Boyapati v Rockefeller Management Corporation

VICTORIA DISTRICT REGISTRY VID 1289 OF 2004

ROCKEFELLER MANAGEMENT CORPORATION (A CORPORATION INCORPORATED IN THE STATE OF ILLINOIS, UNITED STATES OF AMERICA)

REASONS FOR JUDGMENT (Ex Tempore) 1 By a notice of motion dated 23 June 2006, the applicants/cross-respondents ("the applicants") seek various orders, including that part of the existing cross-claim dated 14 September 2005 be struck out and that there be a separate trial of certain questions. Also by notice of motion dated 23 June 2006, the respondents/cross-claimants ("the respondents") seek orders that they be granted leave to file and serve a second further amended defence and cross-claim. These matters are properly before the Court pursuant to my orders of 16 June 2006. 2 The applicants also seek an order concerning the respondents' alleged non-compliance with an order of Registrar Mussett made on 15 March 2006 for the discovery of certain categories of documents. I have not dealt with this today. This matter is the subject of ongoing discussions between the parties, which may resolve the current dispute. I would refer the matter back to the Registrar for resolution in the event it does not do so. 3 The pleadings currently comprise the applicants' further amended statement of claim dated 10 February 2006, the respondents' proposed second further amended defence and cross-claim;the applicants' amended defence and cross-claim dated 29 April 2005; and the respondents' reply to the applicants' defence to amended cross-claim dated 1 August 2005. A helpful summary of the parties' claims and defences is contained in Annexure A to the submissions filed by the respondents in respect of these motions. For present purposes, I accept that the issues to be investigated in these proceedings are as set out in these submissions at [8]. 4 The respondents seek leave to amend their pleading under O 13 r 2 of the Federal Court Rules. The nature of the respondents' proposed amendments are as follows: (a) an additional defamation claim in respect of the "sixth publication" (b) a further allegation of misleading or deceptive conduct in respect of the applicants' representations from at least 1 January 2005 to date; and (c) clarification of the defence concerning 640 questions/solutions forming part of the Practice Exams. 5 The applicants oppose the giving of leave, first, because the new claims will require additional pleading and further discovery and will delay the hearing of the proceeding. The applicants referred to the fact that the proceeding has been on foot since October 2004 and submitted that the respondents had provided no adequate explanation for the delay 6 In an affidavit sworn on 30 June 2006, the respondents' solicitor sought to explain the delay. The respondents' counsel submitted, and I accept, that the additional pleading would raise matters within a relatively narrow compass. He further submitted, and I accept, that the applicants themselves repleaded in February of this year and, in effect, the respondents' proposed repleading had to be seen in this light. Seen in this light, I accept that there was no unacceptable delay that would warrant the denial of leave. In the circumstances, subject to a matter that I am about to address, it is proper that the respondents have the opportunity to litigate, in this proceeding, matters of a like nature to their existing cross-claim. 7 In this connection, the remaining matter concerns the applicants' submission that the proposed new defamation claim would not be within the Court's jurisdiction. They opposed leave to amend on this basis too. For the following reasons, I reject this submission. 8 Before discussing this submission, however, I note that, today, the applicants abandoned their strike out application with respect to the first and second publications. The applicants no longer contest that the respondents' claims with respect to these publications are within the Court's associated jurisdiction: see Federal Court of Australia Act 1976 (Cth), s 32(1). The applicants submit, however, that the claim with respect to the proposed sixth publication remains outside the association jurisdiction of the Court. 9 The principles that govern associated or accrued jurisdiction have been discussed by the High Court of Australia in a number of decisions, including Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457 at 474-5, Fencott v Muller (1983) 152 CLR 570 ("Fencott") at 607-8, Stack v Coast Securities (No 9) Pty Ltd (1983) 154 CLR 261 at 294, Re Wakim; Ex parte McNally (1999) 198 CLR 511 at 585-6, and Australian Securities and Investments Commission v Edensor Nominees Pty Ltd (2001) 204 CLR 559 at 585-6. 