BSA Decisions Ngā Whakatau a te Mana Whanonga Kaipāho

Summary

Allegations by homeowners that Fletcher Homes Ltd engaged in irregular practices with respect to the valuation and financing of new homes were the subject of a ministerial investigation, according to reports broadcast on One Network News on TV One on 26 and 27 February 1998 between 6.00-7.00pm.

Through their solicitors, Fletcher Homes Ltd (FHL) and Residential Mortgages Ltd (RML) complained to Television New Zealand Ltd, the broadcaster, that the reports were unfair, inaccurate, unbalanced and lacked objectivity. They also complained that TVNZ failed to respect the principles of law by broadcasting potentially prejudicial evidence prior to trial, thus raising the issue of contempt. In addition, they complained that the editing of the items distorted the facts. They asked for a full correction and apology to be published.

In its response, TVNZ explained that the report provided a background as to why the Minister, the Housing Corporation and the Serious Fraud Office were engaged in an investigation of the companies’ practices. TVNZ denied that the item contained factual inaccuracies or lacked balance and objectivity. With respect to the contempt matter, it responded that in its view, the items were not likely to influence the outcome of civil litigation and furthermore, that it was in the public interest to raise the matters. The editing of the complainants’ statement was, it contended, in accordance with accepted practice, and necessary to satisfy the time constraints of the items.

Dissatisfied with TVNZ’s response, FHL and RML referred the complaints to the Broadcasting Standards Authority under s.8(1)(a) of the Broadcasting Act 1989.

For the reasons given below, the Authority declines to uphold the complaints.

Decision

The members of the Authority have viewed the items complained about and have read the correspondence (summarised in the Appendix). On this occasion, the Authority determines the complaints without a formal hearing.

An item on One Network News on 26 February 1998 broadcast between 6.00-7.00pm reported that the Housing Minister had ordered officials to investigate "serious allegations" that Fletcher Homes Ltd (FHL) deliberately duped and deceived customers. According to the item, a former employee of FHL, whose affidavit was at the centre of a top level investigation, admitted that he had sold brand new houses at over-inflated prices. It was claimed that FHL knowingly sold some homes which were worth less than the mortgages on them. In addition, it was claimed that FHL received payment from the Housing Corporation’s Mortgage Guarantee Scheme when mortgagors defaulted on their mortgages. That scheme, the report continued, had cost taxpayers $16.5 million between 1990-1995, and of that, FHL was paid approximately $5 million. At the end of the report, the presenter advised that FHL had issued a statement that day which noted that the affidavit referred to had been described by the High Court as "a sweeping hearsay statement which can be fairly described as gratuitous, egregious and provocative…".

A second item, broadcast on One Network News on 27 February 1998 included interviews with two FHL homebuyers who claimed their homes were over-valued. It also reported that the Minister was considering a full ministerial inquiry into the allegations that FHL duped homebuyers, and that the Mortgage Guarantee Scheme was used improperly. At the item’s conclusion, the presenter introduced a response from FHL’s Corporate Affairs Manager who asserted that FHL had been the victim of "very shoddy valuation practices" in one part of the country and irregular practices in isolated transactions, but that it was not widespread.

The Complaint

FHL and RML complained to TVNZ that the two programmes involved serious breaches of the Television Code of Broadcasting Practice. The cumulative effect of the two broadcasts, the complainants argued, was to imply that: during the period from 1989 to 1995 they had engaged in a nationwide plan, instigated at head office level, to sell fraudulently overvalued homes to unsuspecting buyers; a desired result of the plan was that they fraudulently obtained $5 million of taxpayers’ money from the Housing Corporation Mortgage Guarantee Scheme; and that they had consistently lied about the existence of the plan and attempted to cover it up.

The First Programme

The complainants contended this programme breached standards G1, G5, G6, G7, G14 and G19 of the Television Code of Broadcasting Practice. Standards G1, G5, G6 and G7 require broadcasters:

G1  To be truthful and accurate on points of fact.

G5  To respect the principles of law which sustain our society.

G7  To avoid the use of any deceptive programme practice in the presentation of
      programmes which takes advantage of the confidence viewers have in the
      integrity of broadcasting.

G6  To show balance, impartiality and fairness in dealing with political matters, current
      affairs and all questions of a controversial nature.

The other standards read:

G14 News must be presented accurately, objectively and impartially.

G19 Care must be taken in the editing of programme material to ensure the extracts
       used are a true reflection and not a distortion of the original event or the overall
       views expressed.

Standard G1 – truth and accuracy

The complainants argued that the tenor of the programme as a whole conveyed impressions which were not true, including that:

• All of the homes sold by FHL and financed by RML between 1989 and 1995 were fraudulently overvalued;
• The complainants gave everyone who bought a Fletcher Home in that time a fraudulent overvaluation of their property;
• The fraudulent overvaluations caused vast numbers of those purchasers to suffer heavy financial losses in later years;
• As a result of the fraudulent valuations, the complainants fraudulently claimed about $5 million from the Mortgage Guarantee Scheme;
• The complainants and its senior executives were liars and had failed to tell the truth about the fraudulent valuations for at least the last two years.

The complainants contended that an impression was left that the allegations were factual because of the numerous references to the affidavits sworn by two former employees, the interview with one of those former employees, the extract from the Opposition spokesperson on Housing speaking in Parliament, the references to the Housing Minister’s investigation and the Serious Fraud Office, and the lack of questioning by TVNZ’s reporters to test the veracity of the allegations. The complainants argued that any reference to the impressions being only allegations was overshadowed by this seemingly overwhelming evidence, and that it also neutralised the effect of the extract from the complainants’ statement which was reproduced at the end of the programme.

FHL and RML also argued that the programme was factually inaccurate in that it implied that the Mortgage Guarantee Scheme continued to be available until 1995. That was wrong, they advised, as cover under the scheme ceased from late 1991.

At the outset, TVNZ emphasised that at the time of the broadcast, the matter was being investigated both by the Housing Corporation and the Serious Fraud Office. It was a report which explained the reasons why an investigation had already begun, TVNZ asserted, and was a matter which was demonstrably in the public interest.

TVNZ identified what it called an etymological problem in establishing errors of fact on the basis of impressions. It pointed out that matters of fact were objective while impressions and inferences drawn were subjective.

As for the "numerous references" to the affidavits, TVNZ responded that those affidavits lay at the heart of the issue which concerned the Minister. It noted that the references were clearly labelled as claims or allegations and did not accept that the "seemingly overwhelming evidence" neutralised the effects of those words.

TVNZ rejected the complaint of factual inaccuracy regarding the implication that the Mortgage Guarantee Scheme continued to be available until 1995. It maintained that the date the scheme went out of existence was not material. What was important was the amount of money paid out, TVNZ responded. The details given on those amounts were correct, it concluded.

The Authority notes that the introduction defines the parameters of the story. This item reported that the Housing Minister had ordered officials to investigate what he called serious allegations involving hundreds of homeowners and millions of taxpayer dollars.

In recounting the background, TVNZ recorded that Opposition Spokesperson on Housing Paul Swain had been the first to reveal that there were some irregularities in home valuations. Since then, an affidavit from a former employee had prompted the Minister of Housing to launch an inquiry. In addition to the claims about inflated valuations, it was reported that officials from the Minister’s office and from the Serious Fraud Office were investigating the payout to FHL under the Mortgage Guarantee Scheme.

In the Authority’s view, TVNZ made it clear that the inquiry was based on allegations. It reported that those allegations had sufficiently concerned the Minister that he had begun an investigation.

