The Wellington High Court trial between New Zealand’s two professional accounting bodies has ended in victory – albeit somewhat pyrrhic – for the defendant. In a 61 page judgment in CPA Australia v NZICA [2015] NZHC 1854 Dobson J held that, whilst NZICA representatives had made some indefensible disparaging remarks, CPAA’s inability to establish pecuniary loss meant its claims could not be made out.
Background
Since 2005, CPAA has established a presence in New Zealand as a rival professional accountants’ body to the incumbent NZICA. In 2012, CPAA’s efforts were bolstered when the Financial Markets Authority accredited CPAA to license auditors.
NZICA, which had enjoyed a century-long statutory monopoly in this regard, was evidently threatened by CPAA’s foray into the market. NZICA executives were concerned by CPAA’s ability to buy expensive television advertising, as well a rumour that CPAA was offering free iPads to new members.
CPAA’s claim
CPAA issued proceedings in respect of five statements made by NZICA personnel between 2011 and 2013. Three were brought under sections 9 and 11 of the Fair Trading Act 1986 – which prohibits and deceptive conduct – for which CPAA sought damages of $50,000. The two other impugned statements were brought in defamation, for which CPAA sought a declaration from the Court that the statements were defamatory, in terms of section 24 of the Defamation Act 1992 (the “Act”).
In terms of the claims under the Fair Trading Act, CPAA objected to (a) a flyer handed out by NZICA representatives at a University careers fair, (b) an advertisement placed by NZICA in two nationwide publications, and (c) comments made by NZICA’s then chief executive that were reported in a newspaper article.
The essence of these statements was that CPAA administered slackened entry standards, provided inferior professional support, and its members earned less.
The defamation claims were brought in respect of addresses made by Ms Kirsten Patterson, NZICA’s acting chief executive, at conferences in Christchurch and Wellington. An attendee of the Christchurch conference made an electronic recording of Ms Patterson’s address, which was transcribed for the proceeding and entered into evidence. For the purpose of the proceeding, it was accepted that Ms Patterson made substantially similar utterances at the Wellington conference.
Ms Patterson’s disparaging remarks of CPAA concerned its allegedly inferior education standards, lack of overseas affiliation, and garish marketing ploys, such as offering free iPads and “tak[ing] out sponsorship of the entire series of CSI in prime time television in Australia”. Ms Patterson’s addresses were supplemented by a PowerPoint presentation, which referred to alternative accounting qualifications “cluttering the market”. (See [29]-[30].)
CPAA pleaded that the following natural and ordinary meanings arose:
- CPAA does not have affiliations with accounting bodies throughout the world;
- the education provided by CPAA to its members is inferior to that provided by NZICA and other members of the Global Accounting Alliance (GAA);
- CPAA was declined membership of the GAA because its education did not meet the requisite standard;
- CPAA resorts to expensive or elaborate marketing ploys to entice accountants to become members;
- CPAA cannot attract members without resorting to expensive or elaborate marketing ploys;
- CPAA wastes or misuses membership fees to pay for expensive advertising on television; and
- CPAA’s designation is a second-rate designation which has undermined and is undermining the accounting profession in New Zealand. (See [39].)
In addition, CPAA pleaded certain true-innuendo meanings, which Dobson J recorded as being “to the effect that CPAA does not comply with internationally recognised standards of best practice for accountancy designations and/or that CPAA’s qualifications are not internationally recognised or transferrable”. The extrinsic facts relied on concerned the audience’s appreciation (as accountants) of the importance of a professional body delivering international standards in order to achieve international association and recognition. (See [40]-[41].)
NZICA’s defences
In respect of the Fair Trading Act claims, NZICA argued that—
- the statements were not materially misleading;
- CPAA had failed to prove they were misleading; and
- in any event, CPAA had suffered no loss.
In response to the defamation claims, NZICA argued that, in terms of section 6 of Act, as a body corporate CPAA had failed to establish the requisite pecuniary loss. Tied to this argument, NZICA argued that “robust criticisms by one professional body of another did not reach a minimum threshold of seriousness to warrant the intervention of the law of defamation”, and the law “should not intervene to punish utterances thought to be unprofessional or in poor taste”. (See [104].)
