Case Law, Australia: Chau v Fairfax Media Publications PL, Philanthropist Wins Round One – Justin Castelan

4 05 2019

Dr Chau Chak Wing is a wealthy Chinese-born Australian citizen. He has extensive business interests in China and is a very generous philanthropist. He has donated enormous sums of money to a number of universities and public institutions in Australia, as well as having made donations to the main political parties in Australia.

He apparently spent $70 million buying his Vaucluse home from James Packer in Sydney and on 16 October 2015, an article written by John Garnaut was published on Fairfax Herald’s website. The heading was “Are Chau Chak Wing’s circles of influence in Australia-China ties built on hot air?” The article broadly described Dr Chau’s supposed link to what was said to be an “unfolding international bribery scandal.

The article was based on an FBI Complaint that was filed in the USA. Three people were charged under USA law, although Dr Chau was not one of them. It detailed the facts underlying the charges relating to the $200,000 bribery of Mr John Ashe, the United Nations General Assembly and Permanent Representative to the United Nations for Antigua and Barbuda, to speak at a conference at a Chinese resort. Dr Chau was not named anywhere in the complaint. The Complaint named a person, CC-3, which the article claimed was Dr Chau.

The article started with this:

“Chau Chak Wing may never get to live in the $70 million Vaucluse mansion that he bought from James Packer sight unseen… Because of an unfolding international bribery scandal, some officials believe the highly connected Chinese tycoon may prefer to bunker down in his personal ‘imperial palace’ just north of Guangzhou, beyond the reach of extradition treaties.”

An emphatic start and the article went on to detail Dr Chau’s wealth, the various political and other donations he had made in Australia, his contacts and associations with various Australian politicians and concluded with:

this story is likely to have much more to tell, while we all learn whether the extraordinary Kingold kingdom [companies belonging to Dr Chau] of Australia and China relations was built upon illicit payments of hot air.”

Dr Chau Chak Wing sued Fairfax in defamation. He claimed the article conveyed four imputations:

  1. Dr Chau bribed the President of the United Nations General Assembly, Mr John Ashe;
  2. Dr Chau participated in a conspiracy to bribe the President of the United Nations General Assembly;
  3. Dr Chau acted in so seriously wrong a manner as to deserve extradition to the United States on criminal charges, including charges of bribery;
  4. Dr Chau created his business empire in Australia by making illicit payments to government officials.

There were two main issues in the case: firstly, whether the articles carried the defamatory meanings alleged by Dr Chau, and secondly, whether Fairfax could rely upon the defence of qualified privilege under s.30 of the Defamation Act? Judgment was given by Wigney J in the Federal Court ([2019] FCA 185).

The meaning of the article

Although the article did not directly or literally state that Dr Chau bribed Mr Ashe, or that he participated in any conspiracy to do so. His Honour commenced the lengthy judgment with a quote from Lord Devlin in 1963:

“a man who wants to talk at large about smoke may have to pick his words very carefully if he wants to exclude the suggestion that there is also a fire, … the critical question is whether the media respondents heeded Lord Devlin’s cautionary words, or whether their reporting of suspicions or allegations that the applicant was somehow implicated in a bribery ‘scandal’ imputed that he was guilty of paying a bribe.”

The answer was no, the media defendants did not heed those words. His Honour held that the article conveyed the first three of the meanings, but not the fourth.

In analysing the meaning, His Honour referred to a number of aspects of the article that compelled a finding that the article went beyond conveying a mere suspicion:

  • The article contained a combination of disparagement, insinuation and suggestion that effectively imputed guilt;
  • The general tone and tenor of the article was derisive, disparaging, sneering and contemptuous towards Dr Chau. It went well beyond imputing mere suspicion;
  • The article commenced with an insinuation that Dr Chau was conscious of his guilt, by stating that he may never get to live in the $70 million Vaucluse mansion;
  • There were few references to the fact that the Complaint only contained allegations, but instead it was stated that the Complaint revealed certain facts [64].