The Authority does not accept the complainants’ argument that the dominant impression given by the programme was that the allegations were true. In its view, the dominant impression was that serious allegations had been made against the complainants, and further, that they were sufficiently serious as to prompt a government investigation.

As for the veracity of the allegations, the Authority notes that they were attributed to the affidavits and not declared as fact. Each allegation, it observes, was sourced to one or other of the affidavits which were the basis for the Minister’s investigation. It finds no inaccuracy there.

Next the Authority deals with the complaint that the programme was inaccurate because it implied that the Mortgage Guarantee Scheme continued to be available to secure lending rights up until 1995. The Authority accepts TVNZ’s explanation that although the Scheme might not have been available to home buyers from FHL after 1991, if pre-1991 home buyers went into default after 1991, they were eligible for a payout under the scheme. The Authority notes that the complainants do not dispute the amount which was paid out to FHL under the scheme between 1990 and 1995.

The Authority considers the programme accurately reported the facts. Subsequent events, including the outcome of the case, do not alter the facts which were known in February. The Minister had ordered an investigation. That investigation was based on the allegations made in the affidavits. The Authority concludes that the programme did not contravene standard G1.

Standard G5 – respect the principles of law

The complainants contended that TVNZ failed to respect the law of contempt. They maintained that the broadcast was likely to have inhibited litigants from resorting to the Courts for enforcement of their rights.

Further, the complainants argued that they were exposed to public obloquy for exercising their legal right to defend any claims from Fletcher Homes buyers on their merits. They submitted that the broadcast exposed them to public and prejudicial discussion of the merits or facts in issue prior to determination by the Courts. In addition they argued that the conduct was likely to deter witnesses from coming forward who might have given evidence favourable to the complainants.

The complainants reminded TVNZ that it had been put on notice that they regarded the programmes’ content as a contempt. They also pointed out that TVNZ was well aware at the time of the broadcast that one of the affidavits at the heart of the investigation had been struck out by the Wellington High Court in its entirety.

TVNZ responded that it was well aware of the law of contempt. In its view, the items referred to in the programme were unlikely to have deterred witnesses or influenced the outcome of civil litigation. Further, it argued, the issues raised were demonstrably matters of public interest.

With respect to the fact that one of the affidavits had been struck out by the High Court, TVNZ emphasised that the striking out was on grounds associated with the admissibility of evidence in civil proceedings. It maintained that did not render the affidavit invalid for the purpose of providing public information, nor as the basis for an investigation by the Housing Corporation and Serious Fraud Office. It submitted that the government regarded the affidavit as a serious document with possible serious implications. That, TVNZ concluded, was the basis of the news story.

The issue of whether TVNZ was in contempt of court with the broadcast is not one for the Authority. However, the Code does require broadcasters to respect the general principles behind such a law in their programmes. Here, the general principle must be to guard against content or material which may impede or interfere with the orderly and just disposition of any case before the court. The Authority is not satisfied that these broadcasts transgressed the standard, for it notes, it is not sufficient for the broadcaster merely to raise matters which are before the court, even if in a provocative way. Further, there was not sufficient information put before the Authority to convince it that the court processes were threatened in the way it has described. The Authority finds no breach of standard G5.

Standard G6 – balance, impartiality and fairness

FHL and RML contended that the programme was neither prepared nor presented in a way which showed balance, impartiality and fairness.

They noted that the programme failed to mention that the former employee, who was interviewed and who filed the affidavit referred to, worked only at the Manawatu branch, that he and another employee had issued proceedings against the complainants themselves, that the affidavit referred to was in all material respects the same as one which had been thrown out of the High Court and that the former employee’s allegations had not been questioned or tested.

The complainants objected to the programme’s failure to reproduce their full statement which stated that the former employee had acted dishonestly and that any customer who had been hurt by that was being compensated. They also objected to TVNZ’s failure to refer to the fact that the allegations of fraud were contained in an affidavit described by the Court as containing "sweeping hearsay statements which can fairly be described as gratuitous, egregious and provocative…".

In light of the serious and controversial nature of the statements made in the programme, the complainants maintained that they were not given a fair opportunity to comment upon the allegations in the affidavits. They further complained that the programme ignored information provided by the complainants’ spokesperson.

TVNZ acknowledged that the programme did not refer to the fact that the former employee worked only in the Manawatu region. It said there seemed no reason to do so. The point was, it continued, that he had worked for FHL.

TVNZ advised that it was aware of FHL’s contention that the problems relating to mortgages were confined to the Manawatu region. However, it responded, the facts did not support such an assertion. It pointed to more than 100 claims which had been lodged seeking compensation, and noted that they came from many parts of New Zealand.

With respect to its failure to note that the two former employees were suing FHL, TVNZ responded that that was peripheral. However, it noted, the item on 26 February specifically quoted FHL as saying the two men were suing the company.

As for the reliability and credibility of the affidavit, TVNZ reiterated that the item correctly reported that the affidavit existed, summarised the key allegations contained in the document, and reported that the allegations were being taken seriously by Parliament and that investigations had been ordered. It recorded that it repeatedly approached FHL to test the allegations made, but that on all occasions, FHL refused requests for an interview. TVNZ argued that those approaches suggested that it had not accepted the affidavit at face value as the complainants contended.

With respect to the complaint about the editing of the press statement, TVNZ responded that it was under no obligation to run a press statement in full. In its view, the thrust of what FHL wished to say was reflected in the broadcast. TVNZ stressed that it was incorrect for the complainants to suggest that it had deleted a reference from the statement, and repeated that it was properly summarised, and the interviews were edited in such a way as to stress the thrust of the interviewees’ arguments.

Turning to the complainants’ argument that the status of the affidavit was not revealed, TVNZ stressed that the focus of the item was the investigations ordered by Parliament into the allegations contained in the affidavit.

TVNZ disputed the assertion that the complainants were not given an opportunity to comment. It recalled that the matter was not new to the complainants as it had been first raised in December and was revisited in February when the Minister of Housing called for an investigation. TVNZ said it understood the complainants had four hours in which to consider a response, and when they eventually issued a statement, that was accurately summarised at the end of the item.

TVNZ concluded that standard G6 was not breached by the broadcast.

In determining this aspect of the complaint, the Authority’s task is to decide whether the programme was unbalanced, as the complainants contended, because it failed to acknowledge that the affidavits which were at the source of the story were themselves under scrutiny.

The Authority first notes that, according to the report on 26 February, allegations about wrongdoing in the company predated the affidavits, and the Opposition spokesperson was seen raising the matter in Parliament. Then, the report continued, came the affidavits, and they formed the basis for the Ministerial investigation. However, the Authority observes, it was not until the end of the item, when the statement from the complainants was summarised, that any suggestion was made that the integrity of the affidavits was questionable. The question for the Authority is whether the inclusion of the tail piece provided the necessary balance.

The Authority concludes that the relatively brief reference in the item’s tail piece – which included the High Court’s critical description of the affidavit – was sufficient to comply with the requirement for balance. Furthermore, it finds that the veracity of the allegations is not pivotal to the story, which was that a Minister of Housing was sufficiently concerned about alleged malpractice that he had ordered an investigation. On the facts known at the time, TVNZ provided an accurate summary of the situation, and the Authority concludes that insofar as the Minister deemed the affidavits to be a satisfactory basis for an investigation, it was not necessary for TVNZ to scrutinise the veracity of the source. FHL had, the Authority noted, an opportunity to put its point, and it believes its position was adequately summarised in the tail piece. The Authority declines to uphold this aspect of the complaint.

