Burchell & Anor v Hill & Ors

Facts

The plaintiff issued a subpoena to the National Australia Bank Limited, a non party. The NAB objected to producing the documents specified on the (not unusual grounds) that:

1. it was fishing for documents for the purpose of determining whether there was a cause of action against NAB;
2. it was oppressive and too wide;
3. the documents sought were irrelevant.

Analysis

The issue Muhktar AsJ considered was the scope and operation of the phrase “..to produce any document for evidence..” found in Order 42A.01.  He posited the question, at [3], as:

The question is: does the expression ”for evidence” mean that the only document capable of being sought under this rule is a document – a tenderable document – that the subpoenaing party wants to tender into evidence at trial? The Bank says the rule is to be so circumscribed and relies on the decision of Gillard J in Kennedy Taylor (Vic) Pty Ltd v Grocon.

The plaintiff/respondent submitted that the test was whether there is a legitimate forensic purpose in having the documents produced.  Reference to for evidence only requires that the documents may be needed for trial.  After a detailed review of authorities Muhktar AsJ set out the following applicable broad propositions:

1. at [15], “..the expression “for evidence” might be conjectural but the idea … is to convey an intention that an interlocutory subpoena under rule 42A should not be used as a substitute for non-party discovery. It is looking to obtain documents after the completion of the ordinary pleading and discovery process for use, or potential use, at trial. Whether the subpoena does, or does not, will depend on the terms of the subpoena…it will come to an examination, some times an impression by the Judge, of the breath of amplitude of the document description and nature, and whether the recipient is required to make a judgment whether a particular document satisfies the description
2. at [16], “..for evidence” means no more than the document produced may be potentially required for evidence, either in-chief or by cross-examination.”
3. at [17], “..for evidence” means no more than the document produced may be potentially required for evidence, either in-chief or by cross-examination. “
4. at [18], having regard to court’s practice prior to orders 42 and 42A “..the test was whether there was a legitimate forensic purpose in seeking documents before trial, and if it would be in the interests of justice to compel production. ..the essential test was whether the documents were identified with sufficient particularity.“
5. at [19], “..much might depend on the timing. At an early stage, a court might be more inclined to direct a party to rule 32.07 because at that stage attention is usually focussed on case formulation or pre-trial process. However, closer to trial, a court might be more supportive of the subpoena as long as it was not too wide.”
6. at [20], in determining whether the document can permissibly be subpoened “A useful test and one which I shall apply here is to ask whether the subpoena would have been objectionable if it was made returnable at trial.“

The NAB contended the subpoena was oppressive because there was evidence of illicit purposes.  Shortly before issuing the subpoena the plaintiff wrote to NAB and intimated that it was liable to compensate the plaintiff because a contravention of section 260A of the Corporations Act.  The court took into account the plaintiff’s disavowal of any ulterior purpose and noted that the subpoena was issued in the shadow of a looming trial.  The documents were relevant for that trial.  If they could be used for another purpose there would be a real question of the Court providing leave.  The Court was interested in the  issue at hand.  Compare this approach to that taken by Gillard J in Kennedy Taylor.

Issue

The propositions the court set out while very broad and general are a very useful point of reference when framing a subpoena under Order 42A and making application to set aside such a subpoena.  Some caution is warranted in relying on this decision as determinative of the scope of Order 42A subpoenas.  Gillard J in Kennedy Taylor (Vic) Pty Ltd v Grocon adopted a far more stringent test on the question of “evidence” as did Kaye J in Newnham v Davis. Muhktar AsJ essentially distinguished those decisions on the facts.

Re Bill Express Limited (in liq)

Facts

The applicant’s complaint at first instance, see [3],  was that the wording “all books and records relating to the affairs of [the] Bill Express [Group]” was oppressive and that the use of the expression “relating to the affairs” was uncertain and too wide.  On appeal the applicants in addition to maintaining the objection submitted the summons were beyond power because, see [6],:

1. summons issued under 596B of the Corporations Act must be “specified” whereas the summons described the documents as “relating to” the examinable affairs of the corporation;
2. the documents sought must be confined to examinable affairs of the corporation;
3. it is a fishing expedition;
4. it is too wide

Analysis

Davies J embarked upon a detailed analysis of sections 596D and 596B.  The court’s power under section 596B is enlivened when an eligible applicant provides sufficient facts which which satisfy it that the person summonsed may be able, rather than will be able,  to give information about the corporation or its examinable affairs.  It is not a high threshold (see [13]).  While the discretion is unfettered it must be exercised judicially (see analysis at [14]).

Davies J found that “relates”, a word capable of wide meaning, must be construed in the context within which it appears ([22]).  She found:

In this context, the phrase operates to indicate the requirement that there must be a connection between the documents sought to be produced and the examinable affairs of the company. It follows that a document that is unconnected with the company the subject of the examination or of its examinable affairs would not be a document required to be produced

Regarding point 2 of the applicants submissions her Honour summarised the guiding principles, after a detailed examination of the authorities,  as “the cases confirm that the scope and exercise of the power to order the production of documents for the purposes of an examination depends on the scope and exercise of the power to order an examination.” (see [26]). Where there is no limitation on the subject matter of the examination, other than it is about a corporation’s examinable affairs, the examinee must produce all books and records relating to the affairs of the  corporation.

Davies, extracting Re New Tel (In Liq) listed legitimate purpose of examination under 597 of the Corporations Act (see [27]):

(a) an examination is designed to serve the purpose of enabling an eligible applicant to gather information to assist the eligible applicant in the administration of the corporation;

(b) an examination assists the corporation’s administrators to identify the corporation’s assets, both tangible and intangible and also allows the corporation’s liabilities to be identified;

(c) the purpose is to protect the interest of the corporation’s creditors;

(d) the examination serves the purpose of enabling evidence and information to be obtained to support the bringing of proceedings against examinable officers and other persons in connection with the examinable affairs of the corporation;

(e) an examination assists in the regulation of corporations by providing a public forum for the examination of examinable officers of corporations.

