N4360

PAPUA NEW GUINEA
IN THE NATIONAL COURT OF JUSTICE

WS NO 313 OF 2009

SMY LULUAKI LIMITED
First Plaintiff

MOSES LULUAKI
Second Plaintiff

V

PAUL PARAKA LAWYERS
First Defendant – Removed

PACIFIC STAR LIMITED
TRADING AS THE NATIONAL NEWSPAPER
Second Defendant

THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Third Defendant

Madang: Cannings J
2010: 29 September, 22 October
2011:19 August

DEFAMATION – whether an article published in a newspaper contained defamatory imputations – defences of fair comment, truth and qualified privilege.

The second defendant published in its newspaper an article headed "Lawyers probe K16.3m claim/Million-kina claim being squeezed out of alleged K400,000.00 contract", which reported that the first plaintiff had been pursuing an out of court settlement for K16,226,160.00 from a purported contract worth just K400,000.00 but that lawyers appointed by the State have noted inconsistencies in the claim and advised the Attorney-General and the Solicitor-General not to settle it and instead to challenge a purported consent default judgment, of which the Attorney-General and Solicitor-General had no knowledge. It was reported that the first plaintiff had launched a claim for K800,000.00 for alleged breach of contract and that there had been no public tender contrary to normal practice and law and that it had not carried out any form of work. It was further reported that State lawyers were seeking options to refer the second plaintiff (the principal of the first plaintiff) for prosecution for attempting to defraud the State. The plaintiffs commenced proceedings against the law firm which apparently gave the advice referred to in the article (first defendant), the newspaper publisher (second defendant) and the State (third defendant), claiming damages for defamation. In interlocutory proceedings the first defendant was removed as a party and default judgment was entered against the third defendant, so a trial was set down on the liability of the second defendant and on assessment of damages against the third defendant. The second defendant denied liability on the ground that the newspaper article was not defamatory of the plaintiffs, but if it was defamatory its publication was lawful by virtue of the defences under the Defamation Act of fair comment, truth and qualified privilege. The third defendant asked the court to revisit the issue of its liability in view of defects in the statement of claim and dismiss the proceedings against it; and in the alternative argued that no damages should be awarded against it due to insufficiency of evidence.

Held:

(1)	The newspaper article suggested by insinuation, in relation to the first plaintiff, that it was making a bogus and inflated claim and that it had not done any of the work it had been contracted to do and that its business was conducted in an unlawful and irregular manner; and, in relation to the second plaintiff, that he had attempted to defraud the State by making a bogus claim without legal basis. Such imputations were likely to injure the reputation of both plaintiffs and to cause other persons to shun or avoid them and were defamatory imputations.

(2)	The defence of fair comment under Section 9 of the Defamation Act did not apply as the defamatory imputations (a) were based on purported facts that were not true and therefore the comments were not fair; and (b) did not concern the public proceedings of a court, the merits of a decided civil case, the conduct of a person as a party in such a case or the character of a party, so far as his character appears in that conduct.

(3)	The defence of truth under Section 10 of the Defamation Act did not apply as the defamatory matter in the article was not true and it was not for the public benefit that that matter be published.

(4)	The defence of qualified privilege did not apply as publication of the article did not fall within any of the categories of qualified privilege in Section 11(1) of the Defamation Act and the publication was not made in good faith.

(5)	As none of the defences succeeded, publication by the second defendant of the defamatory matter was not protected, justified or excused by law and was unlawful. Thus a cause of action in defamation was established against it.

(6)	The third defendant's request for the court to revisit the issue of liability against it was refused, as there was no formal application before the court to set aside the default judgment that had previously been entered and a cursory inquiry satisfied the court that the facts and the cause of action had been pleaded with sufficient clarity.

(7)	As to assessment of damages against the third defendant, it was in the interests of justice to adjourn determination of this issue, pending a hearing of assessment of damages against the third defendant.