Standards G7 and G19 – avoiding use of deceptive programme practice, and ensuring that extracts used are a true reflection of the original event

The complainants contended that a deceptive programme practice and editing device was used by broadcasting only part of their press statement in a way which led viewers to believe the entire statement had been reproduced.

The first programme was also deceptive, they argued, in making it appear that the interview with the former employee was contemporaneous, or at the least, an accurate portrayal of his current position. In fact, they noted, the interview was filmed in December, and he had backed off his position since then.

TVNZ responded that it was not standard editorial practice to broadcast a press statement in its entirety and that it believed viewers understood they were being told the essence of the various arguments.

TVNZ did not agree with the complainants’ assertion that the former employee had "backed off his position". It noted that he had been spoken to a number of times following the recording of the interview, and had confirmed his stance. Two days before the broadcast he telephoned TVNZ’s Political Editor to say that he no longer wished to cooperate with TVNZ. He did not elaborate, but did not resile from his previous comments. As he did not recant the allegations contained in the affidavit, TVNZ advised that a decision was made to proceed with the story.

TVNZ concluded that neither standard G7 or G19 was breached.

The Authority finds no evidence of a breach of these standards. In previous decisions, it has interpreted a "deceptive programme practice" which would contravene standard G7 as one in which technical trickery is used with the intention of misleading viewers. That did not occur here. Nor does it find that the editing of FHL’s statement was such that it distorted the original views expressed. The Authority accepts the broadcaster’s argument that it was entitled to exercise editorial discretion in summarising FHL’s statement. It concludes that it adequately conveyed the complainants’ stance.

As for whether the former employee "backed off" his earlier remarks, the Authority notes that although he refused to be interviewed again, he did not appear to rescind them in his dealings with the broadcaster.

Standard G14 – News must be presented accurately, objectively and impartially

Referring to arguments outlined above, the complainants asserted that no effort was made to challenge the statements made by the two former employees and the programme was not an objective, balanced summary of the matter based on the information which was known to TVNZ at the time.

TVNZ emphasised that the purpose of the item was to inform viewers of what had caused both the Government and the Opposition to launch official inquiries. It repeated that every effort had been made to obtain a response from FHL. When a statement finally arrived, it advised, it was summarised at the end of the item.

In the Authority’s view, the programme was a reasonable summary of the facts which were known at the time. Its purpose, the Authority concludes, was to inform viewers that a Ministerial inquiry was proposed. It concludes that there was no breach of standard G14.

The Second Programme

The complainants argued that the second programme also presented the allegations in a manner which left the overwhelming impression they were true. As a result, they continued, the second programme breached standards G1, G5, G6 and G14 for similar reasons to those referred to above.

They also complained that the broadcaster’s selective and misleading use of information in relation to the interview with FHL’s Corporate Affairs Manager breached standards G6, G7, G14 and G19.

TVNZ maintained that the story was fair and balanced. It noted that it dealt with the on-going political concerns, and included interviews with customers who had been affected, as well as with the Corporate Affairs Manager who emphasised that FHL had been the victim in the matter and that time would show it had acted honourably.

TVNZ concluded that the broadcast was in accordance with programme standards.

The second programme, the Authority notes, began by reporting that some Fletchers homeowners had joined calls for an inquiry. A focus of the inquiry, it continued, was the question of impropriety with respect to the Mortgage Guarantee Scheme. The programme concluded with a statement from FHL in which its Corporate Affairs Manager made it clear that the company itself believed that it had been the victim of shoddy valuation practices, and that it had identified dishonesty in one part of the country and irregular practices in some isolated transactions, but that there had been no widespread wrongdoing.

The Authority concludes that the second programme fairly dealt with the issues, and finds no breach of any broadcasting standards.

Conclusion

The Authority has dealt with the complainants’ arguments and the broadcaster’s responses in detail because this is a complex issue, and has been the subject of recent court proceedings. However, it emphasises, its task has been to decide whether the programmes which were broadcast in February were, on the basis of what was known at the time, in breach of any broadcasting standards. It observes that the programmes were predicated on the point that the Minister of Housing was calling for an inquiry into allegations about irregular practices concerning FHL. He was basing his inquiry on allegations contained in affidavits from two former employees. Although the veracity of those affidavits had been challenged, the fact remained that it was the allegations contained in them which were at the basis of the calls for the inquiry. On that basis, the Authority concludes that there was no breach of standards.

As a final point, the Authority refers to a recent submission made by TVNZ that the matter should not be heard by the Authority because defamation issues were still before the Court. The complainants responded by undertaking that in the event they bring defamation proceedings against TVNZ, they would elect trial by judge alone and not trial by jury. They referred to TV3 Network Services Ltd v BSA [1992] 2 NZLR 724 where McGechan J saw no risk of prejudice if proceedings were determined by a judge alone. The Authority agrees with the complainants’ submission on this point.

For the reasons set forth above, the Authority declines to uphold the complaints.

Signed for and on behalf of the Authority

Sam Maling
Chairperson
15 October 1998

Appendix

Fletcher Homes Ltd and Residential Mortgage Ltd’s Complaints to Television New Zealand Ltd – 26 March 1998

Through their solicitors, Fletcher Homes Ltd (FHL) and Residential Mortgages Ltd (RML) complained to Television New Zealand Ltd that items broadcast on TV One’s One Network News on 26 and 27 February 1998 failed to comply with broadcasting standards.

The first item, on 26 February, gave extensive coverage to allegations made about FHL and RML, and the second item was a follow-up to the first.

FHL and RML argued that both items involved serious breaches of the Television Code of Broadcasting Practice. They noted that under standard G14 news must be presented "accurately, objectively and impartially", and argued that viewers expected news to have those qualities, and were likely to place greater weight on the contents of a news item than on any other television programme. In fact, they maintained, the items were anything but accurate, objective and impartial.

The complainants suggested that in applying the relevant standards, regard should be had not only to the medium used, but also to the seriousness of the content of the items. Their cumulative effect, according to the complainants, was to imply that during the period 1989 to 1995, FHL and RML:

• were engaged in a nationwide scheme to sell fraudulently overvalued homes to unsuspecting customers;
• fraudulently obtained $5 million of taxpayers’ money from the Housing Corporation of New Zealand Mortgage Guarantee scheme; and
• had consistently lied about the existence of the scheme and attempted to cover it up.

The first programme

FHL and RML complained that the first item breached standards G1, G5, G6, G7, G14, and G19 of the Television Code of Broadcasting Practice.

Standard G1
According to the complainants, the programme conveyed the following impressions:

• all of the homes sold by Fletcher Homes and financed by RML between 1989 and 1995 were fraudulently overvalued by the complainants;
• the complainants gave everyone who bought a Fletcher Home between 1989 and 1995 a fraudulent overvaluation of their property in order to induce them to purchase;
• the fraudulent overvaluations caused vast numbers of those purchasers to suffer heavy financial losses in later years;
• as a result of the fraudulent valuations, the complainants fraudulently obtained $5million from the Housing Corporation Mortgagee scheme; and
• the complainants and their senior executives were liars and failed to tell the truth.

The complainants argued that these impressions contained serious allegations about them and were broadcast in a way which would have led viewers to believe those impressions were true. They complained that the broadcaster failed to test the veracity of the allegations.

They also complained that the first programme was factually inaccurate in implying that the Mortgage Guarantee scheme continued to be available until 1995. That scheme, they observed, ceased to be available from late 1991.

