Introduction
The recent Supreme Court of New South Wales decision in Li v Liao [2025] NSWSC 168 provides valuable clarification on the proper pleading of imputations in defamation proceedings. The case involved Xiaolu Li (also referred to as Belinda Li in the judgment), a licensed builder in NSW, and several companies associated with her business. The first plaintiff and the defendant were partners in a joint venture residential development in Carlingford, NSW, and were already involved in Federal Court proceedings related to this development. The plaintiffs alleged they were defamed through an oral conversation between the defendant and others, as well as through a letter sent to a director of a company that had contracted to invest in another development project. The alleged imputations included serious claims of embezzlement, corruption, fraudulent invoicing, and other improper business practices. Justice Rothman ultimately struck out the Statement of Claim but granted the plaintiffs leave to file an amended Statement of Claim to address the deficiencies identified.
What is an Imputation?
An imputation is central to defamation law but is often misunderstood by practitioners and clients alike. In defamation proceedings, there's a crucial distinction between the "defamatory matter" (the published material itself) and the "imputations" that arise from it.
The High Court in Hall-Gibbs Mercantile Agency Ltd v Dun (1910) 12 CLR 84 defined an imputation as being "properly used with reference to any act or condition asserted of or attributed to a person." This definition has stood the test of time and continues to be applied by Australian courts.
As explained by Samuels JA in Petritsis v Hellenic Herald (1978) 2 NSWLR 174 at 189:
"Section 9(1) distinguishes between a defamatory imputation and the matter by means of the publication of which the defamatory imputation is conveyed. There is no reason to suppose that the word 'imputation' is used in any sense different from its ordinary meaning. Hence it means 'the action of imputing or charging; the fact of being charged with a crime, fault, etc.'; in short, an accusation or charge."
His Honour further clarified that the "matter" is the material which conveys the imputation, or within which the imputation is embedded, or from which the imputation may be inferred.
Imputations vs. Published Material
A common error in defamation pleadings is failing to distinguish between the published material and the imputations that arise from it. The imputation is not simply a repetition of what was said or written, but rather the defamatory meaning that arises from the material.
As Justice Rothman noted in Li v Liao [2025] NSWSC 168 at [31]-[32]:
"The imputation may and usually does arise by inference, either a false innuendo or true innuendo, from the statement. The difficulty with the practice, which I do not here criticise, and which is permissible, is that it elides the 'matter' and the 'imputation'."
In Whelan v John Fairfax & Sons (1988) 12 NSWLR 148 at 154, Hunt J emphasized:
"It has always been made quite clear that the plaintiff's pleaded imputation must identify the meaning for which he contends rather than merely the words by which that meaning is said to have been conveyed. Words are but instruments which are used to express or convey their author's meaning. Outside of legal documents, however, words are often imprecise instruments for that purpose. A defamatory imputation is very rarely stated expressly; rather, it is more usually implied or to be inferred. The charge against the plaintiff is often to be read only between the lines..."
This distinction becomes particularly important in cases like Li v Liao, where some alleged "imputations" were found to be merely restatements of the published material rather than proper imputations arising from it.
Pleading Imputations Properly
In Li v Liao, Justice Rothman emphasized that imputations must be pleaded as substantive paragraphs in the Statement of Claim, not merely as particulars. Under the Uniform Civil Procedure Rules (UCPR) r 14.30(2), a Statement of Claim must "specify" each imputation on which the plaintiff relies, allege that the imputation was defamatory, and allege that the publication has caused or is likely to cause serious harm.
Justice Rothman explained at [94]-[96]:
"In the context of the operation of the Defamation Act 2005, particularly since the inclusions of ss 12A and 12B, and the restrictions on that which may be pleaded as an imputation to that which has been the subject of particulars in the Concerns Notice, it would seem that a harmonious reading of the provisions, bearing in mind the need to facilitate a just, quick and cheap resolution of the real issues between the parties, is that each imputation needs to be the subject of a pleading and not merely a particular."
His Honour further stated that each imputation is a "material fact" giving rise to liability, and specificity is required in a manner that cannot be altered without leave or argument.
Concerns Notices and "Substantially the Same" Imputations
The 2020 amendments to the NSW Defamation Act introduced sections 12A and 12B, which require a Concerns Notice to be served before defamation proceedings can be commenced. Importantly, section 12B(1)(b) stipulates that the imputations to be relied on in proceedings must have been particularized in the Concerns Notice.
However, section 12B(2)(b) permits reliance on "imputations that are substantially the same as those particularised in a concerns notice." In Li v Liao, Justice Rothman considered when imputations will be "substantially the same."