Further to these arguments, NZICA pleaded the “full gamut of defences”. First, NZICA pleaded truth for the imputations relating to marketing ploys, and waste or misuse of membership fees to pay for expensive advertising. Secondly, NZICA attempted a rolled-up plea – that “insofar as the statements consisted of statements of fact, they were true and in substance and in fact, and so far as they consisted of expression of opinion, they are the honest opinion of the defendant”. NZICA further claimed the conference addresses were made on occasions of qualified privilege, in terms of the classic duty-interest test. In response to qualified privilege, CPAA sought, in terms of section 19(1) of the Act, to defeat qualified privilege on the basis that the defendant “took improper advantage of the occasion of publication” – a quasi-malice finding.
Judgment
The Fair Trading Act claim
Dobson J held the flyer’s contents were somewhat misleading and they contributed to a pattern of adverse comparisons that portrayed CPAA in a misleadingly inferior light. (See [191] and [200].)
However, Dobson J held that readers of the newspaper advertisements – which sought to differentiate NZICA’s “best practice” with competitors’ “second best practice” – would have treated these representations as puffery. They could not be considered misleading or deceptive in law. (See [202]-[207].)
Similarly, Dobson J did not find the chief executive’s recorded comments in the newspaper article were materially misleading. (See [208]-[211].)
Ultimately, the Judge held that CPAA had not been able to adduce evidence of loss, which meant no relief could be granted under the Fair Trading Act. (See [220]-[221].)
The defamation claims – pleaded meanings and pecuniary-loss threshold
In delineating the context in which Ms Patterson’s conference addresses were made, the Judge assessed the utterances complained of in view of the topics covered across her entire address, and more proximately to the words complained of. The Judge also listened again to the electronic recording in order to ascertain the tone of her comments. Finally, the Judge viewed the PowerPoint presentation, which was displayed during Ms Patterson’s addresses.
The Judge was satisfied, in view of Ms Patterson’s “confident tone claiming [NZICA’s] superiority over CPAA”, that the audience reasonably construed her comments to mean that CPAA provided inferior education to NZICA (See [47]-[48].)
His Honour also upheld the imputations that CPAA was “declined membership to the GAA because its education did not meet the required standard”, and “resorts to expensive or elaborate marketing ploys to entice accountants to become members” – the latter implicit in Ms Patterson’s statement that CPAA was offering free iPads. (See [50] and [52].)
Dobson J did not uphold the meaning that CPAA “cannot attract members without resorting to expensive or elaborate marketing ploys”, on the basis that Ms Patterson’s statement did not extend that far. (See [54].)
However, the Judge was satisfied the imputation arose that CPAA “wastes or misuses membership fees to pay for expensive advertising on television”. This was upon the “substantial exaggeration” that CPAA had sponsored a whole series of CSI on prime time television in Australia, which was contradicted by a statement from Nine Network Australia that the network had broadcast CPAA advertisements only on six occasions during air time related to CSI episodes. (See [55].)
In respect of the pleaded imputation that CPAA “is a second-rate designation which has undermined and is undermining the accounting profession in New Zealand”, Dobson J drew from this two separate imputations. He upheld the imputation that CPAA was a “second-rate designation”, but was not satisfied the element arose of “undermining the accounting profession”. The Judge noted that, although that theme was strengthened by a certain PowerPoint slide – which referred to alternative accounting qualifications “cluttering the market” – it was apparent from the transcript that Ms Patterson had not read out those words, thus weakening the prospect the meaning was imputed to audience members. (See [57]-[60].)
Finally, as to the true-innuendo claims, His Honour upheld the imputation that CPAA “did not comply with best practice for accountancy designations”, but rejected the imputation that CPAA qualifications “were not internationally recognised or transferrable” – the Judge finding the statements went no further than to impute they would not be as internationally recognised or transferrable as NZICA’s qualifications in view of the NZICA’s membership of GAA. (See [61]-[64].)