Standard G5
This standard was breached, according to the complainants, because TVNZ failed to respect the law of contempt. They considered that the broadcast was likely to have the effect of inhibiting litigants from resorting to the courts for enforcement of their rights. They also complained that the items exposed them to public and prejudicial discussion of the merits or the facts in issue prior to determination by the courts. In addition, the complainants considered the broadcasts would be likely to deter witnesses from coming forward who might have given evidence favourable to them. FHL and RML argued that the broadcast was all the more contemptuous given that TVNZ had been put on notice that they regarded the items’ contents as a contempt, that an affidavit by a former employee had been struck out in its entirety in the Wellington High Court, and that the first item lacked balance.

Standard G6
The complainants alleged that the first item lacked balance because:

• It failed to mention that Mr Marshall (the former employee of Fletcher Homes) worked only at the Palmerston North branch;

• the only reference to the fact that he and another employee had issued proceedings against the complainants in respect of their own purchase of Fletcher Homes was in the broadcast of an extract from the complainants’ statement;

• TVNZ was aware that the former employee’s affidavit referred to in the first item was in all material respects the same as one sworn by him in proceedings in Wellington and which had been struck out in its entirety;

• it reproduced his allegations, without testing or questioning them;

• it failed to reproduce the full statement by Fletcher Homes which included:
  
  Marshall was a salesman who we now know acted dishonestly while he worked for us. He worked only in Palmerston North.
  

  Any customer who has been hurt by dishonesty is being compensated.

• the programme gave extensive coverage to Mr Marshall’s allegations of dishonesty on the part of the complainants but deleted the reference from Fletcher Homes’ statement about dishonesty on his part;

• The complainants said they understood that Mr Marshall asked TVNZ not to broadcast any of the contents of his television interview;

• TVNZ failed to refer to the strikeout application and to the contents of the judgment which placed Mr Marshall’s allegations of fraud in context, and in particular that the allegations were too generalised. That decision clearly undermined Mr Marshall’s credibility and the weight to be given to his allegations, the complainants argued;

• the complainants were not given a fair opportunity to comment on Mr Marshall’s allegations, given their seriousness. They noted that on the day of the broadcast, TVNZ was advised that the Marshall affidavit was almost identical to the one which was subject to a strike out order, and that any reference to the affidavit in the media was in contempt of court and defamatory. The complainants contended that as TVNZ ignored this information, standard G6 was breached.

Standards G7 and G19
The complainants argued that the first item used the deceptive programme practice and editing device by broadcasting only part of their press statement. They argued that the first item was also deceptive and distorted in that it implied that the interview with Mr Marshall was contemporaneous or at least an accurate portrayal of his current position. In fact, they noted, the interview took place in mid December, and since then Mr Marshall had backed off his allegations.

Standard G14
The first item was not accurate, objective or impartial, the complainants argued. Further, they continued, no effort was made to challenge the statements made by the former employees and the item was not an accurate summary of the information which was then available to TVNZ or could reasonably have been acquired at that time.

The Second Programme

The complainants contended that similar breaches of standards occurred in the second item. In particular, they referred to the fact that the first item was summarised and Mr Marshall’s allegations were again presented in a way which left the overwhelming impression that they were true. The complainants also objected to the coverage given to the unidentified claimant, the Minister’s call for a full ministerial inquiry, the reference to the Minister taking advice from the Solicitor General, the innuendo that Fletchers might not cooperate with an official investigation, and the call by a Labour MP for a full inquiry. As a result, they contended, the second programme was in breach of standards G1, G5, G6 and G14 for similar reasons referred to above.

The complainants advised that prior to the broadcast of the second item, a representative of FHL was contacted by TVNZ. He answered the questions put to him by TVNZ regarding whether FHL would provide information for the inquiry, but in the event, the thrust of the item emphasised and repeated the allegations made by Mr Marshall in the first item. FHL and RML argued that the selective and misleading use of the information available to the reporter was in breach of standards G6, G7, G14 and G19.

Remedy

The complainants demanded that a full correction and apology be broadcast on terms to be agreed with them.

TVNZ’s Response to the Formal Complaint – 20 April 1998

TVNZ began by noting that the items explained the background to a decision by the Minister of Housing to order investigations into allegations that FHL deliberately deceived some of its customers. The first item, it noted, arose from the Minister’s request for a departmental inquiry, and the second followed up with confirmation that the Minister was by then considering a full Ministerial inquiry. It advised that it considered the complaint under standards G1, G5, G6, G7, G14 and G19 of the Television Code of Broadcasting Practice.

TVNZ observed that there appeared to be an implication in the complaints that the story was somehow a fabrication, dreamed up by TVNZ and its political reporter, based on a discredited affidavit. It seemed to overlook the fact, TVNZ contended, that at the time of the broadcast, the matter was being investigated by both the Housing Corporation and the Serious Fraud Office.

TVNZ emphasised that the story was not a speculative piece, but was a report explaining the reasons why the Minister of Housing, the Housing Corporation and the Serious Fraud Office were already engaged in an investigation. It noted that the matters were both of and in the public interest, as reflected by the concerns of the Minister of Housing.

TVNZ then responded to the point that it should not have referred to an affidavit which had already been struck out by the High Court. It said that its understanding was that the affidavit was struck out because of the rules of evidence relating to civil proceedings. It argued that did not preclude the use of information contained in the affidavit in the legitimate context of an issue which had already attracted Parliamentary attention.

As a further point, TVNZ advised that its response would only deal with the allegations about breaches of broadcasting standards.

Standard G1
TVNZ noted that the complaint identified errors of fact on the basis of impressions given in the items. It pointed out that matters of fact were objective, while impressions and drawn inferences were necessarily subjective. It denied that there were any identifiable errors of fact, and did not believe the complaint established any such errors.

Regarding the complaint that the references to the affidavits of the two former employees were presented as fact, and not merely as allegations, TVNZ responded that those affidavits were at the heart of the issue. They were such that the Minister felt obliged to order an investigation, and it was on that basis that the stories were broadcast. TVNZ did not agree with the complainants’ conclusion that "the seemingly overwhelming evidence" presented in the programmes neutralised the effects of the references to the impressions being only allegations or claims. The fact was, it argued, that the government and the opposition were in agreement on the seriousness of the allegations and the need for further investigation.

TVNZ rejected the claim of factual inaccuracy. It added that the Minister’s interest in the allegations was largely driven by the fact that Fletcher Homes and its associated companies had received taxpayers’ money through the Mortgage Guarantee scheme. The item clearly detailed how the scheme worked, and showed the total paid out. TVNZ pointed out that the figures were included after consultation with Fletchers.

Standard G5
With respect to the allegation of contempt, TVNZ responded that it was well aware of the law of contempt. In its view, the items referred to were not likely to deter witnesses or influence the outcome of civil litigation. Further, it considered it had a duty to publish the facts, given all the circumstances.

TVNZ then referred to attempts by the complainants to prevent the story from appearing. When a Labour MP attempted to table the affidavit in Parliament, his application for leave to do so was refused on the basis of the complainants’ injunction. When the injunction was lifted, it was done so on the basis of consent, and none of the conditions related to contempt. TVNZ believed that it was most unlikely that the complainants would have agreed to the injunction being lifted if they considered an issue of contempt still remained.

TVNZ advised that its news staff were aware of the similarity of the affidavits, and the fact that the Marshall affidavit had been struck out. However, it noted, that was on grounds associated with the admissibility of evidence in civil proceedings, and did not render the affidavit invalid for the purpose of providing public information, or as a basis for an investigation by the Housing Corporation or the Serious Fraud Office. It emphasised that the Minister did not call off the investigation because the affidavit was struck out. The government’s response was to regard the affidavit as a serious document with possible serious implications.