Cases cited
Papua New Guinea Cases

Arlene Pitil v Rutis Clytus (2003) N2422
PNG Aviation Services Pty Ltd v Michael Thomas Somare [1997] PNGLR 515
Public Prosecutor v Nahau Rooney (No 2) [1979] PNGLR 448
Rabaul Shipping Limited v Cyril Mudalige (No 2) (2009) N3783
South Pacific Post v Nwokolo [1984] PNGLR 38
Supreme Court Reference No 3 of 1984; Ex Parte Rowan Sidney Callick and Joe Koroma [1985] PNGLR 67
Theresa Joan Baker v Lae Printing Pty Ltd [1979] PNGLR 16
William Mel v Coleman Pakalia (2005) SC990
Wyatt Gallagher Bassett (PNG) Ltd v Benny Diau (2002) N2277
Yakham & Pacific Star Ltd v Merriam (No 2) (1999) SC617

Overseas Cases

Australian Broadcasting Corporation v Foot (1986) 12 FCR 510
Boyd v Mirror Newspapers [1980] 2 NSWLR 449
Calwell v Ipec (1975) CLR 321
Hansen v Border Morning Mail Pty Ltd (1988) ATR 80,188
Hunt v Star Newspaper [1908] 2 KB 309
Hutton v Jones [1910] AC 20
Kemsley v Foot [1952] AC 345

TRIAL

This was a trial on liability and assessment of damages for defamation.

Counsel

M Luluaki, the second plaintiff in person, for the plaintiffs
T M Ilaisa, for the second defendant
T Tanuvasa, for the third defendant

19 August, 2011

1. CANNINGS J: The plaintiffs, SMY Luluaki Ltd and Moses Luluaki, are seeking damages for defamation arising out of publication of an article in The National newspaper. They argue that the article, which was about court proceedings the company and Mr Luluaki had instituted against the State for breach of contract, was defamatory and that its publication was unlawful. The plaintiffs commenced proceedings against three parties:

•	Paul Paraka Lawyers, first defendant, the law firm that was giving legal advice to the State that was referred to in the article;

•	Pacific Star Ltd, second defendant, publisher of The National;

•	the State, third defendant, claimed to be vicariously liable for defamatory imputations attributed to the Attorney-General and the Solicitor-General in the article.

2. During interlocutory proceedings Paul Paraka Lawyers was removed as a party and default judgment was entered against the State, which meant that a trial was set down in regard to Pacific Star on liability and in regard to the State on assessment of damages. At the trial Pacific Star denied liability on the ground that the newspaper article was not defamatory of the plaintiffs, but if it was defamatory that its publication was lawful by virtue of the defences under the Defamation Act of fair comment, truth and qualified privilege. The State asked the court to revisit the issue of its liability in view of defects in the statement of claim and to dismiss the proceedings against it; and in the alternative argued that no damages should be awarded against it due to insufficiency of evidence.

3. The elements of a cause of action in defamation are that firstly, the defendant made a defamatory imputation of the plaintiff, secondly, the defendant published it, and thirdly, the publication was unlawful in that it was not protected, justified or excused by law (Defamation Act, Sections 5, 24; Theresa Joan Baker v Lae Printing Pty Ltd [1979] PNGLR 16).

ISSUES

4. The first major issue to resolve is the liability of Pacific Star. This requires the court to determine whether the article was defamatory of either or both plaintiffs and if it was, there being no issue that the article was published, whether any of the defences apply. If any of the defences apply, publication of the defamatory matter will be protected, justified or excused by law and therefore not unlawful. Next, the question of liability of the State will be addressed. Finally the question of damages will be raised. The issues will be addressed in this order:

1	Was the article defamatory of SMY Luluaki Ltd and/or Mr Luluaki?

2	Does the defence of fair comment apply?

3	Does the defence of truth apply?

4	Does the defence of qualified privilege apply?

5	Is Pacific Star Ltd liable in defamation?

6	Is the State liable in defamation?

7	How should damages be assessed?

1 WAS THE ARTICLE DEFAMATORY OF SMY LULUAKI LTD AND/OR MR LULUAKI?

5. The article was on the top of page 4 in the Wednesday 8 December 2004 edition of The National. A teaser headline appeared on the front page: "Lawyers probe K16.3m claim PAGE 4". The same headline appeared in large print at the top of page 4:

Lawyers probe K16.3m claim

Beneath that was a smaller headline:

Million-kina claim being squeezed out of alleged K400,000 contract

6. The article, which had no by-line, read as follows:

State lawyers are puzzled over how an inflated claim of K16.3 million can be made against the State from a purported contract worth just K400,000.

Ironically, the proponent of this claim, SMY Luluaki Ltd, has been pursuing the claim seeking an out of court settlement for K16,226,160 with the offices of the Attorney General and the Solicitor General.

But lawyers appointed by the State to challenge every claim and award against the State have noted inconsistencies in the claim and had advised the Attorney General Francis Damem and acting Solicitor General Francis Kuvi not to settle the claim.