Her Honour considered the meaning of “specified books” ([29] – [34]). She found that section 596D(2) requires no other construction than the ordinary meaning of “specified” (see [33]).   To that end she stated:

Where an order is made under s 596B, the summons must identify the books and records required to be produced with sufficient clarity to enable the recipient to know what the documents come within the terms of the summons to be able to form a reasonable view about what must be produced in order to comply with the summons. The inquiry, in each particular case, is the degree of specificity required to provide the clarity and precision that the section mandates.

Her Honour found the summonses were not too wide or oppressive noting that

1. the applicants, although not officers of the company had significant involvement in its affairs.  The onorous nature of the request is no reason not to comply provided it complies with the statutory requirements of section 596D.;
2. the appropriate test in determining whether the summons is oppressive is “.whether the summons makes “reasonably clear” what documents must be produced.” (see [37])

Issue

Courts take a broad view regarding liquidators summonses.  There is limited utility in taking issue with broad terminology typically used in framing such summonses.

]]> http://www.peteraclarke.com.au/2010/04/08/production-of-documents-summons-and-subpoena-re-bill-express-limited-in-liq-2010-vsc-101-31-march-2010-burchell-anor-v-hill-ors-2010-vsc-96-31-march-2010/feed/ 0 http://www.peteraclarke.com.au/2010/04/05/no-case-submission-operation-of-section-159-of-the-fair-trading-act-blackman-ors-v-gant-anor-2010-vsc-109-31-march-2010/ http://www.peteraclarke.com.au/2010/04/05/no-case-submission-operation-of-section-159-of-the-fair-trading-act-blackman-ors-v-gant-anor-2010-vsc-109-31-march-2010/#comments Mon, 05 Apr 2010 13:24:21 +0000 Peter Clarke http://www.peteraclarke.com.au/?p=635 In Blackman & Ors v Gant & Anor Vickery J considered a very interesting no case application by the Second Defendant.  This is a case that has drawn considerable press coverage, including in the Australian and the Age.

FACTS (pars 4 – 11)

The Plaintiffs are the artist Charles Blackman and his trustee, Robert Dickerson.  The Second Defendant is Peter Gant, an art dealer.  Gant originally supplied three works of art to a Helen Stewart , another art dealer, together with two valuations of the works.  She was the former First Defendant.  Stewart sold the works to a a Robert Blanche, giving him a copy of the valuations.  The evidence is that Blanche relied upon one of the valuations when purchasing the works and used the other for insurance valuation purposes.  When, later, Blanche was advised that the works were not authentic he returned them to Stewart who refunded his money.  Stewart then returned the works to Gant.   The Second Defendant maintains the works are authentic.  The issue before Vickery J was confined to the Second Defendant’s no case application.

ANALYSIS

The Plaintiffs claim, at [12], that the valuations impliedly represent that the works were authentic and consequently a breach of section 9 of the Fair Trading Act.  The Plaintiffs claim loss and damage (see [21] - [24], [27] and [33] – [36]).

No case submission – generally

Vickery J, as is his wont, set out the principles governing consideration of a no case submission, at [2], quoting Kaye in Oakley & Anor v Insurance Manufacturess of Australia:

1. Where a no case submission is made in a trial by jury, the role of the judge is to determine whether, on the view of the evidence most favourable to the party against whom such a submission has been made (“the respondent party”), the jury could (not would) find in favour of the respondent party.
2. The test which is applicable, where a judge is sitting without a jury, is less stringent. In such a case the judge may uphold a no case submission, notwithstanding that the evidence, on the view most favourable to the respondent party, could support a judgment in favour of the respondent party.
3. In such a case the judge may perform an assessment of the quality of the evidence which has been called on behalf of the respondent party. In some cases, such an assessment may involve the judge evaluating the credit of witnesses from whom such evidence has been called.
4. In determining a no case submission, the judge is entitled to draw inferences from the evidence.
5. On a no case submission, the judge cannot draw an inference against the party making the submission (“the moving party”) based upon the absence of evidence from that party.
6. Although the judge, sitting alone, may assess the quality of the evidence in determining a no case submission, nonetheless the test which is to be applied by the judge, at that stage, is different to the test which the judge would apply in determining the ultimate outcome of the case, at the conclusion of a trial. Notwithstanding that the judge, in determining the no case submission, may assess the quality of the evidence, nonetheless the test remains whether, on the evidence so assessed, the judge “could” (not would) find for the respondent party on the evidence so far led. In such a case, the judge would only find against the respondent party if the evidence, so far adduced, is so unsatisfactory or inherently unreliable or equivocal that he were to conclude that he could not be reasonably satisfied of the case made by the respondent party on the evidence thus far adduced.

(my emphasis)

No case application – misrepresentation.

Counsel for the Second Defendant submitted, (see [14 ] – [16]) that the valuations were opinions of market value, not representations of authenticity.  As such the valuations did not constitute a representation under section 9 of the Fair Trading Act.  A valuation is an opinion of worth, not statement of fact, and as such is not a representation or misrepresentation.

His Honour did not accept this submission stating at [18]:

18 However, I am satisfied that there is evidence from which it is open to conclude that the valuations served a dual purpose. True it is that they contained an opinion of value. However it is open to conclude that the valuations also contained an implicit representation of fact that each of the works in contention were authentic works, each having been created by one of the Plaintiffs.

(my emphasis)

No case application – loss and damage.