TVNZ advised that it was satisfied the broadcast did not breach standard G5.

Standard G6
TVNZ denied that the items lacked balance, impartiality or fairness. It acknowledged that the item did not refer to the fact that Mr Marshall had worked only in the Manawatu region. It said there was no reason to do so; what was relevant was the fact that he worked for Fletcher Homes.

TVNZ said that it was aware that the complainants had insisted that the problems relating to mortgages were restricted to the Manawatu region but, it argued, the facts did not support that assertion. It pointed out that more than 100 claims had been lodged from all over the country.

In TVNZ’s view, the point that the two former employees were themselves suing Fletcher Homes was peripheral. However, it noted, the item did state that they were doing so.

TVNZ denied the allegation that it had reproduced the affidavit at length without questioning it. It considered such a comment to be an exaggeration, and noted that the report on its contents was necessarily brief. It responded:

The item correctly reported that the affidavit existed, it summarised key allegations contained in the document, and reported that they were being taken sufficiently seriously by Parliament for investigations to be ordered.

It added that its news staff had repeatedly attempted to contact Fletcher Homes to test the allegations made by Mr Marshall, but the requests for an interview were refused. It added that every effort had been made to check matters raised in the affidavit with Fletcher Homes.

Responding to the complaint that the complainants’ press statement was not read in full, TVNZ stated that it was impractical to suggest that such a policy should be followed. It believed the thrust of what the complainants wished to say was reflected in the broadcast. It also rejected the suggestion that it edited a reference from the Fletcher statement in a manner which breached the standard, pointing out that the story was subject to editorial judgment, and that the statement was properly summarised.

TVNZ disputed the complainants’ assertion that they were not given a fair opportunity to comment. It reminded them that TVNZ first made inquiries about the affidavit in December 1997, but decided at that time not to run the story. When the Minister became involved, it reported, the story took on a new interest. TVNZ considered that the complainants had sufficient time to respond on the day of the broadcast and, it understood, a number of conversations were held between newsroom staff and Fletcher Homes that day. In addition, it noted, the material was already familiar to the complainants. When the complainants did finally release a statement, it was accurately summarised, TVNZ observed.

It concluded that standard G6 was not breached.

Standards G7 and G19
TVNZ emphasised that there was no expectation that a news outlet publish or broadcast statements in their entirety. It disputed the suggestion that Mr Marshall had "backed off" his allegations, advising that it had spoken to him a number of times following the recording of the interview. It noted that he had not been spoken to for about two weeks prior to the 26 February story, but two days before the broadcast he had telephoned TVNZ’s political editor to say that he no longer wished to cooperate with TVNZ. He did not elaborate but, TVNZ reported, neither did he resile from his previous comments. TVNZ continued:

This conversation with our Political Editor was considered at a senior editorial level. It was noted then that at no time in any conversation with TVNZ did Mr Marshall recant the allegations contained in his affidavit. The decision was made to proceed with the story. That the interview with Mr Marshall was recorded some time before the broadcast was not material unless he had in the interim indicated a change of mind. He did no such thing.

TVNZ also pointed out that by then the affidavit was already at the centre of a political storm and that he as a consequence no longer had any control over its contents.

Standard G14
TVNZ advised that every effort was made to obtain a response from the complainants. When, at a late hour, a statement was issued, a summary was included at the end of the item. It noted that the purpose of the item was to inform viewers about what had prompted official inquiries by both the government and the opposition.

Referring to a previous decision of the Authority (Decision No: 1996-175/176) it noted the Authority had concluded:

Unwillingness of the company to respond does not preclude the investigation continuing and, since the company’s representatives were given an opportunity to respond, the Authority considers that (in this case) the requirement for balance was satisfied.

The second programme

To the complaint that allegations were made in such a way that the impression was left that they were true, TVNZ responded that it was perfectly valid for it to make use of examples in a story of this nature, and to report on the proposed ministerial inquiry and the concerns expressed by the opposition.

It also made the point that it could not undertake a "follow-up" story without briefly restating the salient points from the original. It was necessary for viewers who might not have seen the first item, and served to jog the memories of those who did. In TVNZ’s view, the story was worthy of a follow-up, as the minister had moved on to consider a full ministerial inquiry into the matter.

TVNZ recorded that a number of Fletcher homeowners contacted it after the first story was broadcast. About three quarters of them had already settled with Fletchers, yet none were satisfied with either the process or the compensation. Those who had settled spoke of a confidentiality clause, which barred them from speaking publicly.

TVNZ considered the item overall was fair and balanced. It revealed on-going political concerns, and showed examples of those who were affected. Fletcher Homes’ representative was heard expressing the view that Fletchers had been the victim in the matter and that time would show it had acted honourably.

TVNZ said it was satisfied that the broadcast was in accordance with programme standards.

Fletcher Homes Ltd and Residential Mortgages Ltd’s Referral to the Broadcasting Standards Authority – 10 July 1998

Dissatisfied with TVNZ’s decision not to uphold the complaints, the complainants referred them to the Broadcasting Standards Authority under s.8(1)(a) of the Broadcasting Act 1989.

The complainants asked the Authority to bear in mind, when it considered the complaints, the fact that the two programmes in issue were part of TV One’s prime time news coverage, and that they contained extremely serious allegations against the complainants which went to the core of their business reputations. The complainants observed that accusations of dishonesty and fraud were not to be reported lightly. Further, they argued that TVNZ knew but failed to report key facts which seriously undermined the reliability of affidavits which led to the investigations referred to. As a result, they contended, the public received a totally false impression of the credibility of the allegations made.

Overview

In the complainants’ opinion, TVNZ’s response ignored a fundamental point. They noted that the story was based on David Marshall’s affidavit, and the message given was that the Minister ordered an official investigation because of the allegations in that affidavit. They pointed to references by the presenters, and the reporter, which emphasised the role of the affidavit. However, the complainants argued:

What happened however, was that [the reporter] only reported on those aspects of the affidavit which appeared to be negative…, and failed to report the fact that affidavits by Mr Marshall and Mr Burston, which TVNZ knew were in all material respects the same as those referred to in the story, had been struck out by the High Court in their entirety because they:

"Contain[ed] sweeping hearsay statements which can be fairly described as gratuitous egregious and provocative and which are likely to result in retaliation in kind."

The complainants argued that the High Court’s decision went to the heart of the story. That decision cast serious doubt on the weight which should be given to the affidavits which had prompted the investigations. They continued:

How then could TVNZ fail to mention that only the previous day the High Court had delivered a decision which at the very least meant that Mr Marshall and Mr Burston’s ability to give evidence on the matters they deposed to was seriously open to question?

In the complainants’ view, it was misleading for TVNZ to have suggested that the affidavit was struck out "because of the rules of evidence relating to civil court proceedings". They contended that the Court’s decision amounted to a finding that the contents of the affidavits were so objectionable that they should not just be given little weight, but should not be considered by the Court at all. The complainants asserted that they did not say that the affidavits should not have been referred to, but that the references should have been fair, balanced and impartial.

Standard G1 – accuracy
To TVNZ’s argument that impressions were not the same as errors of fact, the complainants responded that an impression was an effect produced on the mind, and that effect might be one of fact. They repeated that the impression left by the first programme was that many of Mr Marshall’s allegations were true and indisputable. They noted that the story stated that Mr Marshall worked for FHL and personally sold brand new houses at over-inflated prices. Regardless of references later in the story to his "claims" or "allegations", the complainants noted that viewers were not given any information as to why his accusations might be unfounded.

