Court of Appeal rules in Red Cross appeal

Associate Minister, Muagututagata Peter Ah Him, is to pay $20,000 after losing his appeal against the Supreme Court’s dismissal of a defamation case he initiated.

According to a judgement made by the Court of Appeal of Samoa, Muagututagata, Malcolm Johnston, Falefata Tuaniu Petaia, Fuimaono Poloma Eteuati, Leali’ifano Dr. Iopu Tanielu, and Miriama Alenapi appealed against the judgement which found that Jerry Brunt of Tanumapua and Namulauulu Tautala Mauala had not defamed them. Both appellants and respondents were at the time of the alleged defamation members of Samoa’s Red Cross Society. “Mr. Ah Him has failed entirely, at trial and in this Court,” the judgement reads.

“The respondents will have a global sum against Mr Ah Him of $20,000 for costs in the Supreme Court and this Court, together with their disbursements, in both courts, as fixed by the Registrar of this Court. “The four appellants other than Mr Ah Him will have a global sum against the respondents jointly and severally for costs in the Supreme Court and this Court of $10,000 together with their disbursements, in both courts, as fixed by the Registrar of this Court.”

The Judges ruled that while Mr. Ah Him’s appeal must be dismissed in its entirety, the other appellants succeed in their appeals and judgment will be entered for them against the respondents.

“The appellants other than Mr. Ah Him are entitled to damages from the respondents for the unjustified allegation that they were pocketing money which was properly that of the Red Cross Society,” the Judgment reads. “We were not referred to any Samoa authority or decisions on the quantum of defamation damages.

“The judges of this bench are not well placed to make an evaluation of this kind. “We may well have been minded to remit this case to the Supreme Court in Samoa for the assessment of damages, but for one factor.

“Dr Harrison indicated in closing that the matter had been pursued as it has been primarily as a matter of vindication for the appellants. “He asked this court to fix damages here, rather than remit the matter.” The Judges said with respect that was a sensible course to adopt.

“This is somewhat in line with the increasingly common practice in New Zealand of asking a court to make a declaration of liability together with full or even indemnity costs, rather than the troublesome and sometimes invidious task of having to have damages assessed,” the Judgement reads.

“Doing the best we can, each of the four appellants other than Mr Ah Him will have a sum of $1,000 each against the respondents.

“That is a sum of $4,000 in all against the respondents jointly and severally.”

The Appeal was heard before, Honourable Justice Fisher, Honourable Justice Hammond and Honourable Justice Blanchard.

Dr R E Harrison QC and S Wulf appeared before the Court for the Appellants while Leota Raymond Schuster appeared for the Respondents. The Judgement of the Court reads as follows:

INTRODUCTION

[1] The appellants say they have been defamed by the respondents. In February 2013 their claim was dismissed by the Supreme Court. They now appeal to this Court against that determination and the order for costs made against them.

BACKGROUND

[2] The appellants were all members of the Samoa Red Cross Society Incorporated (the Society). In March 2009 they were elected at its Annual General Meeting to its governing body, the National Executive of the Society.

[3] The first named appellant, Mr Ah Him, was President of the Society.

[4] The respondents were respectively the Honorary Solicitor and the Secretary General of the Society.

[5] In September 2009 Samoa suffered from a disastrous tsunami. There was great loss of life. Considerable damage was occasioned to property and the infrastructure of Samoa. The Society and its National Executive were faced with endeavouring to provide support to victims of this tragedy.

[6] Unfortunate differences arose within the Society. Some members considered that resources could have been more effectively allocated and the Society’s systems of response improved. There was also concern about the necessity to submit budget proposals for funding from the International Red Cross before 31 August 2010. These members anticipated being able to voice their concerns at an annual meeting (AGM) in March 2010. That meeting did not eventuate. So some members then requested a special meeting of the Society. Such was not held.

[7] A dissident group then called an Extraordinary General Meeting (EGM) for Friday 13 August 2010. Notwithstanding a court injunction obtained to prevent that meeting taking place it went ahead at short notice. Two hundred of the two hundred and fifty members of the Society were present. The appellants were not present.

[8] Various resolutions were passed by this EGM. These included the adoption of a vote of no confidence in the appellants, and a resolution removing them from the National Executive. An interim managing committee was appointed to manage the affairs of the Society until the next AGM could be held.

[9] The resolutions had been substantially drafted by the first respondent Mr Brunt (a solicitor) and advanced by him and the second respondent (the Secretary) to members of the Society at the EGM and later the media.

[10] The appellants contend that they were unlawfully deposed from office despite an injunction aimed at keeping matters orderly, vilified to justify the actions, which had been taken and their names blackened.

