) leading to over expenditure and wastage."

Key actions and necessary controls are then recommended to address the issues raised above. This is then followed by this passage which reads:

"Management comments

"We are in agreement with the above recommendations. As a matter of fact, the Alafua Campus Administration had already started looking into the issues raised by KMPG before the auditor came to review Alafua Campus. Effort will now be intensified in this direction.

"Person Responsible Alafua campus Administration (in conjunction with the Chief Accountant and the Student Welfare Officer)

"Date of Implementation Hopefully before the end of 2002

It is clear from what has been set out, that the particular passage in the Executive Summary complained of, when read in the context of the other relevant parts of the full report, do not carry the imputation pleaded by the plaintiff. The conflicts referred to in the particular passage complained of must be the friction between the plaintiff as chief accountant and the students welfare officer as a result of the removal of the purchasing responsibility for the Dining Hall from the students welfare. The reference in the particular passage complained of to "other issues arising" must be in relation to the issues mentioned in that part of the full report set out above. Read in the context of the other parts of the full report, the passage complained of does not carry the imputation that the plaintiff was dishonest in the conduct of his duties as chief accountant and has taken advantage of his position for his personal gains and that of his family’s business interests.

The third passage complained of is taken from the full report and reads:

"We note that the Chief Accountant has various business interests that may conflict with the discharging of his responsibilities as an employee of the University."

This passage has already been considered in relation to the first passage in the report complained of by the plaintiff. I have already set out the full passage and the related comments by the plaintiff which follow immediately after. For ease of understanding, I will set out here the full passage again but without the plaintiff’s comments:

"We note that the Chief Accountant has various business interests that may conflict with the discharging of his responsibilities as an employee of the University.

"We understand that the CA is a director and a shareholder in a company of which two motels and a service station are divisions. We also understand that the CA is involved in managing a nightclub and a Band."

In my opinion, the ordinary reasonable reader will understand those words to bear the natural and ordinary meaning that because the plaintiff is a director and a shareholder of a company which owns two motels and a service station and is involved in managing a nightclub and a band, that may give rise to a conflict with the carrying out of his responsibilities as chief accountant of the University. That meaning falls well short of the imputation pleaded that the plaintiff was dishonest in the conduct of his duties as chief accountant and has taken advantage of his position for his personal gains and that of his family’s business interests. There is also no reference to the business interests of the plaintiff’s family in the passage complained of. The use of the word "may" in the quoted passage would also not support on allegation that the plaintiff was dishonest in the performance of his responsibilities or was misusing his position for personal or family gain. I therefore conclude that the third passage complained of does not carry the imputation pleaded by the plaintiff.

The fourth passage complained of is also taken from the full report. It reads as follows:

"We believe that employees of the University should be excluded from participating in family or other business/commercial ventures, however these should not conflict with their responsibility to the University as an employer or conflict with services provided to the University."

I do not find it necessary to refer to the comments by the plaintiff in relation to the above passage as those comments relate to "the business of the plaintiff’s wife" and not to the Tatiana Investments Ltd which was said in evidence to be 1/3 owned by the plaintiff and of which he is a shareholder, director and the secretary.

Even though the fourth passage complained of is a general statement or observation, the fact that it appears in the context of that part of the full report in which the plaintiff as chief accountant is discussed, it should be taken to refer more to the plaintiff than to any other employee of the University, particularly any employee without business interests. With that in mind, the passage complained of here would be understood by an ordinary reasonable reader to mean that employees of the University, such as the plaintiff, should not be excluded from engaging in family or other business ventures provided it does not conflict with their primary responsibility to the University as their employer. I conclude that the passage complained of here does not carry the imputation that the plaintiff was dishonest in the conduct of his duties as chief accountant and has taken advantage of his position for his personal gains and that of his family’s business interests. I am reinforced in that conclusion by the fact that the immediately preceding passage states that the plaintiff as "the chief accountant has various business interests that may conflict with the discharging of his responsibilities as an employee of the University." So read in context, the fourth passage complained of does not carry the imputation which has been pleaded.

The fifth and final passage complained of is also from the full report, and not the Executive Summary, and it reads:

"Matters noted which suggest a conflict of interest include:

"☻the regular absence of the CA from the University during working hours, during which period we understand he performed personal errands. During the first four days of the internal audit, we observed that the CA was off-campus during normal working hours on several instances. Staff in the Accounts Section advised us on at least two vacations that the CA had gone out to for personal banking.

"☻the stopping of all outside catering by the Dining Hall, a service which is provided by the CA’s business interests."