Standard G5 – respect for the principles of law
In the complainants’ view, respect for the law of contempt required that the programme be at the very least, accurate, balanced and impartial. Instead, they noted, the first programme deliberately omitted crucial information which would be likely to affect the way the complainants were perceived. They added:

An experienced broadcaster such as TVNZ should have questioned why Mr Marshall took the affidavit which the complainants had applied to strike out, re-drafted it in form but not in substance, and released it for public consumption.

The complainants made it clear that they did not suggest that the Housing Corporation and the Serious Fraud Office were not entitled to use the affidavit. What was critical, they argued, was that there was accurate and balanced reporting of important information relevant to the strength and reliability of the affidavits being used.

Standard G6 – balance, impartiality and fairness
The complainants described TVNZ’s response to its complaint that the item was unbalanced because it did not mention that Mr Marshall worked only at the Palmerston North branch as "flippant and offensive". It stressed that its point was that Mr Marshall had only localised knowledge and therefore his ability to make allegations about nationwide fraudulent schemes was seriously open to question.

The complainants repeated their objection to the fact that the only reference to the two former employees suing FHL was contained in the excerpt from FHL’s statement included in the presenter’s afterpiece. They objected to TVNZ’s assertion that the matter was "peripheral". The complainants emphasised that standard G6 required balance, impartiality and fairness in both the preparation and presentation of the programmes and maintained that the piece was completed before it received comment from FHL and RML. Therefore the complainants alleged TVNZ could not have known whether FHL would comment and what it would say.

FHL and RML also repeated their objections to the reporter’s failure to question the allegations made and the reliability of Mr Marshall’s affidavit. They continued:

The thrust of what Fletcher Homes wished to say was not reflected in the broadcast. It was critical that viewers realised that Mr Marshall himself was guilty of dishonesty. Could his affidavit be relied on? This point was inadequately covered in the story. The point that Mr Marshall only worked in Palmerston North has already been referred to above. The fact that the claimants were prepared to compensate any customer who had been hurt by Mr Marshall’s dishonesty should also have been mentioned.

The complainants next referred to the interview with Mr Marshall. They asked whether TVNZ considered it "irrelevant" that two days before the broadcast he told the reporter he no longer wished to cooperate with TVNZ. They suggested that a balanced, impartial and fair approach to preparing the story would have required the reporter to ask why he did not wish to cooperate, and whether he resiled from the comments made in the December interview. They added:

It is extraordinary that TVNZ used the same December interview with Mr Marshall as if nothing had happened.

The complainants acknowledged that the reporter contacted them in December in relation to an intended news story at that time. Their solicitors, the same day, advised TVNZ that an application had been filed in the High Court to strike out an affidavit by Mr Marshall, that his allegations were highly defamatory and denied by the complainants, and that publication of his allegation would constitute a contempt of court. TVNZ did not proceed with the item. The complainants contended that it was therefore misleading for TVNZ to suggest that they had not responded to its enquiry between December and 24 February.

They concluded by repeating that the highly questionable status of the affidavits was known to TVNZ, and nothing prevented if from referring to that status in the programme.

G7 and G19 – deceptive programme practices / distorted editing
The complainants disagreed that the essence of their statement was broadcast. They emphasised that they did not assert that press statements must always be broadcast in their entirety. However, in this case they argued, the seriousness of the allegations and the lack of balance in the rest of the story required all its key points to be broadcast.

Regarding TVNZ’s assertion that Mr Marshall had not recanted from his allegations, the complainants inquired as to whether TVNZ’s reporter had asked him. They also stated it was incorrect for TVNZ to assert that Mr Marshall no longer had control over the affidavit’s contents.

G14 – accurate, objective and impartial news
The complainants maintained that in the first programme TVNZ and its reporter in particular had given considerable weight to Mr Marshall’s allegations, and the complainants were left to defend themselves in a tailpiece to the story. They emphasised that the story was required to be accurate, objective and impartial, particularly when accusations of multi-million dollar fraud were being made.

With respect to the second programme, the complainants asserted that its basis was not just what was said, but also what was omitted. They noted that TVNZ ignored the questionable status of Mr Marshall’s affidavit. It also failed to report the complainants’ assurance that they would cooperate and provide information to the inquiry as required, they wrote.

Conclusion

In summary, the complainants considered TVNZ’s response was unconvincing. They contended that in both programmes the coverage was partisan, and that there had been no attempt to portray the status of the affidavits accurately. Further, noting that Mr Marshall was "no longer cooperating", the complainants suggested this was a sure sign that he had cold feet over his allegations. They complained that TVNZ ignored these developments and instead gave weight to the allegations to build a false picture, and treated the complainants’ response as an afterthought.

TVNZ’s Response to the Authority – 30 July 1998

TVNZ contended that once the two items were seen in their context it would be clear that the complaints had no substance. In its view, the complainants had ignored the real issues which were the subject of the broadcasts.

First, TVNZ noted that the complainants did not appear to dispute that the two items dealt with matters in the public interest. The items gave an explanation and background as to why the Minister of Housing had called for an investigation. It noted that the issues were the subject of debate in Parliament and subject to scrutiny by the Serious Fraud Office.

Secondly, TVNZ argued, FHL was not a stranger to the events raised. The disputes had already been the subject of a large amount of publicity and were in the public domain.

Continuing on the matter of context, TVNZ noted that on 18 December 1997, its reporter approached FHL to seek their comment on the allegations in Mr Marshall’s affidavit. FHL’s response was to threaten injunction proceedings. TVNZ decided not to broadcast the story then, but advised that it would look at it again in the new year.

Then, on 24 February, TVNZ reported, the Corporate Affairs Manager of FHL was contacted by TVNZ’s reporter with regard to the Minister’s investigation. The affidavit and the investigation were matters to be raised in Parliament in the following days. The judge granted the injunction, but on 26 February, FHL consented to its withdrawal. The item was broadcast that night.

Overview

TVNZ emphasised that the story dealt with the Marshall affidavit and what flowed from it – the ministerial inquiry and scrutiny by the Serious Fraud Office. In TVNZ’s view, the fact that a similar affidavit in the High Court was struck out was irrelevant to those issues. It pointed out that the court ruling did not stop the Minister’s investigation or the probe by the Serious Fraud Office or the debate in Parliament.

TVNZ then referred to the judgment on the application to strike out. It noted that FHL applied to strike out one of the plaintiffs’ claims because it was outside the six year limitation period. Three affidavits were filed in opposition to that application, one being filed by Mr Marshall. TVNZ reported that the court said at page 5:

The second and third defendants’ submission is quite basic. It is submitted that resolution of the second and third defendants’ application to strike out requires determination by the court of a simple issue, namely whether or not on the pleadings the property transaction relied on by the third plaintiffs to found the cause of action is outside the six year limitation period set out in the Limitation Act 1950. In support of that application a short affidavit has been filed by a Mr Lucas. He confines himself to giving the relevant dates in respect of the property transaction. If that evidence is accepted by the court Mr Alderslade says it would appear the six year limitation period has expired before the proceeding was issued. Indeed, I understand Mr Delaney during argument to accept that to be so. The second and third defendants rely on Rules 252 and 510 of the High Court Rules to strike out the three affidavits.