It was also submitted that the sole recipient of the representation was Blanche.  Blanche is not a Plaintiff.  There was no evidence that he suffered any loss or that the valuations were circulated in the market place.   Vickery J extracted the relevant paragraphs and found that the relief sought included future loss and damage if valuations were used in the future in conjunction with the sale of the works (see [27] – [28]).  That element of the claim justified the claim for permanent injunction regarding the use of the valuations.  In considering sections 149 and 149A of the Fair Trading Act, empowering the grant of injunctive relief, Vickery J stated, at [30]:

30 These sections of the Fair Trading Act are framed in broad terms. On their face they arguably do not depend upon any person being actually mislead by conduct which contravenes section 9 of the Act. Rather, it is the conduct in breach of section 9 which may give rise to a grant of relief under section 149 .. The relief sought by the Plaintiffs in this case under paragraphs 1-3 of the relief claimed, would appear to fall within the ambit of these statutory provisions.

While Vickery J found there was a case to answer regarding the claim for injunctive relief he found there was no case to answer regarding the Plaintiffs’ claim for $25,000 in damages.  Section 159 of the Fair Trading Act requires a causal link between the contravening conduct and the loss and damage claimed, [34].  After analysing the evidence thoroughly (at [37] – [43]) his Honour found while thre was considerable evidence going to authenticity of the works (though he noted no declaration was sought on same in the pleadings - [41]) there was no evidence that valuations or their use had any effect causing the loss claimed.  On that point Vickery J found there was no case to answer the claim for $25,000.

No case application – the election.

The usual rule in making a no case submission is:

1. a judge will not rule on a no case submission unless the applicant states it will not call evidence in the event that submission is unsuccessful [44]. It is however a matter of discretion whether the judge puts the applicant to his election.  The exercise of the discretion depends on “..depends on matters which go to the just and convenient disposition of the litigation and the interests of justice.”
2. a judge will rule on whether to put the the applicant to his election after the submission is made.

His Honour did not put the applicant to his election because of the serious allegations being made; that an art dealer represented that fakes were authentic and sold fakes.  This is particularly serious for a dealer continuing to operate in the art market. In the circumstances the Second Defendant should have the opportunity to put on evidence against the case put against him.  Curiously his Honour regarded the publicity associated with the case as a factor, stating (at [46]), “I cannot ignore the measure of publicity that this case has attracted.”

ISSUE

No case applications are, not surprisingly,  infrequently made.  In a matter where the facts are actively contested the prospect of being put to an election rightly warrants a conservative approach.  If an application is contemplated it is critical to carefully analyse the Plaintiff’s evidence against the pleadings.  In this case the  Second Defendant was partially successful because the Plaintiff’s evidence focused on authenticity claims rather than evidence of actual loss.  As Vickery J made clear, one does not equate with the other.

Sanelli v Sanelli & Anor

Mukhtar AsJ in Sanelli considered a very full throated application by the plaintiff for indemnity costs.  At [29] Mukhtar AsJ set out the broad principles

29 An order for indemnity costs is a departure from the Court’s usual course and special circumstances must be shown. In my experience, applications for such orders are increasing in modern litigation but overall they are difficult to obtain, certainly in borderline cases. Great care must be taken in reaching a conclusion at the urging of a victorious litigant that the losing litigant somehow conducted itself delinquently as litigant so as to attract an indemnity order, as if it were an expression of the Court’s admonition. Such an order may be made where proceedings are commenced or continued in wilful disregard of known facts or clearly established law, or where there is undue prolongation of a case by groundless claims, or conduct of proceedings for an ulterior motive, or where a litigant acts dishonestly in the litigation or flouts or abuses rights and privileges. They tend to be cases where a Court might think that a litigant properly advised had no hope of success and therefore must be taken to have proceeded for some illicit motive or chosen to wilfully disregard the law. That would require a strong finding to sustain a judicially exercised discretion.

The Plaintiff claimed indemnity costs arguing that the second defendant never had a case [2], more technically described wilful disregard of the law, and a Calderbank letter where the Plaintff offered to bear her own costs if the second defendant would consent to monies held in Court being released to her.  The second defendant, notwithstanding withdrawing its defence 5 days from the scheduled commencement of the trial date argued that there should be no order as to costs because of the Plaintiff’ obstructionist behaviour.  The plaintiff’s claim was grounded on the equity of exoneration (usefully described at [23] – [27]) however the Plaintiff did not plead her case in those terms until approximately half way through the proceeding.  Mukhtar did not regard the extensive discovery and enquiry as being evidence of a lack of a defence.  Similarly he regarded some of the defences as being dubious.  Against this he noted that the ultimately successful claim was formulated lateish in the piece [34].  His Honour in analysing whether the rejection of the offer was unreasonable in the circumstances noted that the Calderbank offer was made 2 months before the Plaintiff amended her claim and at the time the offer was made the second defendant still had not “.. had all the relevant objective material to enable a litigator to give definite advice, or at least could say to their client that they had exhausted all means to dutifully investigate the case.” [40].  Timing of an offer an offer  is critical in determining the reasonableness in rejecting it.

O’Reilly v TS & B Retail Systems Pty Ltd

This was an appeal regarding a costs ruling made at the conclusion of a County Court trial.  The Court set out in some detail the exchange of offers and related correspondence.  A Defendant’s offer was made on Friday 16 May 2009 and left open until 5pm Monday 19 May 2009.  The plaintiff rejected that offer just before noon on 19 May and made a counter offer, leaving it open until 5pm the next day.  The court noted the very short period within which the offers were left open but regarded it as significant that even with such a short time frame the Plaintiff was sure enough  to reject the defendant’s offer with 6 hours to spare. The trial judge found it was unreasonable to reject the 16 May offer.  The Court approved of the trial judge’s analysis, recounted at [31],  including the haste of the Plaintiff’s response without properly considering the risks. The Court also highlighted the fact, at [20], that “..An order for indemnity costs does not entitle the party in whose favour it is made to recover whatever sums he incurs. Costs incurred unreasonably are not recoverable, nor are those of an unreasonable amount.”  The Plaintiff’s figures lacked credibility. It is very important for the offeree to be as temperate and resaonable as possible in any correspondence and couteroffers.