10 In Fencott, Mason, Murphy, Brennan and Deane JJ, in a joint judgment, sought to clarify what would be considered a "separate and disparate" matter. At 607-608, their Honours said: "Perhaps it is not possible to devise so precise a formula that its application to the facts of any controversy would determine accurately what claims are disparate and what claims are not. Whatever formula be adopted as a guide - and the formula of 'common transactions and facts' is a sound guide for the purpose - it must result in leaving outside the ambit of a matter a 'completely disparate claim constituting in substance a separate proceeding', a non-federal matter which is 'completely separate and distinct from the matter which attracted federal jurisdiction', or 'some distinct and unrelated non-federal claim'" (Citations omitted) Their Honours continued at 608: "The scope of a controversy which constitutes a matter is not ascertained merely by reference to the proceedings which a party may institute, but may be illuminated by the conduct of those proceedings and especially by the pleadings in which the issues in controversy are defined and the claims for relief are set out. But in the end, it is a matter of impression and of practical judgment whether a non-federal claim and a federal claim joined in a proceeding are within the scope of one controversy and thus within the ambit of a matter." In short, this Court will have jurisdiction to hear and determine the cross-claim in so far as it concerns the claimed sixth publication defamation, even though the claim raises no federal claim, if it shares a "common substratum of facts" with the principal proceeding, or if the claims are related in the sense that the determination of one is essential for the determination of the other. 11 The respondents relied on Hunt Australia Pty Ltd v Davidson's Arnhemland Safaris (2000) 179 ALR 738 ("Hunt") in support of the proposition that this proposed claim fell within the associated jurisdiction. In Hunt, a Full Court held that, on the facts of that case, a defamation claim was not completely separate and distinct from a claim under s 52 of the Trade Practices Act 1974 (Cth) and therefore the court had jurisdiction to decide it. The circumstances of Hunt, though different, are not completely dissimilar to the present case. The parties in Hunt were competitors and the dominant purpose of the defamatory publication was, so the court at first instance found, to injure the other party. The Court held that there was a common substratum of facts even though the publication that gave rise to the misleading and deceptive conduct claim was separate from the publication that gave rise to the defamation claim: see Hunt at 746 [30]. 12 I accept that the alleged sixth publication forms part of the one controversy and, for the reasons I am about to give, can be said to arise out of the same substratum of facts. The respondents' case is that the applicants have waged a campaign of defamatory conduct against them as part of the applicants' attempt to seize market share from the respondents. The cause of action with respect to the sixth publication is related to the other defamation claims pleaded by them. Similar factual and legal issues arise in respect of all the respondents' defamation claims. The applicants conceded that at least some of the respondents' defamation claims arise out of the same circumstances as the federal matters pleaded by them. In any case, as already noted, the applicants no longer contest the court's jurisdiction over the first to fifth defamation claims. I can discern no relevant distinction between the claim with respect to the sixth publication and the other claims. It is to be borne in mind that there is an issue as to whether the applicants were motivated by express malice in making the first publication; and there is a common temporal connection with respect to all the defamation claims and the remaining issues in the proceeding. 13 Accordingly, I would grant leave to the respondents to amend their pleading in the manner they have sought. 14 As noted earlier, the applicants also sought an order for the separate determination of certain questions under O 29 r 2 of the Federal Court Rules. The principles that govern the circumstances in which an order of this kind may be made are well established. They are discussed by Branson J in Reading Australia Pty Ltd v Australian Mutual Provident Society [1999] FCA 718 at [7] and [8] and by French J in Olbers Co Ltd v Commonwealth (No 3) [2003] FCA 651 at [7]. In discussion in court today, the parties agreed upon what I consider, in accordance with these principles, to be an appropriate separation of the questions that arise for determination in the proceeding. Accordingly, I would make the order sought in the terms discussed in court. 15 The parties also made submissions on costs today and, for the reasons discussed in Court, I would make orders as to costs in the form appearing at the commencement of these reasons, as well as a number of other orders that were also the subject of submissions today. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kenny.

Associate: Dated: 10 July 2006 Counsel for the Applicants: A J Ryan