Fairfax Media Publications Pty Ltd v Cowper

Reasons of the primary judge

1. The primary judge rightly treated the proposed amendment as the most important element of the application. His Honour addressed the question as follows at [61]-[70]: "It is necessary to harken back to the issues with which the Court is now dealing. First, the plaintiff alleges the publication of defamatory material. As a consequence of that allegation, the defendant justifies the publication on the basis of truth. The allegation of forgery is a whole new proceeding which does not, directly, relate to any imputation upon which the plaintiff relies nor any justification upon which any of the defendants have, hitherto, relied. The new case that is now sought to be added will significantly prejudice the plaintiff and force the vacation of the dates already set. Moreover, the allegation of forgery is only indirectly associated with the substantive issue between the parties as to whether damages are to be awarded for what is said to be defamatory material published by them. The material upon which the defendants rely for the allegations in question do not, on their face, amount to proof that the plaintiff forged documents. The material, if accepted, does amount to the reconstruction of files. The material produced on subpoena and which has been adduced on the motion revolves around whether clients were provided with a review by the plaintiff or on his behalf. The plaintiff seems to suggest that the clients were provided a review of their investments and insurance status, from time to time, which review was given orally. The clients, at least on some of the evidence that has been adduced for the purpose of the motion, deny having been given any such review. When the issues came before NAB in its internal review, it seems that the evidence (including admissions) was that the plaintiff instructed his assistant to reconstruct (or construct) file notes of the conversation said to have occurred by telephone. There is no admission, or proof, other than the testimony, which has yet to be adduced of the clients, that the reviews did not occur. More importantly, there is, on my understanding of the material, no evidence that the plaintiff 'forged' a document. He certainly reconstructed notes, if the material is accepted, but did not affix to any such notes a signature of a client as alleged in the defence. To the extent that the Amended Defence depends upon that which has been produced on subpoena, the documents do not go so far as to prove, or even allege, forgery by the plaintiff of clients' signatures. More importantly, the issue is, at best, peripheral, given that it does not relate directly to any of the allegedly defamatory material. Most importantly, the effect of adding the defence, at this late stage, would be that the plaintiff would need time to investigate any such allegation and adduce its own material in relation thereto and the hearing date that has been fixed for months would need to be vacated. For the foregoing reasons, the Court is not satisfied that the amendment ought to be allowed at this stage and leave to further amend the defences in the proceedings before the Court is refused."
2. His Honour was not persuaded that the position of one of the Fairfax defendants could make a material difference, and left the question of a separate hearing as to special damages to the primary judge. The Court was told that that application was being heard by the judge before whom the trial is listed on the following day, Friday 18 November 2016.