TVNZ noted that although the court ruled that Mr Marshall’s affidavit contained statements which could fairly be described as "gratuitous, egregious and provocative and which are likely to result in retaliation in kind", it did not rule on or make any comment on the substance of the allegations contained in the affidavit.

Thus, TVNZ concluded, the judgment made it clear that the High Court decision did not go to the heart of the matter as the complainants contended. It repeated that the striking out of the affidavit in no way affected the credibility of the two news items. It continued:

It was the allegations and issues raised in the Marshall affidavit that led to the Minister calling for an investigation, the Serious Fraud Office scrutiny and the debate in Parliament. Issues of admissibility of evidence in High Court proceedings have nothing whatsoever to do with these.

TVNZ submitted that it would not have made any difference on the issue of fairness, balance and impartiality if the item had said that a similar affidavit had been struck out in the High Court. In fact, it asserted that could have misled viewers into believing the allegations themselves had been decided by the Court and struck out.

Referring to the complaint that its reporter had focused only on those aspects of the affidavits which appeared to be negative for Fletcher Homes, TVNZ responded that it could see little, if anything, that was positive in the affidavits.

Standard G1
TVNZ did not accept that the impression left by the programme was that many of Mr Marshall’s allegations were true and indisputable. It repeated that it was reporting on allegations made in an affidavit which was being dealt with at the highest level and debated in Parliament.

TVNZ reiterated its view that it was of peripheral relevance that the mortgage guarantee scheme was not available from late 1991 to 1995. It noted that although it may not have been available to home buyers after 1991, if pre 1991 buyers went into default after 1991, payout under the scheme was available.

Standard G5
In TVNZ’s view, this standard had no relevance. The two news items were not in contempt of court and the fact that FHL agreed to the withdrawal of the injunction confirmed this, it argued. The issue as to whether the affidavit complied with the rules of evidence was not the point, it maintained, as it was at the core of the investigation and the debate in Parliament.

Standard G6
TVNZ maintained that it had a responsibility to report on matters in the public interest, and noted that FHL had every opportunity to respond.

With respect to the complainants’ point that Mr Marshall’s knowledge was confined to the situation in the Manawatu, TVNZ pointed out that Mr Marshall "believed there was a uniform approach around the country to the way the homes were marketed and sold." He had noted that salespeople were paid on commission, it wrote, so were always under pressure to effect a sale.

TVNZ contended that the fact that Mr Marshall was suing FHL was peripheral in the context of the story. However, it noted viewers were made aware that he and Mr Burston were suing FHL. It added:

It can hardly be relevant whether this was said by the presenter, or by the reporter, or whether it was part of Fletcher Homes’s statement or whatever. The item comprises the visual material combined with surrounding studio material making a cohesive whole.

TVNZ asserted that the reporter did question and test Mr Marshall’s allegations. It repeated that although Mr Marshall had said he did not want the story to be broadcast, he did not resile from the allegations made in his affidavit. TVNZ said that its clear impression was that pressure had been put on Mr Marshall by FHL to have the item withdrawn.

With respect to FHL’s statement in the item, TVNZ responded that FHL only had itself to blame for any shortcomings, as it provided a statement at the very last minute and had chosen not to respond to the allegations and thrust of the story, but instead had embarked on a personal attack on Mr Marshall. It did not believe that any useful purpose would have been served had it told viewers that Mr Marshall did not now want the story to run, although he still stood by what was said in his affidavit.

TVNZ denied that it was misleading to suggest FHL could have responded between 18 December and 24 February. It emphasised that the story was very much in the public interest, and FHL knew in December, of TVNZ’s interest in the story.

TVNZ argued further:

The issue is not whether compliance with the Codes is the broadcaster’s responsibility. Rather, the issue is whether the standards were complied with. They clearly were. Likewise the affidavits were not of "highly questionable status" as [the complainants] would like the Authority to assume. Once it is accepted that the affidavits and the issues raised by them are matters of public interest (which they must be – judging by the ministerial investigation, the debate in Parliament, the scrutiny by the Serious Fraud Office and the use of tax payer funds), and that ample opportunity was given to Fletcher Homes to respond, then this complaint is seen to lack substance.

G7 and G19 – deceptive programme practices/distorted editing
TVNZ maintained that the essence of the statement from FHL was broadcast. Mr Marshall did not publicly or privately retract his allegations, it wrote.

G14 – accurate, objective and impartial news
TVNZ contended that it was not as if FHL were oblivious of deadlines. It repeated that FHL had "rushed into court" and obtained an injunction. At a late stage it had chosen to provide a brief statement, the thrust of which was to attack Mr Marshall personally, it wrote.

The second programme

TVNZ observed that the complaint regarding the second programme related solely to the alleged "questionable status" of the Marshall affidavit. It argued that as the affidavit had standing as far as the Minister, Parliament and the SFO were concerned, then it was clear the complaint had no basis.

Conclusion

TVNZ denied that Mr Marshall’s decision to cooperate no longer indicated that he had cold feet over the allegations. It repeated that he stood by the allegations and confirmed them and, it maintained, his failure to cooperate arose after he had been contacted by FHL.

In essence, it appears to us that Fletcher homes relies solely on the fact that the Marshall affidavit was struck out in the High Court proceedings and has nothing else to support the complaint.

TVNZ continued by noting that it was an irrelevance that the affidavit was struck out in the High Court on an application to see if the proceedings could be brought outside the strict legal time limits. The Court said it could not consider the allegations in the affidavit, but this was not to say that they could not be considered by the Minister, Parliament and the SFO. That is what the items were about, it concluded.

Fletcher Homes Ltd and Residential Mortgages Ltd’s Final Comment – 14 August 1998

First the complainants advised that as they had been asked to be brief, they would be selective in their response.

They noted that a recurring theme in TVNZ’s handling of the complaint had been that the complaint was somehow weakened because the subject matter was in the public interest. In their view, they wrote, it was clear that the Code’s requirements were neither excluded nor relaxed in such circumstances. They argued that the greater the importance of the item broadcast, the greater the care TVNZ should exercise to ensure compliance.

The complainants noted that TVNZ accepted that the story dealt with the Marshall affidavit and what flowed from that. The fundamental issue, they argued, was whether the broadcasts dealt with the affidavit in a balanced, impartial and fair way, having regard to TVNZ’s knowledge at the time. They continued:

While it is true that the Court did not rule on whether Mr Marshall’s allegations were correct, what is misleading in TVNZ’s response is that the Court did rule on Mr Marshall’s inability to give evidence on whether those allegations were true. Much of Mr Marshall’s affidavit was simply hearsay. The point is not whether the Court’s ruling "did not stop the Minister’s investigation…", but whether the unreliable nature of the affidavits was likely to affect the course and outcome of the investigations.

The complainants argued that if the credibility of the affidavits was affected by the High Court decision striking them out, then it was a small step to accept that the decision also affected the credibility of the allegations under investigation. They argued that TVNZ’s broadcasts should have reflected this but did not.

Next, they argued that there was nothing improper in FHL threatening or issuing injunction proceedings where it believed a broadcast to be defamatory or in contempt. They noted that the injunction was granted on 24 February 1998, and argued that their subsequent consent to its withdrawal did not mean that their position lacked merit. They also pointed out that when injunction proceedings were threatened on 18 December 1997, TVNZ decided not to broadcast the story.

The complainants pointed out that FHL spoke to Mr Marshall on 23 January 1998, and it was one month later that he telephoned TVNZ (24 February, two days before the first broadcast). They continued:

According to TVNZ, TVNZ had spoken to Mr Marshall about two weeks earlier and he did not refuse to cooperate at that stage. The implication is that he got cold feet, not that the complainant had pressured him to have the item withdrawn (which is denied).

