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Court in the Act
7 September, 2007  
High Court stops the fun

The High Court knocked back Nicholas Whitlam’s special leave application to get the NRMA to pay for his defamation case against Channel 9. He’s settled with Nine – but was his case over an interview broadcast in 2001 all that strong?

imageFormer NRMA el presidente Nicholas Whitlam (pic) went down in the last round of his struggle to get the NRMA to stump up for his legal bills so he could fund a personal defamation action against Channel 9 over a Sunday story prepared by the journalist John Lyons.

In the process he’s piled up a $200,000-plus bill for himself that must be dangerously close to the amount for which he since settled his defamation action against Nine.

What could be fairer than that? Instead of transferring money from the NRMA to his pocket, Nick will have to transfer it from his pocket to the NRMA. He shouldn’t begrudge doing that because the purpose of the defamation exercise was to defend his reputation and, in the process, the reputation of the company.

Whitlam had sought special leave to appeal a NSW Court of Appeal decision in favour of the NRMA handed down last April.

Smiler, Gummov and Dyce rejected the massive Beetroot’s special leave application, finding there were no grounds to disturb the Court of Appeal’s thinking on the reach of the directors’ indemnity deed. Costs were awarded against him.

The Court of Appeal also ordered costs against him for that round and the original hearing before Justice Paddy Bergin.

The piling of costs upon costs might explain why Beetroot was so determined to box on after the Court of Appeal very sensibly blew the whistle on his attempt to get others to pay for an exercise in which he stood solely to trouser any payout.

At the time he commenced proceedings against Channel 9 he also sued radio station 2GB for defamation over an interview that reporter John Lyons, gave to Graham (Whatever It takes) Richardson concerning his investigations into the NRMA.

We know the 2GB action was settled for $668.55 less than his costs.

In the High Court, Justin Gleeson, for Beetroot, argued that the NRMA should cough-up because both Whitlam and the NRMA suffered reputational damage as a result of the Channel 9 defamation and as president of the company he had no option but to defend both reputations.

Whitlam claimed that the Channel 9 broadcast gave rise to imputations that he lied and caused contracts to be awarded to cronies without proper process.

imageThe special leave judges pointed out that NRMA could have taken its own defensive measures, but did not, at least not in the form of suing Nine for defamation.

Smiler also suggested that Whitlam could also have hired a public relations firm to remedy reputational damage, and it could have paid for advertisements to vindicate his and the company’s reputations.

Yes, but the Chief Justice (pic) seems to be missing the point. Neither of those remedies gave rise to a prospect of Nick being paid damages.

Rodney Smith, for the NRMA, pointed out that if the company had taken an action to defend itself against reputational damage, it could have controlled the costs.

However, with Whitlam doing the suing it had no such control over the expenditure on lawyers and would not recover any of the damages.

The court noted that if the directors and officers indemnity agreements were to cover offensive (as opposed to defensive) defamation actions, every company in Australia could be exposed to its directors or officers mounting personal defamation actions when they felt wronged – with shareholders footing the bills.

* * *

imageBut what is the nub of Whitlam’s complaint against Channel 9? Doubtless you’ll remember the brouhaha that accompanied the launch of Gerald Stone’s recent book, Who Killed Channel 9?

In the tome Stone dedicates a chapter to dealing with the interview of Whitlam conducted by Lyons for Sunday.

It was this interview that really vexed Whitlam. Stone (pic) described it as, “one of the worst examples of unfair reporting that I have seen in my 25 years in television”. The giant Beetroot no doubt agrees.

It concerned the way a crucial question was put to Whitlam, his answer and the way it was edited and presented by Lyons. Stone went to ponderous lengths to argue this was a “shabby” example of TV journalism, a “hatchet-job” and that Lyons played “fast and loose with the facts”.

What went to air was this:

Lyons [commentary]: Tensions became war last year, after a series of newspaper articles which embarrassed Nicholas Whitlam by revealing his failed attempt to become chief executive. Whitlam was furious and convinced the board that an internal investigation should be established. The board appointed Sydney QC Robert McDougall. Critics argued that McDougall was not independent, that he regularly earned other money from the NRMA, a fact that as late as this week, Mr Whitlam categorically denied.

Whitlam: I know that was asserted by some people, but that is absolutely unfair and untrue and has no basis on any legal or propriety basis that I am aware of. In fact, it is something that was asserted by someone that is simply – that is not fair.

Lyons [commentary]: But Sunday can reveal this morning that Mr Whitlam’s statement is in fact false. A letter written by Robert McDougall himself admits only four weeks ago that [voice-over]: ‘I provided legal services to companies within the NRMA Group over the last 18 months’.

What was Beetroot denying? That McDougall was not “independent” or that he earned money from the NRMA for other work or both?

This is what happened in the raw, uncut interview:

Lyons: But given he [McDougall] does other work for the NRMA, was he independent enough to do the enquiry. He gets other income from the NRMA. Shouldn’t he, in terms of conflict of interest, not be the person …

Whitlam: I know that was asserted by some people, but that is absolutely unfair and untrue and has no basis on any legal or propriety basis that I am aware of. In fact, it is something that was asserted by someone that is simply – that is not fair. But in any event Mr McDougall – I have no doubt that Mr McDougall is totally independent and he can speak for himself.

Then Lyons unfolds the document that shows McDougall did do previous work for NRMA and declares Whitlam’s denial is “false”.

In his book Stone insists Whitlam was not denying McDougall did other work for the NRMA but it was the question of the barrister’s impartiality to which he was directing his response.

Surely though the issues of previous work, payment for that work and independence are all interrelated. Whitlam could have been more direct and clear with his answer. He could have said, “Yes, I think he has done previous work, but he’s still independent”.

It’s not at all clear that the version of the Q & A that went to air is a perversion of what was originally recorded.

Even though it settled with Whitlam (because PBL was clearing the books of contingent liabilities prior to the sale to CVC Capital Partners) it is quite arguable that Channel Nine had a good defence to Beetroot’s actions.

It makes you wonder where Stone has been living all these years if he insists that this is “one of the worst examples of unfair reporting that I have seen in my 25 years in television”.


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