Instead, the government lawyers had opted to challenge a purported consented default judgment order endorsed by Justice Don Sawong on April 21, 2004, in Madang with the view of saving the State K16.3 million.

The lawyers have prepared all necessary documents and are ready to counter the consented default judgment, which Mr Damem and Mr Kuvi had denied knowledge of any settlement of the State's liabilities.

This is just one of the many court challenges taken out by the State-appointed lawyers who had saved over K500 million from the public purse through investigations they have been instructed to carry out since April last year.

Attorney General has been the man behind the reviews of all the claims and awards against the State, and his lawyers had so far done a commendable work in their efforts to reduce the State's liability which stands close to K1.5 billion in both civil and land matters.

The claim by SMY Luluaki Ltd was launched against the State on June 13, 2003, claiming damages of K800,000 for alleged breach of contract following a purported letter of acceptance dated March 27, 2002 from the director of the office of the Rural Development Mathew Tepu, who accepted the company's offer to construct 100 septic tanks around Madang town. The value of the contract was only up to K400,000.

However on Dec 10, 2002, the acting deputy director of the Department of Planning and Rural Development Samuel Pulipet wrote to SMY Luluaki advising that the letter of acceptance was null and void for breaches of Public Finance Management Act.

It was noted the SMY Luluaki did not carry out any work or implemented the construction of the 100 septic tanks at any time even to this date.

The State lawyers had found that the letter of acceptance was for the construction of only 100 septic tanks for a value of up to K400,000 only, but for reasons only known to SMY Luluaki, and the claim was double in its statement of claim.

The lawyers investigating the claim also noted that there was no public tender of the contract, which is contrary to normal practice and law, and further found that the company had not carried out any form of work to claim the Office of the Rural Development Project Funds.

In the meantime, the State lawyers are seeking options to refer the principal of SMY Luluaki, Moses Luluaki, for possible prosecution under the laws of the country for attempting to defraud the State millions of kina using a claim which is otherwise illegal and without legal basis whatsoever.

7. Mr Ilaisa, for Pacific Star, submitted that there was nothing in the article that was defamatory of either SMY Luluaki Ltd or Mr Luluaki. No defamatory meaning or innuendo could be extracted from the words used. In determining that submission the court must have regard to Section 2 (definition of defamatory matter) of the Defamation Act, which states:

(1) An imputation concerning a person, or a member of his family, whether living or dead, by which—

(a) the reputation of that person is likely to be injured; or

(b) he is likely to be injured in his profession or trade; or

(c) other persons are likely to be induced to shun, avoid, ridicule or despise him,

is a defamatory imputation.

(2) An imputation may be expressed directly or by insinuation or irony.

(3) The question, whether any matter is or is not defamatory or is or is not capable of bearing a defamatory meaning, is a question of law.

8. The question of whether a statement contains a defamatory imputation is to be determined objectively according to the standards and reactions of a reasonable person. It is irrelevant whether the publisher of the statement intended it to be defamatory or to do any harm to the plaintiff's reputation (Boyd v Mirror Newspapers [1980] 2 NSWLR 449; Hutton v Jones [1910] AC 20). My assessment is that the article imputes by insinuation, viewed from the perspective of a reasonable person reading it:

•	in relation to SMY Luluaki Ltd, that it was making a bogus and inflated claim in its attempt to settle out of court a default judgment, which had been entered in questionable circumstances (that imputation arising from the description of the judgment as "a purported consented default judgment", from the statement that lawyers appointed by the State had advised the Attorney-General and Solicitor-General not to settle the claim as there were "inconsistencies" in it and government lawyers had opted to challenge the judgment) and that it had not done any of the work it had been contracted to do and that its business was conducted in an unlawful and irregular manner; and

•	in relation to Mr Luluaki, that he had attempted to defraud the State by making a bogus claim without legal basis.

9. Such imputations are likely to injure the reputation of both plaintiffs and to cause other persons to shun or avoid them. They are defamatory imputations by virtue of Sections 2(1)(a) and (c) of the Defamation Act. The plaintiffs have proven on the balance of probabilities that the article is defamatory of each of them. The first element of the tort of defamation has been proven.