Tenth Vandy Pty Ltd v Natwest Markets Australia Pty Ltd (No 2)

As is his wont Croft J undertook a very detailed analysis of the operation of Order 26 [12] – [16],  Calderbank offers [17] – [20] and orders for non party costs [40] – [53].

Croft cited the factors of reasonableness set out in Hazeldne’s Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2):

(a) the stage of the proceeding at which the offer was received;

(b) the time allowed to the offeree to consider the offer;

(c) the extent of the compromise offered;

(d) the offeree’s prospects of success, assessed as at the date of the offer;

(e) the clarity with which the terms of the offer were expressed;

(f) whether the offer foreshadowed an application for an indemnity costs in the event of the offeree’s rejecting it.

His Honour made the point that in exercising its discretion it must judge the conduct of the offeree at the time of the offer but not with the benefit of hindsight.  To that end his Honour considered the offers in the context of the stage of the litigation process.  The authorities make it clear there is no rule requiring the maker of an offer to set out the reasons why the offer should be accepted.  It depends upon the circumstances.  In Tenth Vandy the Court did consider the analysis set out in the various Calderbank offers.  In his considerations the Court also noted the intemperate and “quite ridiculous offers to settle with the defendants on payment of sums in the millions of dollars..” [38]. The Court found that the plaintiff’s correspondence indicates that it was not behaving reasonably. Interestingly the Court in O’Reilly referred to some quite pungent correspondence. All the more reason for an author to remove as much emotion from correspondence as possible.  In considering the reasonableness of the refusal one should assume a court will be unimpressed by an offeree making serious allegations of misconduct or allegations relating to the proceeding unless it is relevant to the offer.

The Court ordered costs against a non party in this case.  It is an unusual order to make.  The basis for making an order was set out in [51] where Croft J said:

51 The jurisdiction to award costs against a non-party is not enlivened unless the non-party has a sufficient connection to the proceeding.  Elaborating on this requirement, and by reference to Burns Philp & Co v Bhagat, Bischof v Adams and also Guss v Geelong Building Society (in liq), Ashley J said:

“The Court’s power to award costs under s 24(1) of the Supreme Court Act is wide enough to order that costs be paid by a non-party. Focussing upon the general situation – that is, putting the circumstances raised by r.6323 to one side – it may be said that such an order is always exceptional. In the vast majority of cases it would be unjust to make an award of costs against a non-party. It may also be said that whilst certain categories of persons have been identified as persons against whom such orders may be made, the Court’s discretion is not confined to those categories of persons. A further proposition may be put, that is, that a non-party against whom an order is made must have a connection with the proceeding in question. Gobbo J dealt with the matter of connection in Bischof. His Honour concluded that in the exercise of the discretion it would be pertinent to take into account the extent of the connection between the non-party and the proceeding and the causal connection between the third party and the costs. His Honour pointed out, correctly in my respectful opinion, that in some cases the connection between the non-party and the proceeding may be slender, but there may be a close relationship between the non-party and costs (or increased costs) incurred. At the other extreme it may be that the non-party stands to benefit greatly from a proceeding, but may not have had any real part in supporting the proceeding, and so any real part in the incidence of costs.”

The court made the connection between the natural person and Tenth Vandy, his corporate vehicle, in the conduct of the litigation and incurring of costs by the defendant.  The Court was satisfied that the natural person was in effect the driving force behind the litigation and he had personal interest in the outcome.  It should be noted that just being a director is not a basis for a non party costs order. There must be a significant connection to the proceeding.

Interestingly, while  the Court made the non party jointly and severably liable for the costs the  non party’ s liability “…should be subject to the proviso that the liability … is not to arise unless and until the plaintiff fails to meet its obligations to pay the defendant’s costs” [56].  Such an order is indicative on the conservative approach of the Courts to make non party costs orders.

His Honour sets out the principles at [5] & [6] regarding the principles applicable in removing caveats under section 90(3) of the TLA, namely:

• it is broadly analogous to determination of interlocutoryinjunctions – the power is discretionary;
• the caveator has the onus of establishing there is a serious question to be tried that he has an interest in the land; and
  
• the balance of convenience favours maintenance of the caveat until trial;

The evidence

The agreement, reproduced at [7], in this case is exhibit A as an example of what to avoid when seeking to make a claim for an equitable right over property. The agreement seemed to relate to an agreement between the Plaintiff/sole proprietor’s husband and a putative business partner regarding purchase of shares in a pet food business.  His Honour forensically analysed the many deficiencies in the agreement, at [17] – [26].  The first observation made was that it consisted of 5 recitals and no operative clauses. The problems included the agreement:

• requiring the husband to pay $3 million for 15% share in a company that had not been established at the time of the agreement;
• referring to the parties a creditor and debtor respectively.  Hardly consistent with an investment;
• in one part limiting the interest to $3 million, at another recital registering the interest for not less than $3million.

Unusually in such applications the deponents were cross examined and his Honour found that that sole proprietor never knew of this agreement.  In examining the enforceability of the agreement his Honour noted that no demand for money by the business partner was made from August 2005 until 2007, that the husband had no interest in any corporate entity which might be the vehicle for the pet food busines and there was no evidence of a company conducting a pet food business.  The court found it relevant that notwithstanding a “clause” providing for the execution of an unregistered mortgage within 7 days of 8 August 2005 in favour of the business partner nothing had been done.  In such circumstances that constitutes evidence that it was not a caveatable interest (see [29]).

