Channing v South African Financial Gazette Ltd and Others

• Jurisdiction: South Africa
• Judge: Colman J
• Judgment Date: 28 March 1966
• Citation: 1966 (3) SA 470 (W)
• Court: Witwatersrand Local Division

D Colman, J.:

The plaintiff is a stockbroker. He became a broking member of the Johannesburg Stock Exchange in 1958, and (with an interval of about one week to which I shall later refer) he has carried on business as such up to now.

The rules of the Johannesburg Stock Exchange require of a broking member that he shall hold, in his stockbroking business, assets the value whereof exceeds the amount of his liabilities in that business by at E least R10,000, and according to the evidence in this case, the plaintiff had such a surplus of assets over liabilities in his business at all material times.

But the Stock Exchange committee is concerned also that there shall be F an appropriate measure of liquidity in the resources of a broking member, and in August, 1965, the plaintiff fell short of its requirements in that regard. It had become known to the committee that a client of the plaintiff's, who owed the plaintiff a substantial sum of money, had become insolvent, and because of this the plaintiff's financial position was considered on 17th August, 1965. The plaintiff says (and his evidence in this regard stands uncontradicted) that, even G if no value was assigned to his claim against the insolvent, the value of the assets of his stockbroking business exceeded the amount of its liabilities at the time of the committee's investigation by R11,254.

But the committee was of the view that the requisite degree of liquidity H was not present. The plaintiff asked that he be allowed to carry on as a broking member for a few days, during which period he would render his position liquid, but the committee refused that request. It deprived the plaintiff of his status as a broking member, and, on the following day (Wednesday, 18th August, 1965), a notice to that effect was posted on the floor of the Exchange, where it could be seen by members and certain of their clerks, but not by members of the general public. The committee gave no other publicity to its decision.

The effect of the decision was that the plaintiff's status was reduced

Colman J

to that of a non-broking member. He retained his membership of the Exchange, and his proprietary rights therein; he could go on to the floor of the house, and he could deal there, with a broker, for his own account; he was entitled, and indeed obliged, to carry into effect A bargains which he had already made on behalf of clients; his office remained open and he could receive telephone calls as before; but he was precluded from dealing on behalf of clients and thereby earning brokerage; he could issue no broker's notes. If a client asked him to buy or sell securities, all that the plaintiff could do was to refer the B order to another broker, who would effect the transaction, issue the broker's note and earn the brokerage. And that is what the plaintiff did with the orders which came to him while he was a non-broking member.

The plaintiff, in his evidence, queried the right of the Stock Exchange committee to impose this disability upon him. But it is not necessary to C discuss the soundness of his contentions in that regard, because he accepted the decision, and immediately set about creating a state of liquidity in his business which would satisfy the committee. It was, apparently, accepted by all concerned that, when he did that, the plaintiff would be restored to his former status. And, indeed, he was restored to that status on Wednesday, 25th August, 1965, after he had D effected a hasty sale of his dwelling house, borrowed money against the purchase price which would come to him on transfer of the house, and paid the sum of R9,375 into the banking account of his business.

But in the meantime, on Friday, 20th August, 1965, an article had been published in the South African Financial Gazette, a weekly newspaper, E which, the plaintiff claims, was defamatory of him. He consequently claims damages from the defendants, who are, and were at the time of publication the owner, the printer, and the publisher of the newspaper.

The article complained of appeared in what is called the 'late edition' F of the newspaper, which was circulated in certain coastal areas and in some of the country districts of the Transvaal. In the 'final edition', which came off the Press a couple of hours later on the same day, and which circulated in Johannesburg and Pretoria, the article was modified by the omission therefrom of the plaintiff's name, and in certain other respects. It is for that reason that the plaintiff has based his claim solely upon what appeared in the late edition. I set out below the G article as it appeared in that edition, with the addition of numbers which I have assigned to the paragraphs therein in order to facilitate reference, later in this judgment, to those paragraphs:

'Four firms close their doors.

John Peter

(1)

In a matter of weeks, no less than four member firms of the H Johannesburg Stock Exchange have closed their doors.

(2)

One - Allen, Hesselberger and Co - has merged with Max Pollock and Freemantle. See Financial Gazette, 30th July, 1965.

(3)

The other three have simply disappeared. They are B. G. Reed, Mailer and Company, and B. G. Channing.

(4)

Slack conditions on the stock market have evidently contributed to these closures.

(5)

Another factor has been the unfortunate habit that some investors have of relying on their stockbrokers for short-term finance.

(6)

Although the Stock Exchange committee enforces stringent regulations on credit for share transactions stockbrokers have sometimes been caught unawares.

Colman J

(7)

The fact that four firms have disappeared in such a short period emphasises the need for stronger broking partnerships.

(8)

It is also another argument in favour of corporate membership of the Exchange, a possible innovation that was supported in the Broome Commission's majority report published earlier this year.

(9)

Every stockbroker is in a position of trust. He is entitled to A expect the fairest of deals from his clients.

(10)

The onus is also on him to ensure that every transaction he handles is one of integrity. Otherwise the price is heavy.'

The plaintiff was the only broker called Channing, and although the defendants, in their plea, had put in issue the averment that the article referred to him, it was conceded at the trial that it did. But other defences which had been pleaded were argued at the trial, and B these I must consider.

A major issue was whether or not the article was defamatory of the plaintiff. Counsel for the defendants, relying, inter alia, upon Conroy v Nicol, 1951 (1) SA 653 (AD), and S.A. Associated Newspapers v. C Schoeman, 1962 (2) SA 613 (AD), urged upon me the proposition that a Court dealing with a defamation case is not entitled, where the matter complained of is capable of more than one reading, to adopt a defamatory interpretation in preference to a non-defamatory one. If a newspaper article is equally capable of both types of interpretation, he argued, D the plaintiff must fail. That proposition is, in my judgment, a sound one, provided that this qualification or clarification is borne in mind: the test is not whether...