THE CLAIM

[11] The appellants’ claim that the natural and ordinary meaning of the words complained of in the resolutions were that:

(a) They had taken or used funds of the Red Cross for their own personal gain, and then used them in relation to interests of their own to further themselves at the expense of the Red Cross;

(b) They abused or misused or took advantage of their position as the National Executive of the Red Cross for their own benefit;

(c) They engaged in misappropriation or are suspected of misappropriate or engaged in conduct unbecoming or are suspected of engaging in conduct unbecoming elected members of the National Executive of the Red Cross, resulting in disrepute or disgrace to the Red Cross and the country.

[12] The appellants’ say they have been exposed to ridicule and contempt and their reputations seriously injured and impaired. They further allege that the respondents were actuated by malice “and in contumelious disregard for the plaintiff’s reputation or positions as the National Executive of the Red Cross”. They sought $600,000.00 in general damages.

THE DEFENCE

[13] The heart of the defence was that the words complained of were published by the General Assembly of the Society, not by the respondents. In their final submissions the respondents admitted the statements complained of were defamatory, but they denied responsibility for their publication. These, they say, “were the words of the Samoa Society and they had neither requested nor caused the statements to be publicised by the media”. The respondents denied malice.

[14] The respondents further pleaded that the statements complained of were true in substance and in fact; and that there were reasonable grounds to support the allegations made against the appellants.

[15] They also relied on the defence of fair comment on a matter of public interest. But no claim of qualified privilege was pleaded, or advanced.

THE TRIAL JUDGEMENT

[16] Nelson J held that the appellants’ proceeding was “misconceived”, in that it tried to hold the respondents to words not “publicised” by them. The judge felt considerable difficulty as to how any damage to the respective reputations of the appellants could be assessed, because of an absence of evidence. He held that justification was established “but only in relation to [Mr Ah Him]”.

On the Judge’s reasoning, he did not therefore have to deal with the defence of “fair comment” and did not do so.

THE GROUNDS OF APPEAL

[17] The appellant’s case is that the judge was wrong to attribute the matters complained of by way of publication entirely to the Society, thereby exonerating the respondents entirely.

[18] Second, issue is taken with the judge’s findings on justification.

[19] Third, issue is taken with the holding that no damage had been proved, and damages should not therefore be awarded. COMMON GROUND [20] It was common ground that under the law of Samoa the appellants were required to establish:

(a) That the words complained of carried the imputations pleaded in the statement of claim;

(b) That these imputations were defamatory;

(c) That the words complained of were published by the defendants; and

(d) That no defences to the claim had been established. See Enosa v Samoa Observant Company Ltd [2009] WSSC 15 and Mouli v USP [2007] WSSC 23. [21] It was rightly accepted by the respondents that points (a) and (b) had been established.

[22] The issues before the Supreme Court were therefore whether the words complained of were “published by the respondents”, and whether the defences of justification or fair comment had been made out.

PUBLICATION

[23] The judge was in error in his holding on this point. The general rule, correctly expressed by Gatley, is that: “any person who has authorised or participated in the publication of a libel is treated as publishing the libel and hence is liable in his own right” (Gatley, Libel and Slander, 11th ed, para 8.29 at page 253). (Emphasis added)

[24] Fleming on Torts (10th ed) puts the principle this way, at page 627: “Every participant in the publication incurs liability, regardless of the precise degree of his or her involvement”. Not only actual distribution or dissemination are caught, but also all “those who compose the libel…even freelancers employed to prepare the script” (citing Webb v Block (1928) 41 CLR 331 at 362 – 366. see also Eyre v NZPA [196] NZLR 736).

[25] Here, Mr Brunt was a drafter of the words complained of. And he actively participated in the advancement of the material before the Society by reading them out.

[26] The General Secretary was not involved in the drafting, but she was involved in the administrative arrangements and the advancement of the statements complained of to the Society, and later to the press.

[27] In the result, the respondents are both liable for the defamation, unless there is a distinct “affirmative” defence available to either of or both of them. It is for them to establish such a defence.

JUSTIFICATION

[28] The defence of justification, or “truth” as it is now known in many jurisdictions (including New Zealand) is a complete defence to a claim of defamation.

[29] The onus is on a defendant to prove that the allegations are true. Street, Torts 8th ed at 3 403, puts the test rather well: “Does that which is proved to be true tally with that which the defendant’s statement is interpreted to mean?” However a defendant does not have to prove the truth of each and every fact. The defendant is able to defeat the claim if he or she justifies the substance of the allegation, or what is commonly referred to as the “sting” of the libel.