This application was made with the backdrop of Family Court litigation between the sole proprietor/wife and husband.  In that context it was relevant to consider the possible outcome of the litigation and the disposition of the property between the husband and wife.  The court found it likely that the wife wold remain the sole proprietor of the property.

While effectively His Honour found in favour of the plaintiff on the serious question issue he also found the balance of convenience also favoured her.  The husband and his business partner were engaged litigation which was moving at a “lamentably leisurable pace”, a factor which may prejudice timely resolution of the Family Court proceedings.  His Honour, at [44] found that the husband’s lawyers are seeking to dleay the trial of the Family Court proceedings on the basis of the claims made by the business partner.

Issues

Applications for removal of caveats are a regular feature in the Practice Court.  It is important to carefully analyse the underlying factual basis for the equitable claims. Those that rely on vague agreements, notoriously involving family members, can be susceptible to challenge.

There can be a fine line between being forthright and acting without fear or favour on behalf of one’s client and being offensive, provocative or, the using the catch all phrase, bringing the profession into disrepute. The Full Bench of the ACT Supreme Court considered this question in DAVID LANDER v COUNCIL OF THE LAW SOCIETY OF THE AUSTRALIAN CAPITAL TERRITORY, The court reviewed a decision of the Legal Practitioners Disciplinary Tribunal that David Lander, had by statements made in a letter to the Chief Executive of the ACT Department of Education and Training was guilty of unsatisfactory professional conduct.

The letter (republished in full at par 4) leaves very little need for explanation. The following extracts demonstrate why it prompted a complaint :

Your Department has a long history of failing to communicate at all or to communicate substantively and honestly.

My wife remains a teacher in your system and I ask that no recriminations be taken against her because her husband happens to be a solicitor acting for teachers.

This is consistent as we say with years of malpractice and maladministration by your organisation. It appears that nothing will change that conduct and that the Department bears grudges against people who engage lawyers, particularly competent ones.

In my brief encounters with officers of your agency, they have been rude, unhelpful, obsessive and compulsive in relation to their own ego and their own self-importance and otherwise unresponsive.

Lander sought to rely on the freedom of expression provisions of the Human Rights Act 2004 (section 16). Section 15 of the Victorian Charter of Rights and Responsibilities Act 2006 is an equivalent provision.

In a very comprehensive and useful decision (extracted in toto at par 23) the Tribunal traversed the relevant authorities. In that regard it is relevant to consider the High Court decision in Clyne v NSW Bar Association. The court endorsed the principles set out by the Tribunal (par 24).

The Court drew a distinction between gratuitously offensive language between practitioners and communication on behalf of a client which may be discourteous and provocative but is done so on a subject which is in the interest of the client (par 36). In between dealings as between practitioners there is an obligation to avoid offensive and provocative conduct while in dealings with third parties provocative language may be warranted, if there is a reason for it (pars 46 – 7). The court found the correspondence in question, even if based on some fallacious assumptions, fell into the latter class.

A key issue for the Court was whether the solicitor had a foundation for making the very serious allegations, particularly about honesty, malpractice and vindictiveness towards innocent parties. The Court found that this issue was not addressed by the Tribunal but it should have been. Because of that error and, as a consequence, the findings of unprofessional conduct being based on “an erroneous assumption” it was set aside.

The Court was very circumspect about the role of the Human Rights Act in this environment stating, at par 57:

If the HR Act, s 16(2) has a role to play, it super imposes itself on the Statement of Principles to be found in the Rules and it is to allow lawful criticism by a solicitor of the performance of public officials.

Issues

The decision contains a very comprehensive analysis of the principles governing professional behaviour. Clyne remains the bellwether decision. The applicant was fortunate that the issue of foundation was not the basis for the Tribunal’s decision, or so the Court found. Practitioners should take little comfort from Human Rights Act or the Charter in situations of this nature.

In Sopov & Ors v Kane Constructions Pty Ltd the Court of Appeal again traverses the well worn path of applications for stay of execution. The applicants sought a stay of a Court of Appeal decision pending a special leave application to the High Court. I most recently analysed the approach to stays by the Court of Appeal in my post on Gangemi v Osborne.

In this proceeding the applicants/appellants sought to distinguish a stay application to the High Court from other stay applications, submitting that the former did not require special or exceptional circumstances (par 45). The other bases for the application, which constituted exceptional circumstances were:

• the applicants did not have the resources to pay the judgment debt and their accountant said they would face bankruptcy if the orders were enforced. This meant they could not prosecute their appeal (par 45);
• there was a substantial prospect that special leave would be granted (par 46);and
• the respondents had already received substantial monies (par 46)

At paragraphs 52 & 53 their Honours restated the well settled proposition that the principles applying to stays pending a High Court special leave applications do not differ from other stay applications, stating:

52 In relation to the application for a stay, the well-established rule applied by the Court has been that there must be special or exceptional circumstances existing to justify an order staying the execution of a judgment and that such circumstances will exist where there is a real risk that the appeal if successful will prove abortive if the applicant were not granted a stay. The case cited by the appellants, Carter v Geoff Layton & Co Pty Ltd, suggests that no different principle applies pending the hearing of an application for special leave to appeal. In that case, Cooper J said that the Court would not stay proceedings pending the hearing of an application for special leave to appeal unless satisfied that a stay was required to preserve the subject matter of the litigation or to otherwise ensure that any right to appeal was not rendered nugatory eg where execution would deprive an appellant of the means of prosecuting the appeal. The court would also consider whether there was a substantial prospect of leave being granted, whether the stay would cause loss to the respondent and the balance of convenience.