Within the context of the full report, that passage reads:

"Matters noted which suggest a conflict of interest include:

"☻the regular absence of the CA from the University during working hours, during which period we understand he performed personal errands. During the first four days of the internal audit, we observed that the CA was off-campus during normal working hours on several instances. Staff in the Accounts Section advised us on at least two occasions that the CA had gone out for personal banking.

"Comments (CA):

"The Auditors should have asked me directly so they can be given the true explanation of where I went. I do not waste my time doing banking for USP or for my wife’s business.

"Our review of the security arrival and departure records over a random period of five weeks in 2001 and 2002, revealed that on average the CA spends approximately 2.8 hours away from the Campus each day. This suggests that a significant amount of time has been dedicated by the CA to activities outside of the University during normal working hours.

"Comments (CA):

"Again, the auditors should have asked me about the above issue. Furthermore not all senior staff have vehicles and senior staff living inside campus would be left out and not included in this type of surveillance exercise thus showing an incomplete and unreliable record of all staff members. Also, I am entitle to one hour lunch break each working day.

"☻the stopping of all outside catering by the Dining Hall, a service which is provided by the CA’s business interests.

"Comments (CA): This is a false and misleading comment. It shows poor judgment of what is rumour and a fact. We discussed (April 6, 2001) continuous problem in substantial loss in the Dining Hall with the Pro Vice Chancellor and Secretary (Students Welfare Officer was not available) and approved any recommendation that outside catering done by our Dining Hall must be stopped as these are the major cause of losses, i.e. we supplied $1000 worth of colourful seafoods etc for $500. These outside catering in principle were supposed to make a good profit to compensate or break even the small number of students in resident but in reality they tend to cause the losses. To compound the problem, the Dining Hall was run by a junior Clerical Clerk who was there to keep the store stocks and issue records and was not retained in the catering services. The students Welfare Officer was also not there to supervise the management of the Dining Hall in the absence of a qualified catering manager for the last 4 years. My wife also took my advice and does not operate or involve in such catering services, as they are costly and risky. No restaurant or meals are provided in her motels as guests are encouraged to eat out. The Pro Vice Chancellor-Ebenebe can verify that I have no such interest in this decision and that the Dining Hall finally shows a very small deficit with profit in the Restaurant hall in 2001 since we took that decision.

"...

"Key Actions/Control Required

"While it is difficult to police conflicts of interest, there is a need to emphasise to all University staff the implications of such conflicts and their seriousness. Considerations should be given to developing a Code of Conduct for staff.

"All staff should be reminded of their contractual responsibilities to the University, including working the required number of hours."

As it appears from p.106 of the full report, the outside catering by the Dining Hall of the Alafua campus which is referred to here is outside catering, such as morning tea or set lunches which was provided by the Dining Hall all to external parties such as IRETA groups, conference groups etc, prior to 2001.

In my view, the first observation in the passage complained of here means that the regular absence of the plaintiff from the University during normal working hours for personal errands suggest a conflict of interest with the discharging by the plaintiff of his responsibilities as chief accountant of the University at its Alafua campus. The sting of the observation is the stated regular absence of the plaintiff from the University during normal working hours for personal errands. The suggested conflict of interest would seem to be the regular use by the plaintiff of time during his normal working hours for matters pertaining to himself and not the University.

In his comments relating to the first observation, the plaintiff states that the auditors (second defendants) should have asked him directly so that they can be given the true explanation of where he went. This appears to be an implicit acknowledgment by the plaintiff that he was actually absent from the University during normal working hours. It also appears to be an implicit acknowledgment by the plaintiff that he was absent from the University on several occasions during normal working hours during the first four days the second defendant’s were at the Alafua campus to carry out their internal audit. The only real comment by the plaintiff in response to the first observation by the second defendants is that the second defendants should have asked him directly about where he went. However, the plaintiff did not deny or dispute the observation made by the second defendants that he was regularly absent from the University during normal working hours.

The second part of the plaintiff’s comments that he does not waste time doing banking for USP or his wife’s business states what the plaintiff did not do during the times he was absent from the University. It does not explain what he did during those times. It also does not deny the observation that what he did during the times that he was absent from the University were personal errands.

It is clear from the evidence that was placed before the Court that the purpose for giving the plaintiff and other heads of departments those parts of the draft audit report which were relevant to their respective departments was to provide each head of department the opportunity to comment on those parts of the report relevant to his or her department. For the plaintiff as head of the finance department not to deny or dispute in a meaningful way the observation that he was using his regular absence from the University for personal errands when he had the opportunity to do so would suggest to an ordinary reasonable reader of the report that such observation was true and correct. There is nothing in the comments by the plaintiff to suggest the contrary. With respect, the impression an ordinary reasonable reader would receive from reading the comments by the plaintiff is that those comments are avoiding giving a direct answer to the observation that the plaintiff was regularly using time away from the University during normal working hours for doing personal errands. Thus, to an ordinary reasonable reader, the observation must be true otherwise the plaintiff would have confronted it head on. As earlier mentioned, a person reading the audit report would normally do so with more care than say a person reading a newspaper.