2 DOES THE DEFENCE OF FAIR COMMENT APPLY?

10. Pacific Star's argument appears to be that publication of anything in the article deemed to be defamatory is rendered lawful by the "fair comment" defence in Section 9 of the Defamation Act. I say this appears to be the argument as I do not think their defence has been well pleaded and the written submissions that were filed were scanty and the oral submissions presented at the trial were not elaborate. However, as I have allowed considerable latitude to the plaintiff concerning his statement of claim, which, despite its verbosity and floridity and some unusual and potentially embarrassing aspects and other deficiencies, has survived the pre-trial process and is now regarded as adequately (albeit barely) disclosing the causes of action being prosecuted, it would not be fair to impose the usual strict requirements of the pleadings rules for defamation proceedings on the second defendant (South Pacific Post v Nwokolo [1984] PNGLR 38). I can see what their defences are intended to be from reading the statement of defence. I think it is in the interests of justice to deal with the defences on their merits, just as it is to allow the plaintiffs to argue their case on its merits. I will proceed in that vein for the rest of this judgment.

11. It is sufficiently clear that Pacific Star is relying on the fair comment defences provided by Sections 9(1)(a) and (d) of the Defamation Act, which are in these terms:

For the purposes of this Act, it is lawful to publish a fair comment—

(a) respecting any of the matters with respect to which the publication of a fair report in good faith for the information of the public is declared to be lawful by Section 8; or …

 (d) respecting—

(i) the merits of a case, civil or criminal, that has been decided by a court; or 

(ii) the conduct of a person as a Judge, magistrate, party, witness, lawyer or officer of the court, in any such case; or

(iii) the character of any such person, so far as his character appears in that conduct. 

12. Pacific Star also relies on Section 8(2) (protection: matters of public interest) of the Defamation Act, which states:

For the purposes of this Act, it is lawful to publish in good faith for the information of the public …

(c) a fair report of the public proceedings of a court, whether the proceedings are preliminary, interlocutory or final, or of the result of any such proceedings, unless—

(i) in the case of proceedings that are not final—the publication has been prohibited by the court; or

(ii) in any case—the matter published is blasphemous or obscene, or publication is prohibited by law. 

13. On the presumption that those are the provisions being relied on, the following elements of the fair comment defence must be established if it is to apply in this case:

•	first, the defamatory imputations in the article must be fair comments (bearing in mind that under Section 9(2) the question whether a comment is or is not fair is a question of fact) [s 9(1)]; and

•	secondly, the comments must be respecting:

•	the public proceedings of a court [ss 9(1)(a) and 8(2)(c)]; or
•	the merits of a civil case that has been decided by a court [s 9(1)(d)(i)]; or
•	the conduct of a person as a party in such a case [s 9(1)(d)(ii)]; or
•	the character of a party, so far as his character appears in that conduct [s 9(1)(d)(iii)].

14. Neither of those requirements is satisfied. First the defamatory imputations regarding SMY Luluaki Ltd (that it was making a bogus and inflated claim, that it had not done any of the work it had been contracted to do and that its business was conducted in an unlawful and irregular manner) are not fair comments as the purported facts on which the comments were based were not true. To qualify as a fair comment a statement must have some purported factual basis, which is true; the rationale being that if a reasonable, unprejudiced reader is given the opportunity to form his or her own judgment on whether the comment is justified, the force of the defamatory statement is neutralised (Hunt v Star Newspaper [1908] 2 KB 309; Rabaul Shipping Limited v Cyril Mudalige (No 2) (2009) N3783).

15. Underlying the entire article is the purported fact that SMY Luluaki Ltd was "seeking an out of court settlement for K16,226,160". Hence the teaser on page 1 of the newspaper, repeated as the headline on page 4:

Lawyers probe K16.3m claim.

16. This was a misleading half-truth. It was a false statement. The plaintiffs have in the current proceedings adduced considerable evidence about how and why the default judgment of 21 April 2004 was entered and what steps were taken in the period between entry of the judgment and publication of the article on 8 December 2004 to settle the matter. On 2 November 2004 the plaintiffs wrote a letter to the Solicitor-General (received on 8 November 2004) proposing settlement of the default judgment for the sum of K762,000.00, having significantly reduced their proposed figure from the sum of K19,226,160.00 – not K16,226,160.00 – which had been filed in the National Court in an affidavit on 28 June 2004. The plaintiffs asked the Solicitor-General to study the file, form an opinion, advise the Attorney-General accordingly and then "effect the negotiation and subsequent settlement as directed by the court" so that the matter could return to the National Court for its endorsement. That was the true state of the negotiations during the month leading up to publication of the article. The plaintiffs' claim was no longer for K19.3 million or K16.3 million but for K762,000.00. Given that the amount claimed in the statement of claim for WS No 774 of 2003 was K800,000.00 that would appear a reasonable claim.