53 In Palmer v Permanent Custodians Ltd, on an application in this Court for a stay of execution pending an application for special leave to appeal to the High Court, the Court expressed the view that, in its inherent jurisdiction as well as under the rules, the traditional test of special or exceptional circumstances remained applicable to such an application

On the question of bankruptcy being a special circumstance the principles are less consistent. By reference to previous decisions the Court said:

1. bankruptcy would be irreversible even if the appeal succeeded (pars 55 & 58) constitutes exceptional circumstences & a stay granted;
2. an appeal which has arguable prospects of success would be rendered nugatory, with reputational effect (par 56) – stay granted;
3. where a bankruptcy notice is served the prospect of a sequestration order constitutes special circumstances where the respondent is not prepared to refrain from proceeding with the creditors petition pending the appeal(par 57)- stay granted;
4. but bankruptcy & liquidation were not decisive factors per se. The circumstances will determine the weight given to those factors (par 59)
5. even though bankruptcy may constitute special circumstances there has to be sufficient material evidencing the financial situation and evidence that the applicant will be bankrupted (par 60)- stay refused

In this matter the fatal weaknesses in the application were:

1. insufficient evidence that a stay will stop the special leave. The applicants had assets (par 61).
2. the threat of bankruptcy or liquidation had not crystalised (par 61);
3. there was little if any prospect of success in the special leave application (par 62)

Issues to note

Timing is crucial. The threat of bankruptcy/liquidation is not sufficient. It is also important to set out the applicant’s financial situation sufficient to make the submission that it will either prevent an appeal which has an arguable prospect of success proceeding or the effect of the bankruptcy/liquidation would be irreversible even if successful.

In Kalenik v Apostolidis & Ors (No 2) Hargrave J again considered those principle. The default position is

“..interest ‘must’ be ordered for the whole of the period after the issue of the writ unless ‘good cause is shown to the contrary’. The judgment debtor has the onus of establishing good cause to the contrary. That onus may be satisfied if it is established that allowing interest for the whole of the period since the issue of the writ will cause some injustice to the defendant. …delay may be a relevant discretionary factor.” (see par 12)

In analysing the authorities Hargraves J highlighted relevant factors:

• the exercise of the discretion is not to penalise the Plaintiff but alleviate the Defendant. The defendant needs to show disadvantage; there needs to be “collateral effects of the delay” which caused disadvantage (par 13)
• delay is only relevant in rare cases because in practice the defendants have had use of the money (par 17)
• if the defendant acquiesces/does not object to the cause for the delay, such as taking a matter out of the list, that may work against the exercise of discretion(par 19)

Hargrave J pithily summarised the principles as:

Nor does the defendant rely upon prejudice arising from delay by the plaintiff while very serious allegations have been hanging over his head for many years. This kind of prejudice could be relevant in a case where there is unreasonable delay by a plaintiff who, although successful at trial, fails to establish one or more serious allegations maintained for a long time; for example, fraud or other criminal activity…..(par 64)

In addition to not showing prejudice the Defendant used the money to grow his overall assets. Another relevant factor was that the Plaintiff’s impecuniosity which hampered the prosecution of the claim was attributable to the Defendant’s conduct (par 64). The discovery dispute was a saga in itself, and ultimately one where the defendant was shown to be less than forthcoming. These factors overrode other issues of delay, such as change of solicitors.

Interest

The Defendant’s attempts to apply a rate less than that of the penalty interest rate was unsuccessful. One issue the Court highlighted was the Defendant failing to make any attempt to compromise the claim. Rather he challenged any form of contribution by the Plaintiff. The Court found he was wrong to do so ((par 85) . The court was less than impressed by the argument that the cash rate was the appropriate measure.

Issues

A Defendant wishing to rely on delay in adjusting the period in which interest is calculated or the rate needs to provide evidence of prejudice. Evidence of steps taken to prosecute the claim, that is not acquiescing to the delay (a normal enough reaction by a Defendant) would also assist. As a matter of practicality Hargraves J was less than enthused by the length of the submissions and associated documents in support (par 31) . Know thy bench- the 11th commandment.

“I would have to say the first-place award for ‘Skankiest in NYC’ would have to go to Liskula Gentile Cohen,” the anonymous blogger wrote.

“How old is this skank? 40 something? She’s a psychotic, lying, whoring, still going to clubs at her age, skank.”

Very blogspeak.  Cohen is planning on suing.  In the Australian context there would be some interesting pleading challenges if one was to run a justification defence.  But the US laws are far more difficult for the plaintiff, particularly if Cohen is regarded as a public figure.  Cohen has apparently already made contact with the blogger by phone.  They know each other.

The Times on line (UK) has run a similar theme to the Australian Press reports with  Vogue model Liskula Cohen wins right to unmask offensive blogger, but it should know better.  It identified Richard Horton, the Night Jack blogger, months ago and fended off his attempt to maintain anonymity publish his details prompting a breathless analysis in June under the banner Analysis: bloggers can no longer be sure on anonymity,  The decision, by Mr Justice Eady, of The Author of a Blog v Times Newspapers Limited refusing an injunction to protect a blogger’s anonymity is hardly ground-breaking law.

There has never been a separate stand alone right to unmask/identify a blogger.

The interlocutory decision of the Manhattan Supreme Court sets no precedent.  The case involves long established principles relating to discovery, whether non party or preliminary discovery.   In Norwich Pharmaceutical Co v Commissioners of Customs and Excise (1974) AC 133 the House of Lords held that in certain circumstances an independent action for discovery can be brought against a person for the purpose of obtaining information about a wrongdoer.  That principle was directly applied in relation to Internet intermediaries in the English High Court decision of Totalise plc v Motley Fool Ltd.   The issue is no different with Ms Cohen in her action.  She took action against Google for the same reason, to require it to provide  information and any identifier it had in its possession and control of the blogger in question.  The same issue has been run in Australia.  In  Resolute Ltd & Anor v Warnes [2000] WASC 35 (9 February 2000) the Supreme Court of West Australia made orders permitting an applicant to get details of an author of a publication by discovery and examination.