For example, His Honour compared an imputation that the plaintiff "embezzled" money with an imputation in the Concerns Notice that the plaintiff "misappropriated" money. At [52], Justice Rothman concluded:
"Because the ordinary reasonable reader may reasonably infer that an allegation of misappropriation includes fraud, an allegation that a person has misappropriated funds for their own benefit is not substantially different from an allegation that a person embezzled funds. No substantial difference arises as a result of that aspect of the imputation."
However, when examining other imputations, Justice Rothman found substantial differences. For instance, at paragraphs [58]-[60], His Honour found that an imputation that "The development properties that [the plaintiff] constructs all have massive issues and you can't buy them" was substantially different from the Concerns Notice imputation that "there is not a single developer who has worked with [the plaintiff] that is not suing her in Court."
When Will Imputations Be Struck Out?
The test for striking out imputations is stringent. As the High Court noted in Favell v Queensland Newspapers Pty Ltd (2005) 79 ALJR 1716; [2005] HCA 52 at [6]:
"Whether or not [the pleading] ought to and will be struck out [as disclosing no cause of action] is ultimately a matter for the discretion of the judge who hears the application. Such a step is not to be undertaken lightly but only, it has been said, with great caution. In the end, however, it depends on the degree of assurance with which the requisite conclusion is or can be arrived at. The fact that reasonable minds may possibly differ about whether or not the material is capable of a defamatory meaning is a strong, perhaps an insuperable, reason for not exercising the discretion to strike out."
Justice Rothman emphasized at [99]-[102] that imputations will only be struck out if, acting reasonably, no factfinder could conclude that a pleaded imputation arises from the material published. A judge's personal view about whether an imputation arises is not determinative unless the judge concludes that no reasonable factfinder could find the imputation.
For instance, in Li v Liao, Justice Rothman struck out imputation 13.7 (that the plaintiff "lies to investors to induce them to invest money in property development projects in which she is involved") because the passage relied upon by the plaintiff did not support this imputation. The only reference to untruths was an allegation that the plaintiff would say "black is white," which His Honour found insufficient to support the specific imputation pleaded.
The "Serious Harm" Requirement
The 2020 amendments to the NSW Defamation Act also introduced section 10A, which requires that publication of defamatory matter has caused or is likely to cause "serious harm" to the reputation of the person alleged to be defamed. This element must be properly pleaded and particularized.
In Newman v Whittington [2022] NSWSC 1725 at [27], the court emphasized that the purpose of enacting section 10A was to avoid litigation on minor disputes which do not cause serious harm.
In Li v Liao, Justice Rothman explained at [146]-[149]:
"The purpose of enacting s 10A was to avoid litigation on minor disputes which do not cause serious harm. The incidence of disputes arising as a consequence of social media and the distribution of emails has notoriously led to 'backyard disputes', which impermissibly utilise the resources of the Courts in dealing with matters that ought never be the subject of litigation."
His Honour further noted that while some defamatory material may inherently suggest serious harm (such as allegations of murder or fraud when widely published), in cases with limited publication like Li v Liao, the plaintiff must specifically plead the serious harm suffered and provide particulars.
Injurious Falsehood
Though distinct from defamation, the case also addressed pleading requirements for injurious falsehood. As Justice Rothman noted at [156], this tort has four elements: "a false statement of or concerning the plaintiff's goods or business; publication of that statement by the defendant to a third person; malice on the part of the defendant; and proof by the plaintiff of actual damage suffered as a result of the statement."
These elements were reinforced by the High Court in Palmer Bruyn & Parker Pty Ltd v Parsons (2001) 208 CLR 388; [2001] HCA 69 at [52] and more recently by the NSW Court of Appeal in Jay v Petrikas [2023] NSWCA 297 at [45].
Conclusion
Li v Liao [2025] NSWSC 168 provides invaluable guidance on the proper pleading of imputations in NSW defamation proceedings. The case emphasizes:
The distinction between published material and the imputations that arise from it
The requirement for imputations to be pleaded as substantive paragraphs, not merely particularized
The interpretation of "substantially the same" imputations in relation to Concerns Notices
The high threshold for striking out imputations
The necessity of properly pleading "serious harm"
For NSW legal practitioners, the case serves as a reminder of the technical requirements for properly pleading defamation cases, particularly following the significant 2020 amendments to the Defamation Act. Failure to properly plead imputations can result in a Statement of Claim being struck out, causing delay, additional costs, and potential limitations issues for clients.
As Justice Rothman concluded, while striking out a Statement of Claim identifies deficiencies in pleadings, it provides plaintiffs with an opportunity to replead their case to overcome these deficiencies—provided they adhere to the limitations and requirements set out in the NSW Defamation Act and associated case law.