The thrust of the observation under discussion is that the regular absence of the plaintiff from the University during normal working hours for personal errands suggest a conflict of interest. The conflict here would be between the interests of the University as employer and the personal interests of the plaintiff. The conflict, of course, does not have to be actual: it may be potential or perceived. The expression "conflict of interest" is also not synonymous with dishonesty or misuse of position. One may be honest in fact and yet have a conflict of interest. In my respectful view, it would be placing on the words used, when read within context, a strained interpretation to say that they mean the plaintiff was dishonest in the performance of his duties as chief accountant and was misusing his position for personal gains and that of his family’s business interests.

I am also not able to draw any inference from the observation under discussion that the plaintiff was taking advantage of his position for personal gains. The observation is directed at the use of time by the plaintiff, that is, spending part of his normal working hours away from the University for personal errands. It is not directed at the use of position. Time and position are two different matters. It is also to be noted that there is no mention in the observation of the business interests of the plaintiff’s family to support the imputation that the plaintiff was using his position for the gain of his family’s business interests. One has to guard against giving the words complained of a strained or forced or unreasonable interpretation.

All in all then, I have come to the conclusion that the first observation in the fifth passage complained of does not carry the imputation pleaded by the plaintiff.

In respect of the second observation that the stopping of all outside catering by the Dining Hall, a service which is provided by the CA’s business interests, suggests a conflict of interest, I am satisfied that that observation does carry the imputation pleaded by the plaintiff. Even though the words by which this observation is expressed do not explicitly state that the plaintiff was dishonest in the conduct of his duties as chief accountant and has taken advantage of his position for his personal gains, that would be the reasonable inference which an ordinary reasonable reader would draw from reading this observation. A reasonable inference which can be drawn from the words used is part of the natural and ordinary meaning of those words. The impression conveyed by this observation is that all outside catering by the University’s Dining Hall was stopped because it is the same type of service which is provided by the CA’s business interests. Obviously, that is not a legitimate reason for stopping all outside catering by the Dining. The observation has defamatory connotations against the plaintiff.

I am therefore of the view that the second observation in the fifth passage complained of does carry the imputation pleaded by the plaintiff. As that imputation pleads dishonesty and misuse of position for personal gains on the part of the plaintiff, it is defamatory of the plaintiff. This is the only matter complained of which carries the imputation pleaded by the plaintiff.

The next stage is to determine whether the defamatory matter was published by the defendants. I find it difficult to accept the submissions for the first defendant and the second defendants that they did not publish the report. Publication in this context is the making known of a defamatory matter to some person other than the person defamed. There are exceptions to that general statement which are not relevant for present purposes.

I will now turn to the defence of bane and antidote raised by counsel for the first defendant.

(b) Bane and antidote

Essentially, the submission by counsel for the first defendant is that if any of the matters complained of is found to be defamatory of the plaintiff, then the comments by the plaintiff which have been incorporated into the report have made that matter non-defamatory. The bane has been effectively removed by the antidote.

For present purpose, the bane would be the observation which I have found to carry the defamatory imputation pleaded by the plaintiff. The suggested antidote would be the relevant comments made by the plaintiff which have been incorporated into the report immediately after the observation complained of. The question for determination is whether the bane, the defamatory imputation, has been effectively neutralised by the antidote, the relevant comments by the plaintiff. This will be a question of fact to be determined by reading and considering the bane and the antidote together.

The observation complained of does not expressly state that the plaintiff is dishonest in the conduct of his duties as chief accountant and has taken advantage of his position for his personal gains and that of his family’s business interests. It is the inference to be drawn from the words used in the observation which supports the pleaded imputation.

The particular passage complained of also has the complexion of a bare assertion which is not supported by any factual information. It simply states that the "matters noted which suggest a conflict of interest include the stoping of all outside catering by the Dining Hall, a service which is provided by the CA’s business interests."

The relevant comments by the plaintiff in response to this passage of the report have already been quoted in this judgment. They appear immediately after the passage that is the subject of complaint. They contain a strong denial of the observation made by the second defendants, a detailed explanation of the reasons why the plaintiff recommended to the pro vice chancellor to stop outside catering by the Dining Hall, a statement that the wife of the plaintiff does not operate a catering service, and a statement that the plaintiff had no interest in the decision to stop outside catering by the Dining Hall.