Bloggers hever never had a status in law separate from any other publisher. The medium may be (not so) new to the law but the principles are as applicable as if the comments were made on the front page of a daily newspaper or inside a Moroccan bound book.  They may have thought they inhabited a Narnia like kingdom where the laws of men don’t apply and Star Trek is the national religion but that is a sociological discussion for another time……….

So the law is well settled. The process is not simple and can be quite expensive.  Court’s do not make orders for non party discovery or examination without a proper foundation.  That takes preparation, an interlocutory application and time.  Given the expense of bringing this application and weighing that against the likely benefit of recovering from a viral blogger it is hardly surprising that this is a road less travelled to date.  That  is no excuse for  nonsensical reporting today.  What really surprised me was listening to Jon Faine on 774 this morning talking about new law/precedent being set by Cohen’s case.  He gushed as if he was present as he talked this and all sorts of other nonsense as with Liskula Cohen.  She was happy to wear the title as a pioneer.  Hard to blame her, it has been an expensive process (she hinted at $50,00 in legals) and no dobut she feels vindication. Of course she is only at the foot of the mountain. Based on her working the talk circuits, see reference in today’s SMH article Model confronts ’skank’ blogger, I wonder how much she is using this as a business opportunity.  Frankly confronting the publisher of a defamatory publication by phone and then talking about her (in this case) prior to suing is, at best, incredibly foolish. I wonder how much this has been turned into publicity opportunity rather than the first step to litigation proper.

As a former practising lawyer Faine should know better to engage as he did.  It appears that  legal knowledge and Mr Faine are not regular bedfellows on the laws of defamation. That surprises me given he is a broadcaster and was on the law report, if many years ago.

On a final note it is interesting to note that “skank” is defined in the Shorter Oxford Dictionary as “A steady-paced dance performed to reggae music…”  Somehow I suspect I need a newer version of the OED. Answers.com has two alternate definitions:

1.    Disgusting or vulgar matter; filfth;

2.   One who is disgustingly foul or filthy and often considered sexually promiscuous. Used especially of a woman or girl.

]]> http://www.peteraclarke.com.au/2009/08/20/liskula-cohen-unmasking-of-blogger-is-not-as-big-a-deal-as-reported/feed/ 1 http://www.peteraclarke.com.au/2009/06/21/equity-and-the-doctrine-of-contribution-the-high-court-in-friend-v-brooker-2009-hca-21-28-may-2009/ http://www.peteraclarke.com.au/2009/06/21/equity-and-the-doctrine-of-contribution-the-high-court-in-friend-v-brooker-2009-hca-21-28-may-2009/#comments Sun, 21 Jun 2009 13:03:17 +0000 Peter Clarke http://www.peteraclarke.com.au/?p=408 In Friend v Brooker [2009] HCA 21 the High Court, in again taking issue with the New South Wales Court of Appeal, has undertaken a useful review of equitable principles vis a vis co ordinate liability. It has again opted for a stricter construction of equitable principles.

Facts (pars [10] – [ 37])

The facts are quite prosaic and depressingly familiar for those in small business. The Plaintiff/Respondent (Brooker) and Defendant/Appellant (Friend) establish an engineering business together, operating through a company. The Company performs a large job for the sum of $2.5million, in this case for a Council. The account is disputed, at least in part. This results in a liquidity crisis made all the more precarious because the Company’s indebtedness was secured by mortgages over Brooker and Friend properties. Brooker turns to a third party, a friend, for finance. The friend, through a company, loans Brooker $350,000 securing it with a mortgages over properties owned by Brooker family members as well as a guarantee by Brooker. Of the sum lent $330,000 was applied to discharge the Company’s debts. The Council ultimately made payment of a significant amount of the monies outstanding, $900,000, to the company as per a settlement. Brooker, not surprisingly, wants to apply that sum to his outstanding indebtedness which had blown out to $1.1million.

The trial judge dismissed Brooker’s claim and found there was no agreement. The Court of Appeal found, by a 2 – 1 majority, that Friend was liable in equity to contribute though on slightly differing grounds. The President found there was a common obligation arising out of the facts while McColl found there was a fiduciary obligation which required each director to meet an equal share of the capital contribution.

The Decision

Per French CJ, Gummow, Hayne & Bell.

The majority, in a comprehensive analysis, stated that in contribution matters equity is concerned with the equality of exposure of obligers (debtors) to an obligee (creditor). Equity intervenes to ensure that the debtors share a common burden, for example where a creditor seeks to recover only against one debtor, but not where all the obligers may derive some benefit. For equity to apply there must be a co ordinate liabilities regarding a debt (pars 38 & 39). The Court made it clear that it is not necessary to have a common design between debtors for there to be equity for a contribution claim (par 42). That is the key distinction between this cause of action and a claim for contribution at common law (par 43).