17. The plaintiffs have also presented ample evidence to show that the default judgment referred to in the article, ordered by Sawong J on 21 April 2004 in WS No 774 of 2003, was properly and regularly entered with the knowledge and consent of the Solicitor-General, for good and sufficient legal reasons, following a hearing at which the State was represented by senior counsel. It was misleading for the article to describe the judgment as a "purported" consent judgment and state that "Mr Damem and Mr Kuvi had denied knowledge of any settlement of the State's liabilities".

18. The imputations that SMY Luluaki Ltd had not done any of the work it had been contracted to do and that its business was conducted in an unlawful and irregular manner, were based on the premise that SMY Luluaki Ltd had done no work and breached the public tender requirements of the Public Finances (Management) Act before entering the contract. The plaintiffs have adduced sufficient evidence in the current proceedings that that was, in fact, a false premise. A substantial amount of preparatory work (soil testing, purchase of assets etc) had been done for purposes of the contract, which appeared to have been entered into on behalf of the State by a senior governmental official after following standard contract procedures.

19. As to the defamatory imputation regarding Mr Luluaki (that he had attempted to defraud the State) this is an unfair comment as it is based on the assertion that State lawyers were "seeking options" to refer him for possible prosecution for attempting to defraud the State of millions of kina that has no truthful factual foundation. The onus of proving that the underlying facts supporting a defamatory comment are true rests with the defendant. Failure to prove them renders the defence of fair comment nugatory (Kemsley v Foot [1952] AC 345; Australian Broadcasting Corporation v Foot (1986) 12 FCR 510). Pacific Star presented no evidence at all in the present proceedings, so the statement that State lawyers were "seeking options" regarding prosecution of Mr Luluaki for fraud cannot be regarded as a fact.

20. The second requirement of the fair comment defence is not satisfied as the comments regarding SMY Luluaki Ltd and Mr Luluaki do not concern the public proceedings of a court, the merits of a decided civil case, the conduct of a person as a party in such a case or the character of a party, in so far as his character appears in that conduct.

21. Thus even if the comments were regarded as fair the subject of the comments do not fall within any of the categories set out in Section 9(1) that are capable of protection under this defence. The result is that the fair comment defence fails.

3 DOES THE DEFENCE OF TRUTH APPLY?

22. Pacific Star's argument is that publication of anything in the article deemed to be defamatory is rendered lawful by the "truth" defence in Section 10 of the Defamation Act, which states:

For the purposes of this Act, it is lawful to publish defamatory matter if it is true, and if it is for the public benefit that the publication complained of should be made.

23. The truth defence has two elements:

•	first, the defamatory matter in the article must be true (note that it is for the defendant to prove that the defamatory matter is true in substance and effect, and it is irrelevant whether the defendant had a genuine belief in the truth of the matter (Hansen v Border Morning Mail Pty Ltd (1988) ATR 80,188); and

•	secondly, it must be for the public benefit that that matter be published (note that the question whether the public discussion of a subject is or is not for the public benefit is by virtue of Section 13(b) of the Defamation Act a question of fact).

24. Neither of those requirements is satisfied. First the defamatory imputations regarding SMY Luluaki Ltd (that it was making a bogus and inflated claim, that it had not done any of the work it had been contracted to do and that its business was conducted in an unlawful and irregular manner), to the extent that they are expressed in the form of opinions, are not capable of factual proof (which makes the defence of truth inapplicable: Yakham & Pacific Star Ltd v Merriam (No 2) (1999) SC617); and, to the extent that they are statements of fact, are false (eg the statement that the first plaintiff had not done any of the work it had been contracted to do).

25. As to the defamatory imputation regarding Mr Luluaki (that he had attempted to defraud the State) this was an unproven assertion, as was the statement on which it was based (that State lawyers were "seeking options" to refer him for possible prosecution for attempting to defraud the State of millions of kina).