[30] The application of this principle is not always straightforward, but some short illustrations may assist. When it was stated a man who had been convicted of an offence had been fined ₤1 with the alternative of three weeks imprisonment, when in fact he had been fined ₤1 with the alternative of two weeks imprisonment, the inaccuracy was held to be immaterial (Alexander v North Eastern Railway Co (1865) 122 ER 1221). And in a relatively recent New Zealand case it had been alleged that a car dealer had wound the odometers on imported cars back. What was proved was that the dealer had knowingly sold cars with odometers wound back by someone else. The Court of Appeal held that the allegation was not materially different from the truth (Pepi Holdings Limited v BMW NZ Limited, CA 21/97, 25/8/97).

[31] On the other side of the line are cases like Scott v Gudsell (1884) 3 NZLR 119, where a correspondent wrote a letter to a newspaper that he had witnessed a drunken brawl outside a hotel and that he could only conclude that the publican had been serving liquor to persons already drunk. In the ensuing defamation action it was held to be insufficient for the newspaper to prove that the publican had served liquor to one drunk; the letter had used the plural.

[32] In Samoa s 9 of the Defamation Act 1992/1993 provides: In an action for defamation in respect of words containing two or more distinct charges against the plaintiff, a defence of justification shall not fail by reason only that the truth of a charge is not proved if the words “not proved to be true” do not materially injure the plaintiff’s reputation having regard to the truth of the remaining charges.

[33] This has some affinities with s 8 of the Defamation Act 1992 in New Zealand. Section 8 (3) provides a defence of truth if the defendant proves that the imputations contained in the matter that is the subject of the proceedings were true, or not materially different from the truth; or where the publication taken as a whole was in substance true, or was in substance not materially different from the truth.

[34] Finally, as to the law, there can be cases of “partial justification”. That is, a defendant may justify some, but not all, the allegations, yet still be liable for appropriate damages in respect of those which are unjustified.

[35] The pleadings in this case, on both sides, are somewhat less than satisfactory. That said, we bear in mind what was said by O’Connor LJ in the wellknown decision in Polly Peck Holdings Ltd v Trelford [1986] 2 All ER 84 at 94. It is a fundamental principle in a defamation proceeding that: …..the trial of the action should concern itself with the essential issues and the evidence relevant thereto and that public policy and the interests of the parties should be kept strictly to the issues necessary for a fair determination of the dispute between the parties. [36] Here the justifications raised by the respondents fall into three categories.

[37] The first related to alleged maladministration, and particularly the lack of authorisation processes within the Society or failure to adhere to those that did exist.

[38] The second related to alleged claims of conflicts of interest. In particular a controversy over a contact for security services given to a company Mr Ah Him was associated with.

[39] The third category was easily the most serious. It was said that Mr Ah Him had received $500 per month from a tenant of a residential property belonging to the Society at Lotopa, which monies should have gone to the Red Cross, but had not. This last allegation had an added gloss. There was a suggestion that Mr Ah Him had made nocturnal visits to a woman who, for a time, resided in that property. However that was never expressly pleaded. The trial judge (rightly) did not feel the need for that issue to be addressed.

MALADMINISTRATION

[40] As to the first category, the trial judge specifically found that there were distinct “areas of maladministration” as he termed it, within the Society. Much of the problem was historic. But the deficiencies had been allowed by the appellants to continue, or at least had not been brought under control.

[41] The Judge found Mr Malcolm Johnston (one of the appellants) to be “a credible and impartial witness” who was “prepared to give an honest and unbiased assessment of the situation”. Mr Johnston was a chartered accountant and CEO of a commercial bank. He had joined the Board of the Society prior to the events complained of in this case. He said in evidence:

[There was] a situation with the Red Cross on my joining…that the organisation hadn’t filed annual accounts or audited accounts for in my belief, around six years. The Society was very understaffed in terms of its administration.

The Board wasn’t very active prior to the appointment of the Board which I came in with the new Board. Many of the decisions that were made, were sometimes made alone by an…sometimes alone by the Secretary- General on her own, and simply because there was no-one else around to assist and run the place, or by the previous President so they also had problems even having Boards comes together and meet when they call meetings. That organisation has to continue to run and they can’t wait for Board to show up when they don’t show up.

So on the appointment of our Board, one of the other things we wanted to do was to improve that situation. However clamping down on every approval, especially when there are people out there in need could be damaging to the organisation.

So my belief is our Board attempted to slowly implement policies and procedures and changes but not in a restricted way that would have put a stop to the organisation. And I recall many invoices that appeared in front of me as Treasurer I questioned because I had never seen these invoices before.