Looking at both the bane and the antidote, my impression is that the bare assertion in the report which is not supported by any factual information is incorrect in view of the strong denial and detailed explanation given by the plaintiff in his comments. On the basis of that impression, I would believe the plaintiff that the stopping of all outside catering by the Dining Hall was not because the same type of service is provided by his business interests. The catering service of the Dining Hall to outsiders was stopped because of the reasons given by the plaintiff in his comments. The plaintiff also says that his wife does not operate any catering service. I find the detailed explanation given by the plaintiff in his comments more convincing and believable than the bare assertion which is the subject of complaint.

In my respectful view, an ordinary reasonable reader would have the impression that the brief and bare assertion in the report which is not supported by any factual information and the defamatory imputation it conveys are incorrect and unfounded and the detailed response by the plaintiff as a chief accountant must be believed. The pro vice chancellor and the secretary would also not have accepted the recommendation by the plaintiff if they were not satisfied that the reasons given by the plaintiff for his recommendation were valid. After all the pro vice chancellor and the secretary must be responsible people given their positions within the University. The evidence given for the second defendants is that the observation in question was based on information given to them that the RSA Club, which is operated by the plaintiff’s family business, provides a catering service to its patrons. But even if that is correct, it does not appear in the report in the passage complained of.

It follows that the antidote has effectively removed the bane. The comments by the plaintiff have effectively neutralised any defamatory imputation in the eyes of an ordinary reasonable reader who reads both the observation complained of and the response by the plaintiff.

All in all then, the plaintiff’s cause of action in defamation is dismissed.

(2) Negligence

As framed in his first amended statement of claim, the plaintiff’s cause of action in negligence is really based on the statements alleged to be defamatory. It is claimed that the second defendants were negligent in the conduct of their internal audit and the publication of their report. The particulars of negligence pleaded is that the second defendants failed to seek clarification from the plaintiff of the matters alleged in the fifth matter that is the subject of complaint in relation to the cause of action in defamation, that the second defendants failed to take into account the adverse implications such statements would have on the plaintiff’s employment and reputation, and as a result of the second defendants negligence the plaintiff’s contract of employment was not renewed with consequential loss of income to the plaintiff.

As I have decided to apply the New Zealand line of authorities in Bell Booth Group Ltd v Attorney General [1989] NZCA 9; [1989] 3 NZLR 148, Balfour v Attorney General [1990] NZCA 364; [1991] 1 NZLR 519, South Pacific Manufacturing Co v New Zealand Security Consultants; Mortensen v Luing [1992] 2 NZLR 282, and Midland Metals Overseas Plc v The Christchurch Press Co [2001] NZCA 321, it follows that it will not be appropriate for the sake of coherence of the law to entertain the plaintiff’s cause of action in negligence. To allow the plaintiff’s cause of action in negligence against the second defendants as auditors for the preparation and publication of their report to the University who commissioned the report, will cut down the long recognised defence of qualified privilege in the law of defamation. Qualified privilege was clearly available in this case to the second defendants. However, it was not pleaded though raised in final submissions for the second defendants. To allow the plaintiff’s cause of action in negligence will set a precedent so that in a future defamation case where qualified privilege is raised and pleaded by a defendant, a cause of action in negligence could still be raised and pleaded by the plaintiff. If that happens, it will cut down the defence of qualified privilege where that defence is available to a defendant in a defamation action. So as a matter of policy and for the reasons elucidated in the above New Zealand cases, I will not allow the plaintiff’s cause of action in negligence.

I should also re-mention that the English case of Spring v Guardian Assurance Plc [1995] 2 AC 296, which took a different position from the New Zealand cases, was concerned with a reference prepared by an employer for an ex-employee to be given to prospective employers. The reference was said to be defamatory and negligently prepared. The House of Lords by a majority allowed a cause of action to be pleaded in negligence. The circumstances of Spring are quite different from the circumstances of this case. In any event Spring has been applied in subsequent English cases as authority for the restricted proposition that a reference prepared by an employer for an employee or ex-employee can be the subject of a claim in negligence.

For the above reasons the cause of action in negligence is also dismissed. It is therefore not necessary to decide whether the cause of action in negligence would have succeeded on the facts in this case as it is not maintainable in law.

All in all then, the plaintiff’s claim is dismissed.

Counsel to file reasonable memoranda on costs in 10 days if they cannot reach agreement.

CHIEF JUSTICE

Solicitors
Toa Law for plaintiff
Drake & Co for first defendant
Fepulea’i & Schuster Law Firm for second defendants