26. The second requirement of the truth defence is not satisfied as Pacific Star has not established that it was for the public benefit that the defamatory aspects of the article be published. Again it is significant that Pacific Star adduced no evidence at the trial, so they have made it hard for themselves to prove that it was for the public benefit that any of this material be published. Be that as it may, the plaintiffs adduced considerable evidence which shows how and why the default judgment of 21 April 2004 was entered and which sets out the steps taken to settle the matter in the period between entry of the judgment and publication of the article on 8 December 2004. Consideration of that evidence reveals two reasons it was not for the public benefit that the defamatory matter be published. First, the correspondence that was being exchanged between the plaintiffs and the Solicitor-General regarding settlement of the default judgment deserved to remain confidential to the parties involved. It was not for the benefit of the public that such matters be revealed in a newspaper. Secondly, most of the contents of the article, in particular the comments regarding the steps being taken to settle the default judgment, including the purported claim by the plaintiffs for K16.3 million – were sub judice. The article contained detailed comment on ongoing court proceedings and it is arguable that its publication posed a real risk of interference with the due administration of justice and amounted to contempt of court (Public Prosecutor v Nahau Rooney (No 2) [1979] PNGLR 448; Supreme Court Reference No 3 of 1984; Ex Parte Rowan Sidney Callick and Joe Koroma [1985] PNGLR 67).

Thus even if the defamatory matter in the article were regarded as true, the second element of the truth defence would not be satisfied. The result is that the truth defence fails.

4 DOES THE DEFENCE OF QUALIFIED PRIVILEGE APPLY?

27. Pacific Star's argument is that publication of anything in the article deemed to be defamatory is rendered lawful by the "qualified privilege" defence in Section 11 of the Defamation Act. It has long been recognised that there are some situations in which there is a public interest to be served in allowing the publication of defamatory imputations provided that this privilege is not abused (Wyatt Gallagher Bassett (PNG) Ltd v Benny Diau (2002) N2277; Arlene Pitil v Rutis Clytus (2003) N2422). The common law developed the notion of qualified, as distinct from absolute, privilege, which has been codified in PNG in Section 11, which recognises eight situations in which, if made in good faith, the publication of defamatory matter will be excused. Pacific Star relies on the privileges available under Sections 11(1)(c), (e) and (h) of the Defamation Act, which are in these terms:

For the purposes of this Act, it is a lawful excuse for the publication of defamatory matter if the publication is made in good faith—

(c) for the protection of the interests of the person making the publication or of some other person, or for the public good; or …

(e) for the purpose of giving information to the person to whom it is made with respect to some subject as to which that person has, or is believed on reasonable grounds by the person making the publication to have, such an interest in knowing the truth as to make his conduct in making the publication reasonable under the circumstances; or …

(h) in the course of, or for the purposes of, the discussion of some subject of public interest, the public discussion of which is for the public benefit, and if, so far as the defamatory matter consists of comment, the comment is fair.

28. The question of whether a publication is made in good faith is to be determined under Section 11(2), which states:

For the purposes of this section, a publication is made in good faith if—

(a) the matter published is relevant to the matters the existence of which may excuse the publication in good faith of defamatory matter; and

(b) if [sic] the manner and extent of the publication do not exceed what is reasonably sufficient for the occasion; and

(c) if [sic] the person by whom it is made—

(i) is not actuated by ill-will to the person defamed, or by any other improper motive; and

(ii) does not believe the defamatory matter to be untrue.

29. The onus of proof on the good faith issue rests with the party denying it, ie the plaintiff, a situation which arises under Section 12 (good faith) of the Defamation Act, which states:

Where a question arises as to whether a publication of defamatory matter was or was not made in good faith, and it appears that the publication was made in circumstances that would afford lawful excuse for the publication if it was made in good faith, the burden of proof of the absence of good faith is on the party alleging the absence.

30. Determination of a qualified privilege defence follows a different type of decision-making process than in the case of the fair comment and truth defences. With those defences the defendant bears the onus of proving each of the elements whereas with qualified privilege the defendant bears only the onus of proving the first element, the existence of a situation of a privilege. The onus of proof, or more correctly the onus of disproof, on the second element – good faith – rests with the plaintiff (PNG Aviation Services Pty Ltd v Michael Thomas Somare [1997] PNGLR 515; Yakham & Pacific Star Ltd v Merriam (No 2) (1999) SC617).

31. The following questions therefore arise:
 
•	first, has the defendant proven that the article was published:

•	for the protection of the interests of the public or for the public good? [s 11(1)(c)]; or

•	for the purpose of giving information to the public with respect to a subject as to which the public has, or is believed on reasonable grounds by Pacific Star (the person making the publication) to have, such an interest in knowing the truth as to make its conduct in making the publication reasonable under the circumstances? [s 11(1)(e)]; or

•	in the course of, or for the purposes of, the discussion of some subject of public interest, the public discussion of which is for the public benefit, and if, so far as the defamatory matter consists of comment, the comment is fair? [s 11(1)(h)].