As is its way, the current High Court refrained from determining what “community of interest” is sufficient to attract an equitable claim save to say that equity looks to the substance and not merely to the legal form (par 47). Their Honours specifically rejected the Court of Appeal’s formulation that equitable contribution is not confined by legal structures, finding that formulaation as being too abstract. To emphasise that point their Honours specifically stated that the doctrine does not apply merely because the claimant’s payment operates to the financial benefit of the other party (par 48). The absence of a common legal burden militates against an application of the doctrine of equitable contribution. Further undermining Brooker’s claim, in the court’s view, was the fact that there was no imminent threat regarding his indebtedness. On the facts Brooker wasn’t required to repay the entire loan. Equity acts quia timet where the apprehended overpayment is sufficiently imminent (par 52). Unfortunately their Honours sidestepped enunciating specific and distinct principles regarding quia timet powers in contribution suits and resolving what they acknowledged as being uncertainties in the case law (see pars 54 – 61). That is a matter for the Court’s consideration at another time. The court rejected Brooker’s formulation of “common design” for equitable contribution, which the court described as “.. where the equity is found not in the relationship of obligee and co-obligers, but simply in commonality of benefit from the operation of that design.” The court rejected this proposition by reviewing and critisising and then restricting the application of the decision upon which it is based: the judgement of Cooper J in Cummings v Lewis (see pars 63 – 83 for the detailed analysis).

A claim of common design should have some concrete basis arising out of the relationship between the parties beyond shareholding in a company through which a business is conducted (see par 90). Their Honour’s commentary on and rejection of the finding of a fiduciary duty was dealt with briefly with the court accepting Friend’s submission (pars 84 – 86)

Per Heydon J.

His Honour concurred with the majority decision. His analysis was an analysis on more specific issues, such as the inadequacy of the pleadings (par 96 – 100) and the methodology of the Court of Appeal.

Issues

This is a very useful consideration of a very specific claim in equity. The Court continues with a black letter and conservative application of the principles. The Court of Appeal’s more expansive approach has been specifically rejected. Unfortunately the Court has not, as its current approach, sought to provide any detailed formulation beyond general analysis even when acknowledging confusion in the state of the case law.

In C-Tech Beach J considers the elements in a malicious falsehood claim. Malicious falsehood (also known as injurious falsehood) is not often pleaded. There was often no good reason to plead it because the facts generally supported a claim in defamation. The advantage of relying upon defamation was that it is actionable per se; with damages being at large. Further there is not need to prove malice in defamation. The reforms to Defamation with the Defamation Act 2005 means that, under section 9, most corporations are precluded from suing in defamation. With the amendment to the defamation law (in the main a great improvement) pleading malicious falsehood is a legitimate response to a tortious wrong. The issue of malice still provides evidential challenges however often evidence of the accompanying or subsequent behaviour of the putative defendant can be relied upon to draw that inference.

The facts

The Appellant’s causes of action were malicious falsehood and unlawful interference with business.

The Appellant pleaded (see par 4), by way of a counterclaim (the matter the subject of the Appeal), that the Respondent (and ex employee of the Appellant), had obtained a computer disc containing confidential information, to wit, the customer lists, from the Appellant and given it to the Appellants’ competitor. The competitor was an ex employer of the First Appellant. The alleged statements which were the basis of a claim of falsehood was to the effect that the information on the disc belonged to the competitor and they were being unlawfully accessed and used. The requisite pleaded malicious intention was for the statements to cause the competitor to taken legal action against the Appellant. As it turned out that happened with the Appellant settling the County Court action with the competitor on terms including a pay out of $90,000.

The finding

Malicious falsehood

Beach J, at paragraph 8 succintly summarises the elements of a malicious falsehood claim, as being:

8 The elements of the torts of malicious falsehood may be summarised as follows:

(1) The defendant published to a third party words which are false.

(2) The words refer to the plaintiff or his property or his business.

(3) The words were published maliciously.

(4) Special damage has followed as a direct and natural result of the publication of the words

Beach J held that the Magistrate’s decision below was fundamentally flawed because he dismissed the malicious falsehood claim on findings extraneous to the claim itself. The Magistrate found that the Appellant did not own the computer disc. The Magistrate made no finding on what if any statements were made, whether they were made by the Respondent and, if so, whether they were false. In this respect the reasons were inadequate. Beach said

In order to determine the malicious falsehood claim, the magistrate needed to make a finding as to the terms of the statement before then determining whether the statement he found to have been published was false. Further, in making a finding as to the statement actually published, the court below was required to determine whether the statements referred to in paragraph 22 of the appellants’ counterclaim had been made by Mr Truong. It was only when these issues had been determined that the court below could then proceed to the issue of falsity.

It was conceivable, Beach said (at par 11) that even if the customer list was owned by the competitor, it does not necessarily mean that it was being wrongfully used. Accordingly the findings made by the Magistrate did not necessarily preclude a finding of malicious falsehood.

Unlawful interference with business

Beach found that the fact the High Court in Sanders v Snell refrained from deciding whether a tort of interference with business is a recognised tort did not permit the Magistrates Court from stating “..it is obvious that this court… should not attempt to determine this issue” (see par 7) and not considering the pleaded case. Until the High Court determines the question definitively the tort is recognised by the Victorian Supreme Court in Ansett (Operations) v Australian Federation of Air Pilotsdefinitively where it applied the United Kingdom authorities most authoritatively the House of Lords in Rookes v Barnard.

Issues worth considering

1. The tort of malicious falsehood is a tort which requires the similar discipline as defamation claims. The statement must be analysed, the falsity identified and the malicious intent. It is an entirely distinct and unrelated action to a breach of confidence claim which seemed to lead the Magistrate astray.
2. The tendency of the High Court since the Gleeson ascendancy has been to identify issues which may be worthy of further consideration in the right circumstances. Rather than a more expansive approach in judgments taken by the Mason and Brennan courts the current bench waits for the “right” case before properly considering an issue. An example of interest to me is the court’s tantalising commentary on an emerging tort of privacy in ABC v Lenah Meats in 2001. That hasn’t stopped their Honours from foreshadowing matters of interest. Those obiter (if that) comments in Sanders v Snell were taken too far by the Magistrates Court.

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