But even with various imputations established, CPAA had the additional hurdle of proving “actual” or “likely” pecuniary loss. Tied to his findings of the Fair Trading Act claim, Dobson J rejected that “actual” loss had been established. Moreover, he held the requirement for “likely” loss could not simply be an inference the imputations had likely caused loss, but rather the imputations were likely to cause loss – i.e. future loss. The Judge further rejected that the threshold of loss body corporates must establish is less when one is seeking only a declaration under the Act as opposed to damages. As a result, CPAA could not establish its defamation claims. (See [65]-[102].)
The defamation claims – the pleaded defences and rulings on malice
Dobson J additionally made findings in respect of NZICA’s pleaded defences. First, the Judge gave extensive consideration to the submission that a minimum threshold of seriousness should apply in New Zealand – and that, on this basis, CPAA’s claim could not be made out. (See [104]-[119].)
His Honour endorsed such approach and held that, consistent with CPAA’s failure to prove pecuniary loss, such finding would be applicable. (See [120]-[121].)
Regarding NZICA’s defence of truth, the Judge held the defence could not be made out because, first, evidence of a single discussion within CPAA of offering free iPads, which went no further, was insufficient to prove that CPAA “resorts to expensive or elaborate marketing ploys”. Secondly, the Judge held that the imputation that CPAA “wastes or misuses membership fees to pay for expensive advertising on television” could not be justified upon evidence of CPAA’s placement of six discrete advertisements during screenings of a series of CSI. Finally, owing to the discrete imputations the Judge had upheld as arising, he was not persuaded that the defence of truth could be made out under s 8(3)(b) of the Act – which permits defendants to justify the overall sting of a publication; that the substantial truth of the sum is more important than falsity of some of its parts. (See [125]-[127], [129]-[132], and [133]-[139].)
In respect of NZICA’s rolled-up plea of honest opinion, Dobson J held that, whilst he was satisfied Ms Patterson’s opinions were genuinely held, the defence failed because the opinions complained of relied on facts that were not germane to the imputations, or were otherwise not true. (See [140]-[170].)
As to the defence of qualified privilege, the Judge was satisfied Ms Patterson’s addresses was made on such occasion – that her addresses, for which she was invited to speak on behalf of NZICA to discuss, amongst other things, NZICA’s imminent merger with the Institute of Chartered Accountants in Australia, “were matters of important mutual interest shared by the speaker and her audiences”. (See [175].)
The defence having been made out, Dobson J examined whether NZICA had sufficiently abused the privilege so as to unseat it. Ultimately, owing to Ms Patterson’s inappropriately aggressive criticisms of CPAA, her lack of care in ascertaining the facts – which the Judge found “verges on recklessness” – and the stark contrast of her comments with the “measured acknowledgements” by NZICA’s expert witness of CPAA’s prowess, his Honour ruled “the defamatory elements of her criticisms did take improper advantage of the occasion”. Thus privilege was defeated. (See [179]-[182].)
In the end, however, Dobson J’s criticisms of NZICA’s conduct were fruitless to CPAA’s claim, the Judge having held no pecuniary loss – and thus no defamation – was established.
Comment
The main points this judgment contributes to New Zealand’s jurisprudential development are—
- Dobson J’s endorsement of a minimum threshold of seriousness – drawing on Tugendat J’s analysis in Thornton v Telegraph Media Group Ltd 2010] EWHC 1414 (QB), [2011] 1 WLR 1985 (for which, of course, David Price’s innovative advocacy should not be discounted) – which no doubt will be applied to purge trivial claims;
- its settling of the “likely” pecuniary loss to be established by body corporates; and
- Dobson J’s valuable comments on “improper advantage” – a standard open to New Zealand plaintiffs to defeat qualified privilege under the Act, which is quite apart, and a somewhat lower threshold, than classic malice conceptualisations of dominant ill-will and/or spite.
Ali Romanos is a Wellington defamation lawyer. He runs the website Defamation Update and Twitter feed @defamationnz.
This post was originally published as Defamation Update’s Case of the Month for August 2015. It is reproduced with permission and thanks.
Photo credit – Insynq
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