They had never been to the Board but they had been approved. Red Cross had been committed to the expenditure so that all that could be done was to pay the debt, pay the creditor but it is something I attempted to work through with the Secretary –General and the previous Treasurer knowing that this is the way things were done in the past. But trying to harmoniously move forward.

[42] At one point Mr Schuster endeavoured to suggest that this was a “dysfunctional” organisation. Mr Johnston resisted that suggestion. But he was careful to point out that straightening out an organisation when there were no annual accounts for several years, let alone audited ones, had created very real difficulties. Too many decisions on important and significant financial matters were made by the President or Secretary-General alone, without consultation with the National Executive. Mr Johnston thought the Society’s processes needed to be streamlined and proper accounting policies followed. Easily the most significant matter of concern was the absence of audited accounts.

[43] The Judge was concerned during the taking of evidence about what had happened in terms of management and that the internal processes in the Society were “not normal”. Mr Johnston said “…it seems there is no one around to do the work. So you know, just put more on the Secretary-General. He was already overloaded.” His Honour then said: “Yes, perhaps normal for this Society but certainly not normal for other societies”. T 0 which Mr Johnson responded: “Well not how you would really want to run things and probably not how we want to run things in the future had we continued.”

[44] We are mindful of local realities and particularly the realities of posttsunami Samoa. But both the officers and the Executive Committee were responsible for putting in place and enforcing systems that were dispersing monies amounting to some millions of Tala. Much of this came from overseas donations and needed to be properly handled and accounted for.

[45] Even on the appellants own evidence this head of justification was made out. It was the responsibility of the appellants to see there were in place appropriate management accounting and authorisation systems. There were not. CONFLICTS OF INTEREST

[46] The second head of justification related to alleged conflicts of interest.

[47] The heart of this concern is that Mr Ah Him had hired a security firm without National Executive approval. It was his firm. And it was paid substantial sums of money.

[48] The President’s evidence was that the 24 hour service was needed for and provided to the Society’s depot because of an increased security risk to containers and other valuable items stored there in the post-tsunami period. It was a “needs must in an emergency situation” type argument.

[49] The President claimed the National Executive was well aware of what had been done. However, there was considerable debate about the state of the members’ knowledge on this issue by the various witnesses.

[50] The second respondent conceded in evidence that some sort of security presence was required to protect relief supplies and other goods. And she signed the cheques in payment of the invoices for the provision of these security services, without raising any concerns.

[51] That said, it appears the contract was awarded to Mr Ah Him’s own firm. To an extent this relates back to the first justification. Indeed the trial judge appears to have considered this issue to be mother matter of “maladministration”. But in any event, justification was made out here too: there was patently a conflict of interest situation, which should have had express and unequivocal Board approval.

MISAPPROPRIATION OF MONEY

[52] The third allegation is the gravest: that of actual misappropriation of money by the appellants.

[53] In reality the claim related only to the President. No attempt was made at trial, or before us, to justify this claim against the other appellants. We will deal with the consequences of this later in this judgment.

[54] The Society had a house at Lotopa. It was in need of repair. Mr Ah Him’s evidence was that he had it renovated at a cost of $3,000 to him. He then rented it out to one Feleni Viliamu Faumui for $500 per month. The judge accepted that Mr Ah Him spent “much time” at the house in the company of the woman concerned. According to the President the tenant left in July 2010 coincidentally one month before the brouhaha which has led to this case erupted.

[55] Mr Ah Him kept the rental for the first three months (November and December 2009 and January 2010) to partially recoup his outlay. He claims he passed the rest of the monies to the Society. He produced a receipt book containing rental receipts for the months of February, March, April, May, June and July 2010.

[56] The Judge held that the rental monies “did not find [their] way into the Society account”. And he did not accept the legitimacy of the rental receipts which had been produced.

[57] Dr Harrison strongly criticised these factual findings, as he was entitled, and indeed obliged to do, on his clients’ behalf. Because of the nature of the challenge, we have gone through the trial transcript, which explains why this judgment has taken some time to prepare.

[58] The first issue is: did the Society receive the rentals?

[59] The second respondent gave evidence, and was cross examined on this issue. Her direct evidence was that the Society had not received the money. Her position was such that she might reasonably be expected — indeed was best placed - to know about this. She was referring to the monthly bank statements. She was quite unequivocal in her assertion that the Society had not received the monies.

[60] The second issue is: Mr Ah Him attempted to meet the fact that monies he accepted should have gone to the Society, but did not, by relying on certain receipts. Were they genuine?