•	secondly, has the plaintiff proven that the article was not published in good faith, ie has the plaintiff proven that:

•	the matter published is not relevant to the matters the existence of which may excuse the publication in good faith of defamatory matter? [s 11(2)(a)]; or

•	the manner and extent of the publication exceeded what was reasonably sufficient for the occasion? [s 11(2)(b)]; or

•	the defendant was actuated by ill-will to the person defamed or by any other improper motive or believed the defamatory matter to be untrue? [s 11(2)(c)].

32. I find that the first limb of the first element (s 11(1)(c)) does not apply as the purpose or effect of publication of the article was not the protection of the interests of the public or for the public good. The article was not protecting anyone's interests and even if a wide view of the notion of "public good" were taken (see, for example the approach of the High Court of Australia in Calwell v Ipec (1975) CLR 321) it was not in the public interest to publish details (which were false and misleading) of private and confidential settlement negotiations between parties to ongoing court proceedings.

33. The second limb of the first element (s 11(1)(e)) does not apply because, though the purpose of publication of the article may properly be regarded as giving information to the public with respect to a subject (bogus and inflated claims against the State) as to which the public has an interest in knowing the truth, I am not satisfied that this made Pacific Star's conduct in publishing the defamatory matter reasonable under the circumstances, as the article was ill-researched and based on false assertions of fact (eg that the plaintiffs were still pursuing a claim for K16.3 million and that the default judgment was improperly entered without the knowledge and consent of the Solicitor-General).

34. The third limb of the first element (s 11(1)(h)) does not apply because, though the defamatory imputations in the article have been published in the course of discussion of a subject of public interest (bogus and inflated claims against the State) the public discussion of which is for the public benefit, the defamatory matter consists of a number of comments that are unfair. In drawing that conclusion I have had regard to the decision of the Supreme Court in Yakham & Pacific Star Ltd v Merriam (No 2) (1999) SC617 which, when upholding a qualified privilege defence under Section 11(1)(h), emphasised the role and duty of the media to report on matters of public interest and the right to freedom of expression enshrined in the Constitution:

It is the function of the press, both the private and State-owned press, in a democracy, to provide its readers with news of current events of public interest. Likewise the public has a right to have access to that information. And it is the duty of the press to ensure as far as possible, that its reports on matters of public interest are reasonably accurate, fair, and objective. …

Our system of government is a constitutional democracy. Freedom of the press to communicate information of public interest to the public for the advancement of the general public welfare is fundamental to the development and sustenance of a free and thriving constitutional democracy. For this reason, Section 46 of the Constitution guarantees everyone the right to freedom of expression and publication.

36. The Fourth Estate indeed has a vital role in maintenance of our democracy. A vibrant and independent media is something to be cherished and protected. But with the great power and privileges that media organisations in PNG enjoy come a responsibility and duty to be fair. A journalist does not have to be perfect. An article published in a newspaper does not have to be mistake-free. But defamatory imputations that amount to comment on the conduct of a business or a person must be fair. In this case, they were unfair as they were based on misleading and false assertions of fact concerning the conduct of the plaintiffs.

The first element of the qualified privilege defence therefore has not been established.

37. As to the second element – that the publication was made in good faith – it does not apply as the plaintiffs have discharged the burden of proving that, though the defamatory matter that was published was relevant to matters the existence of which may excuse the publication in good faith of defamatory matter and though the defendant was not actuated by ill-will (ie malice) to the plaintiffs or by any other improper motive and, it appears, believed the defamatory matter to be true, the manner and extent of the publication exceeded what was reasonably sufficient for the occasion. The definition of good faith in Section 11(2) consists of a number of cumulative elements, so the plaintiffs need only disprove one of them to discharge the burden of proving absence of good faith. They have done that by adducing detailed evidence of how and why the default judgment was entered and what happened between the date of entry of the judgment and publication of the article. They have also proven how and why the contract that became the subject of the proceedings WS No 774 of 2003 was entered into and the work that was done pursuant to that contract. They have proven to my satisfaction that the article that appeared in The National on 8 December 2004 was ill-researched and based on misinformation and that the plaintiffs were not consulted or given a right to be heard on the allegations contained in it prior to publication. The manner and extent of the publication were negligent and irresponsible and exceeded what was reasonably sufficient in the circumstances.