Next, the complainants referred to their statement, pointing out that the only personal attack on Mr Marshall was the fact that he had acted dishonestly. That statement was based on his own admission in his recorded interview, they asserted. They suggested that it was unfortunate that TVNZ did not display similar concern for their reputations in broadcasting Mr Marshall’s allegations against them of multi-million dollar fraud.

The complainants contended that it was clear that TVNZ had made no attempt to contact Mr Marshall after the High Court decision striking out his affidavit was delivered. They continued:

In the circumstances, in our view it was quite improper for TVNZ to broadcast the Marshall interview as if it was contemporary, as opposed to being two months old. It is common practice for TVNZ to note such footage as "file" or to date it. The resulting impression was misleading.

In the complainants’ view, there could be no criticism of their being circumspect in their dealings with the media. They pointed out that the rules of contempt worked both ways, and that it remained TVNZ’s responsibility to comply with the Code at all times.

Finally, the complainants denied that they had been dilatory in their response. The reasons for the delay had been explained in their letter of 30 June 1998.

Further Correspondence

In a letter dated 18 August 1998, TVNZ advised that it felt a few additional points needed to be made.

First, it said that the complainants should have also referred to the fact that what flowed from the affidavit was that the Minister ordered an official investigation and scrutiny by the Serious Fraud Office, as it was very much part of the story.

It also noted that while the Marshall affidavit was struck out, the undisputed fact remained that the High Court did not decide on the credibility or otherwise of the allegations contained in the affidavit.

TVNZ acknowledged that there was nothing improper in FHL threatening or issuing injunction proceedings when it believed the broadcast was likely to be defamatory or perhaps in contempt. However, it argued, that was not the point. The point was that FHL could not now say there is or was a contempt if it expressly consented to the withdrawal of the injunction.

TVNZ argued that the withdrawal of the injunction showed the approach FHL decided to adopt when confronted with the Marshall allegations. It noted that FHL was given every opportunity to respond to the issues raised by the affidavit. However, TVNZ continued, it chose to obtain an injunction, but on reflection consented to the discharge of the injunction and the item went to air.

TVNZ concluded:

There was nothing improper in TVNZ broadcasting the Marshall interview, whether or not it was recorded two months prior to the broadcast. The point is that Mr Marshall agreed to the interview in the first place and at no time withdrew his allegations, or the contents of his affidavit, at any time prior to the broadcast. Rather he confirmed them.

In a fax dated 24 August, TVNZ referred the Authority to an article in the National Business Review which reported that FHL was still considering whether to take defamation action against TVNZ. In those circumstances, TVNZ advised that it believed the Authority should defer further consideration of the complaint until either there was a resolution of any proceedings issued by FHL against TVNZ, or FHL advised that it would not be issuing such proceedings.

FHL responded through its solicitors on 25 August 1998. It first dealt with the matter raised in TVNZ’s fax of 24 August. The matter, it said, was easily resolved, and in the event that the complainants brought defamation proceedings against TVNZ, then they would elect trial by judge alone, and not trial by jury.

FHL pointed out that this undertaking by the complainants meant that there was no reason why the Authority’s decision should be deferred. It referred to a High Court decision in TV3 Network Services Ltd v BSA [1992] 2 NZLR 724 in which Justice McGechan saw no risk of prejudice if those proceedings were determined by a judge alone.

The complainants then dealt with TVNZ’s letter of 18 August.

First they disputed TVNZ’s inference that the SFO investigation "flowed from the affidavit". They advised that the SFO investigation commenced the previous year. They added:

As for "scrutiny" by the SFO, TVNZ should have informed its viewers that the credibility of the affidavits being scrutinised was already known to be highly questionable.

The complainants maintained that it was incorrect for TVNZ to assert that "the undisputed fact remainst that the High Court did not decided on the credibility (or otherwise) of the allegations contained in the affidavit." The complainants’ solicitors wrote:

One of the striking features of TVNZ’s response to our clients’ complaint is that TVNZ apparently still holds the view that the credibility of Mr Marshall’s affidavit was unaffected by the High Court decision that it contained "sweeping hearsay statements". If TVNZ had informed its audience that Mr Marshall’s affidavit had been described by the High Court in these terms, it is inevitable that many viewers (undoubtedly familiar with the general principle that hearsay evidence is of questionable reliability), would have found this fact highly relevant to the conclusions they reached from the programme. It is inconceivable that TVNZ would not have realised this. The High Court decision should have had a significant impact on the content of both the programmes in issue.

The complainants argued that if the Authority decided that TVNZ knew at the time of the broadcasts that the credibility of the Marshall affidavit was highly questionable, then there could be no doubt that the broadcasts failed to comply with the Code.

The complainants referred to the recent decision of Justice McGechan in the first FHL case to go to trial to illustrate its point. They acknowledged the decision was not available at the time of the broadcast, but referred to His Honour’s discussion of Mr Marshall’s evidence, which it argued clearly supported the proposition that hearsay evidence was less credible and reliance on it was risky. It quoted from p.51 of the unreported judgment:

I have serious reservations as to a good deal of Mr Marshall’s evidence. He has certain personal interests and attitudes which dilute credibility. There are some significant elements of exaggeration as to his own activities, and unwarranted extrapolations of similar conduct on to other persons. There was a tendency for the occasional and personal to be put as the regular and the universal.

The complainants noted that the Court went on to hold that "the picture painted by Mr Marshall is a mirage".

The complainants pointed out that they had also referred to the fact that TVNZ knew that Mr Marshall had a personal stake in the outcome of the investigations, and yet neither the reporter nor the presenter referred to that in the programme. They added:

Justice McGechan’s decision endorses the complainants’ view that Mr Marshall’s personal stake in the outcome of the homeowners’ complaints also affected his credibility.

In concluding, the complainants emphasised:

• The two programmes contained very serious allegations of multi-million dollar fraud against the complainants;
• TVNZ knew that Marshall’s allegations were based on sweeping hearsay, and yet it broadcast the two programmes as if it had no such knowledge.

The complainants provided a copy of the Reserved Decision of McGechan J in Gosper & Olsson and Ors v Re Licensing (NZ) Ltd and Ors Wellington High Court CP225/96 17 August 1998.

TVNZ responded in a letter dated 2 September.

Referring first to the complainants’ advice that should they bring defamation proceedings they would elect trial by judge alone, TVNZ responded that it reserved its position on whether it wished to have any claim heard before a jury. In this respect, it considered the orders made by Justice McGechan in TV3 Network Services v BSA to be relevant. In particular, it referred to the order marked (B).

With respect to the rest of the complainants’ response, TVNZ stressed that His Honour did not decide on the credibility of the allegations contained in the Marshall affidavit as he was not required to do so. TVNZ referred again to what the Court had to consider on the Application before it. It argued the complainants read more into the decision than the Court actually decided or what it was called upon to decide. TVNZ referred to the complainants’ assertion that the credibility of Marshall’s allegations was "highly questionable." The Court did not say that, TVNZ asserted. Its concern was with "retaliation in kind".

Finally, TVNZ turned to the complainants’ point that the recent Court decision had not been available at the time of the broadcast in February. For that reason, TVNZ submitted that the decision was irrelevant as far as the formal complaint was concerned and should be disregarded in favour of the real issues in question.

In a fax dated 14 September 1998, the complainants advised that in their view, all of the issues were fairly before the Authority and in order to expedite its decision, had no wish to comment further.