[61] The trial Judge did not accept the authenticity of these receipts. They appeared to have been concocted after the period in question; had purportedly been issued by Mr Ah Him, countersigned by a man whom the second respondent said was fired for forgery on another occasion; and their serial numbers were the same as undoubtedly genuine receipts issued on other occasions. It is highly unlikely that the Society would not only have several current receipt books but, crucially, that the numbering would also be duplicated.

[62] Given that the Judge accepted the evidence of the second respondent and the unreliable state of Mr Ah Him’s evidence he was entitled to hold, as he did, that justification had been made out against Mr Ah Him. It has not been shown that the Judge was wrong. Mr Ah Him’s appeal fails in its entirety.

[63] As to the appellants other than Mr Ah Him the Judge found, and we agree, that justification has not been made out against them with respect to misappropriation. Indeed no attempt was made to justify.

FAIR COMMENT

[64] We need address this issue only briefly. If a matter is one of public interest, any individual has the right to express an opinion on it. Provided the opinion is honestly held and the speaker has got his or her facts right, it does not matter how extreme the opinion is.

But to successfully raise the defence, the commentator must have indicated the facts on which the opinion is based, and they must be shown to be true.

[65] Against these principles, the second respondents cannot rely on this defence. THE OUTCOME ON THE LIABILITY CLAIMS [66] The outcome is that Mr Ah Him’s appeal must be dismissed in its entirety.

[67] The other appellants succeed in their appeals, and judgment will be entered for them against the respondents.

DAMAGES

[68] The appellants other than Mr Ah Him are entitled to damages from the respondents for the unjustified allegation that they were pocketing money which was properly that of the Red Cross Society.

[69] The main function of the tort of defamation is to compensate a plaintiff for his or her loss of reputation. That is, the extent to which he or she is held in less esteem and respect, and suffers loss of goodwill and association.

[70] Nelson J appears to have thought that proof of actual damage is required. If special damages are claimed (for instance, the loss of a job as the result of the libel) then proof is required in that respect. But damages for loss of reputation are at large, and are actionable per se. As Lord Greene put it in Rook v Fairrie [1941] l KB 507 (CA) at 516: “In a libel action the damages awarded are, for the most part and often entirely, without any real connection with any pecuniary loss at all.”

[71] Hence the principles ordinarily applicable to damages at large apply. Compensation may be given for injury to feelings and reputation. And circumstances of aggravation and mitigation are important. Damages may be aggravated by such matters as the mode, and extent of publication, along with the conduct of the defendants from publication to verdict. Doubtless whatever sum is awarded has to take real cognisance of the particular social mores and culture in which the incident complained of occurred. On the other side, the defendants’ belief in the truth of the statements, the fairness of the reports, and even provocation by a plaintiff, all may mitigate damages. Partial justification may reduce an award to almost nothing.

[72] Where several plaintiffs are involved the damages may properly take account of the fact that a defendant has libelled more than one person. But nevertheless the total sum should not exceed that representing a proper sum for the libel. (Riches v News Group Newspaper Limited [1985] 2 All ER 845 (CA).

[73] We were not referred to any Samoa authority or decisions on the quantum of defamation damages.

[74] The judges of this bench are not well placed to make an evaluation of this kind. We may well have been minded to remit this case to the Supreme Court in Samoa for the assessment of damages, but for one factor. Dr Harrison indicated in closing that the matter had been pursued as it has been primarily as a matter of vindication for the appellants. He asked this court to fix damages here, rather than remit the matter.

[75] With respect, that was a sensible course to adopt. This is somewhat in line with the increasingly common practice in New Zealand of asking a court to make a declaration of liability together with full or even indemnity costs, rather than the troublesome and sometimes invidious task of having to have damages assessed.

[76] Doing the best we can, each of the four appellants other than Mr Ah Him will have a sum of $1,000 each against the respondents. That is a sum of $4,000 in all against the respondents jointly and severally. COSTS

[77] In the Supreme Court, the trial Judge made orders for costs in favour of the respondents. We set those orders aside as they are no longer appropriate in terms of our rulings.

[78] Mr Ah Him has failed entirely, at trial and in this Court. The respondents will have a global sum against Mr Ah Him of $20,000 for costs in the Supreme Court and this Court, together with their disbursements (in both courts) as fixed by the Registrar of this Court.

[79] The four appellants other than Mr Ah Him will have a global sum against the respondents jointly and severally for costs in the Supreme Court and this Court of $10,000 together with their disbursements (in both courts) as fixed by the Registrar of this Court. Hon Justice R L Fisher Hon Justice R G Hammond Hon Justice P Blanchard