38. Even if publication of the article were regarded as falling within one of the categories of qualified privilege in Section 11(1) of the Defamation Act, the second element of the defence is not satisfied as the publication was not made in good faith. The result is that the qualified privilege defence fails.

5 IS PACIFIC STAR LTD LIABLE IN DEFAMATION?

39. The three elements of a cause of action against Pacific Star in defamation have been established, in that the article of 8 December 2004 contained matters that were defamatory of both plaintiffs, the article was published, and its publication was unlawful as none of the defences applied and thus the publication was not protected, justified or excused by law. Pacific Star is liable in defamation to both plaintiffs.

6 IS THE STATE LIABLE IN DEFAMATION?

40. Mr Tanuvasa, for the State, submitted that, despite default judgment being entered against the State on 12 February 2010 (seven months before the start of the trial on 29 September 2010) the court should exercise its discretion to revisit the issue of the State's liability and find that no cause of action has been established against it. The plaintiffs' statement of claim is seriously defective, he submitted, and fails to disclose any cause of action against the State. The cross-examination of Mr Luluaki at the trial confirmed that the action against the State was misconceived as it was apparent that he was blaming Paul Paraka Lawyers and the staff of the National Court Registry at Madang, not the Attorney-General or the Solicitor-General, for disseminating information to the second defendant that was published in the newspaper.

41. I reject these submissions. Though a judge assessing damages following entry of default judgment may revisit the question of liability the discretion to do so must be exercised sparingly. The presumption arises on entry of default judgment that the judgment resolves all questions of liability on the matters pleaded in the statement of claim. The judge assessing damages should make only a cursory inquiry to be satisfied that the facts and the cause of action are pleaded with sufficient clarity. If it is reasonably clear what the facts and cause of action are, liability should be regarded as proven. Only if the facts or cause of action pleaded do not make sense or would make an assessment of damages a futile exercise should the judge inquire further and revisit the issue of liability (William Mel v Coleman Pakalia (2005) SC990).

42. I have made a cursory inquiry and, bearing in mind that I was the Judge who ordered default judgment (so I was satisfied then that a reasonable cause of action appeared to have been disclosed against the State), I remain satisfied that the facts and cause of action alleged against the State are pleaded with sufficient clarity. The State had ample time to apply by notice of motion to set aside the entry of default judgment, which would have been the preferable course of action to take. I agree that there are many unsatisfactory aspects of the statement of claim. It is cast in emotive and opinionated terms but it is not so poorly drafted that the court cannot make sense of it. Cross-examination of Mr Luluaki has not had the effect of persuading me that it would be proper to set aside the default judgment. I confirm that the State is liable in defamation.

7 WHAT DAMAGES, IF ANY, ARE PAYABLE?

43. Mr Tanuvasa submitted that if the default judgment against the State remains intact the court should nevertheless refuse to award the plaintiffs any damages as they have failed to prove any losses. I am not going to rule on this submission as I have decided, on reflection, now that liability has been decided against the second defendant, Pacific Star, that it would be in the interests of justice for a joint trial on assessment of damages to be conducted.

CONCLUSION

44. The plaintiffs have established liability for damages in defamation against the second defendant, Pacific Star Ltd, and a declaration to that effect will be made. The plaintiffs have repelled an application by the third defendant, the State, to have the default judgment against it set aside. The assessment of damages against the State has been adjourned and if the parties fail to settle on that issue a joint trial on assessment of damages will be set down. Costs will follow the event, so all of the plaintiffs' costs of the proceedings to date will be payable by the second defendant and the third defendant.

ORDER

(1)	It is declared that the plaintiffs have established a cause of action in defamation against the second defendant.

(2)	It is confirmed that by virtue of a default judgment dated 12 February 2010 the plaintiffs have established a cause of action in defamation against the third defendant.

(3)	The proceedings shall proceed, unless the parties agree on an alternative course of action, to a joint trial on assessment of damages.

(4)	The defendants shall pay the plaintiffs' costs of the proceedings on a party-party basis, to be taxed if not agreed; and liability for costs shall be apportioned equally between them.

(5)	Time for entry of this order is abridged to the date of settlement by the Registrar which shall take place forthwith.

Orders accordingly.

____________________________

Lawyers for the plaintiffs : Nil
Warner Shand Lawyers: Lawyers for the Second Defendant 
Solicitor-General: Lawyer for the Third Defendant