Barrister Sue Chrysanthou SC, who is representing John Karantzis in his Federal Court case over a Rear Window column earlier this year, told Justice Geoffrey Flick on Tuesday that the offer of compensation was not enough to mend the harm to her client’s reputation and that the AFR’s proposed retraction unacceptably repeated the money laundering allegation.

“Under the [Defamation] Act a publisher has to offer an appropriate retraction and offer to pay reasonable costs incurred to date. As far as a retraction was concerned, what the publisher offered was a repetition of the allegation. That was the reason we say it was unreasonable,” Chrysanthou said.

“Also the offer of compensation was insufficient. The offer of compensation was $30,000. One would imagine when a business person is accused in the Australian Financial Review of he and his company committing money laundering $30,000 is not reasonable, particularly when it is accompanied by a retraction that repeats the allegation.” 

But Justice Flick reproached the parties for failing to resolve the dispute out of court, saying it didn’t worry him that the proposed apology by the publisher repeated some of the allegation.

“What does worry me is that between you you couldn’t come up with a set of words that could be appropriate…All I can say is, express [is], disappointment that between the two of you…you couldn’t come up with a necessary set of words,”  he said.

Karantzis, whose company is embroiled in legal action against the ASX over its share suspension in October last year, filed the suit against Fairfax Media in September, naming two AFR journalists, Joe Aston and Myriam Robin, as co-respondents.

Aston and Robin are both writers for the AFR’s Rear Window column, which has been liberal in its coverage and criticism of Karantzis and iSignthis’ ongoing battles with the market operator, among other things.

The suit targets a July 1 article by Aston, entitled ‘Etherstack pump straight from iSignthis playbook’. Aston took aim in the article at iSignthis when reporting on hedge fund LHC Capital’s investment in Etherstack, whose share price skyrocketed on June 30 after an ASX announcement of a partnership with electronics giant Samsung, a deal Aston called a “non-event”.

In August 2019, LHC paid $2 million for 6.7 million convertible notes in Etherstack. At June 30, they were worth $11.7 million, and in July the company converted half. The article noted that 20 per cent of LHC’s total assets were allocated to iSignthis, which Aston referred to as an “international money-laundering colony”.

The article went on to note that Karantzis is one of Etherstack’s top 20 shareholders.

Chrysanthou told the court Tuesday the article contained the defamatory imputation that Karantzis was involved in money laundering.

Justice Flick, after reading the allegedly offending lines in the article, said he understood Karantzis’ concern.

“I can understand your concern Ms Chrysanthou, the applicants concern. It just screams out at me that an appropriate form of words could address this immediately,” he said.

AFR’s defence argues the article does not make the alleged imputation and that Karantzis rejected a reasonable offer of amends.

Chrysanthou told the court the latter defence had been successful in court just once in 10 years, but this did not improve Justice Flick’s mood.

“As you know I am not impressed by the absence of authority. Or the presence of it,” he said.

The barrister for the AFR told the court it hoped to resolve the case in mediation but would immediately seek to amend its defence to potentially include a truth defence if the matter did not settle.

Scolding the barrister for not initially including the alternative defence, the judge directed the parties to mediation before Christmas, adjourned the matter until December 23 and abruptly left the bench as Chrysanthou prepared to make further submissions.

Digging for confidential information to ‘ find a problem’

The ASX suspended iSignthis’ shares on October 12 last year in response to enquiries by the exchange and ASIC. iSignthis is under investigation by the Australian Securities and Investments Commission over suspected contraventions of the continuous disclosure provisions of the Corporations Act from June 2017 to August 2020.

iSignthis commenced legal action against the ASX in December after it refused to lift the share suspension. The company claims the ASX suspended its shares without giving it any notice, any explanation or any chance to respond to concerns about two share trading spikes. The company claims the ASX went digging for confidential information to “find a problem”.

In April, Justice Jennifer Davies denied the company’s request for an injunction blocking the release of ASX’s statement of reasons for suspending the shares on the grounds that it contained inaccuracies and misrepresentations that could mislead the market.

As of September, iSignthis is claiming $264 million in damages for alleged misleading or deceptive conduct arising from ASX’s publication in April of its statement of reasons for suspending the company’s shares on October 2 last year. It also claims another of $200.7 million for ASX’s decision to suspend, and continue to suspend, trading in the shares.

The increased damages bill has not altered ASX’s assessment of the case, however, with the market operator maintaining that the case is not material.

“That reflects our view of the merits of the claim and remains our assessment at this time, notwithstanding the changing amounts being claimed,” a spokesperson said.

John Karantzis is represented by Sue Chrysanthou SC, instructed by Kalantzis Lawyers. The AFR, Aston and Robin are represented by Thomson Geer.

The defamation case is Nikolas John Karantzis Aka John Karantzis v Fairfax Media Publications Pty Ltd & Ors.

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