So the article was defamatory of Dr Chau. The second question, could Fairfax rely upon the statutory defence?

s.30 Defamation Act defence

It was agreed that the article contained matters of public interest where the readers also had an apparent interest in receiving information on that subject. Accordingly, all that Fairfax had to prove to make out a defence under s.30 of the Defamation Act, was that its conduct was reasonable in all of the circumstances. His Honour held it was not.

The key witness for Fairfax was its journalist, Mr Garnaut. His evidence did not appear to go well. His Honour stated in the judgment:

  • Mr Garnaut appeared to have been “particularly awestruck” by Dr Chau’s wealth and privilege, “to the point, perhaps, of being almost mildly obsessed or even infatuated, at least in a professional sense” by Dr Chau [139, 143]. That attitude may well have coloured or clouded Mr Garnaut’s objectivity towards Dr Chau and Mr Garnaut’s evidence “included some other rather extraordinary, if not outlandish and paranoic statements or theories about Dr Chau” [147];
  • His Honour analysed the content of the FBI Complaint that Mr Garnaut based the article on and stated: “It provides precious little support for any of the imputations conveyed by the article” [151] and “The critical point to note about the factual allegations is that there is not a single direct allegation that the person referred to as CC-3 did anything to instigate or effect, or knew anything about, the payment which was alleged to constitute the relevant bribe paid to Mr Ashe.” [161], [166], [171];
  • His Honour held that: “A careful and considered reading of the Complaint and media release would have revealed that there was no sound or reasonable basis to assert that Dr Chau had in fact been accused of bribery, or conspiracy to bribe Mr Ashe.” [178];
  • His Honour had some doubts about Mr Garnaut’s reliability and credibility as a witness. His Honour concluded that he was prone to exaggeration, “showed signs of arrogance, if not smugness” and his answers became “inappropriately dismissive, unresponsive, overly defensive or unhelpful” [119];
  • It got worse for the journalist. His Honour concluded that there were: “serious doubts about the honesty and reliability of at least one aspect of Mr Garnaut’s evidence concerning a supposed confidential source of information. As will be seen, I doubt that that confidential source existed… The likelihood is that Mr Garnaut’s evidence concerning that source was manufactured …” [120]… and “the reliability of Mr Garnaut’s evidence concerning this source was, at best, highly doubtful” [201];
  • Mr Garnaut displayed a willingness to draw adverse inferences against Dr Chau on the basis of fairly limited objectively verified information and this did not reflect well on him. Mr Garnaut appeared to approach the task of writing a “big hit” on Dr Chau “with some considerable enthusiasm, if not glee.” [149];
  • When the article was first posted online at 1.47 pm on 16 October 2015, it did not state that the view that Dr Chau may “bunker down” in China was held by “some officials”. Neither had the three previous versions approved by Mr Garnaut included those words. Yet at 2.18 pm, Mr Garnaut sent an email where he suggested changes in bold, including the addition of the words “some officials believe”. No explanation was given for that last minute addition [215]. Under cross-examination about that matter, Mr Garnaut’s answers were held to be “implausible and unsatisfactory” [218];
  • The article contained an assertion that since the arrest of Mr Ashe, ‘offending’ Kingold websites that had trumpeted Mr Ashe’s appearance had been “scrubbed from cyberspace”. His Honour held that there was no reasonable basis for the assertion [231]. The evidence was that there were still live links concerning the conference and Mr Ashe’s attendance. His Honour held that the making of the “scrubbing” assertion was a highly relevant consideration in determining whether the conduct of Garnaut and Fairfax was reasonable in the circumstances.

His Honour concluded that, in all of the circumstances, the journalist’s conduct was not reasonable and accordingly, the statutory defence failed.

In assessing damages, His Honour concluded that the appropriate award was $250,000, reduced to $225,000 because Dr Chau had already received compensation of $65,000 in settlement of a previous case against the Daily Telegraph. His Honour held that there were no aggravating circumstances and finally ordered damages of $225,000 plus $55,000 interest, so in all $280,000.

So Dr Chau wins the first round. Whether or not there will be an appeal remains to be seen, but in any event, no pun intended, another Dr Chau defamation proceeding is apparently waiting in the wings.

This post originally appeared on the Defamation Watch blog and is reproduced with permission and thanks.


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