Appellable error is established

1. The applicants for leave acknowledged that in order to succeed, they needed to identify House v The King error in the decision of the primary judge. They accepted that the decision being one of practice and procedure, this Court would exercise particular caution before reviewing it, in accordance with what was said in In re Will of Gilbert (1946) 46 SR (NSW) 318. They also acknowledged that in order to obtain leave they needed to identify an error of principle, a matter of public importance or an injustice which was reasonably clear in the sense of going beyond what is merely arguable. All those concessions, which accord with familiar authorities collected, for example, in Young v Hones (No 2) [2014] NSWCA 338 at [13]-[15], were properly made. It is to be expected that the circumstances in which an application of this nature succeeds will be rare.
2. This Court has had the benefit of written submissions and oral addresses for some 3½ hours in the course of a single afternoon. The primary judge was obliged, partly because of commitments in the Court of Criminal Appeal, and partly because the evidence relied on by the defendants (particularly in relation to the condition of the fourth defendant) was changing over time, to hear the application on three or four separate occasions. Whatever the cause, we consider that his Honour's statements that the forgery allegation was "only indirectly associated with the substantive issue" and that the issue was "at best peripheral" significantly understate the position. We also consider that his Honour's assessment of the prejudice to Mr Cowper if the amendment were allowed was overstated. To be fair, the prejudice to which Mr Cowper pointed in this Court was very substantially prejudice flowing from any vacation of the hearing, as opposed to what flowed from granting the amendment. It is plain that those matters were central to the decision of the primary judge on the amendment application.
3. In light of the incomplete and disputed position as to evidence, and the impending trial, it is neither necessary nor desirable to address these issues in detail. It suffices to say that on the one hand there are documents on which Mr Cowper relies which suggest that Mr Cowper resigned from NAB and had not been the subject of unsatisfactory service or misconduct. These were provided months ago, no later than when discovery was given (they are items 4, 5 and 6 on Mr Cowper's discovery).
4. On the other hand, there are also documents to which the defendants first gained access on 25 October 2016 which suggest that some three months before his resignation, Mr Cowper was interviewed by the bank's internal fraud officers, following complaints which had been made by one of his clients, Ms Linda Thomas. NAB had told the client in December 2008 in an effort to resolve the dispute that "Mr Cowper has informed us that you were offered a review on at least 11 occasions at 6 monthly intervals and on other occasions ... on each occasion, you declined the review citing work commitments and, at times, uncertainty about your direction". The letter informed the client of her rights under the Financial Ombudsman Service.
5. The letter did not resolve the dispute, and evidently the client denied being contacted in the way which had been suggested. In February and March 2009, NAB's complaints unit requested Mr Cowper, repeatedly, to provide the client's file. Eventually and belatedly the file was provided. The documents suggest that the file contained file notes, signed contemporaneously by Mr Cowper's Client Services Manager at the time, Ms Amanda Alterio, recording attempts to contact the client. However, the documents also suggest that the file notes were manufactured in February 2009, backdated to the times when it was said the client had been contacted, and with the signature of Ms Alterio being placed on the notes. The documents record Mr Cowper advising the bank's internal fraud officers that, contrary to what was suggested by the backdated file notes, "In all honesty probably on two occasions Linda made an appointment and she subsequently cancelled".
6. Importantly for present purposes, the documents included a letter to Mr Cowper at his home address dated 19 March 2009 which summarised the background and stated: "As you know, the client file as delivered to the complaints team includes six file notes dated between 31 March 2004 and 6 October 2007, purporting to record telephone contacts by your former assistant Amanda Alterio with the client for the purpose of offering reviews. These appear to be signed by Ms Alterio. ... The six 'Amanda Alterio' file notes do not appear to be genuine. It appears that Ms Alterio's signature has been photocopied onto the foot of each. All seven file notes ... have certain characteristics in common. They are on the same document template, are all incorrectly headed 'Leanne Thomas', and are formatted identically with a list bullet points all ending in semi-colons. During the interview, you advised us of the following: • The file notes were not created on the dates appearing below the signatures. They were created within the last couple of weeks. • You reviewed the file when it was retrieved from archives and saw there were no file notes of review offers to the client. • You then instructed your assistant Sophie Mitchell to create file notes of telephone attendances on the client. • Ms Mitchell created these file notes and provided them to you. • You deny adding the copy signatures to the 'Amanda Alterio' file notes. • You then arranged for the file to be delivered to the complaints team. You did this with the intention that the complaints team would accept the documents as genuine file notes created by Ms Mitchell or Ms Alterio on the dates indicated on the notes."
7. The defendants submitted that: "The sting of the relevant imputation is forgery of documents and signatures. The material from the NAB subpoenaed documents on which the applicants rely, if accepted ... found a strong circumstantial case that the respondent directed the forgery of the signature of a fellow (former) employee ..."
8. As the primary judge said, the evidence supports the conclusion that Mr Cowper "reconstructed" file notes. But in our view, the documents go considerably further and are significantly more important than was stated by the primary judge.
9. First, contrary to [67] of the reasons of the primary judge, the documents do in fact contain an admission that the seven attempts to contact Ms Thomas to review her position, which NAB told Ms Thomas had occurred based on Mr Cowper's instructions, and which were documented in her file, did not occur. The document records Mr Cowper saying that there had probably been only two attempts to contact her.
10. Secondly, contrary to [68] of the reasons of the primary judge, the new evidence is not peripheral or indirectly associated with allegedly defamatory material. Notwithstanding the submissions of Mr Cowper at first instance and in this Court, which were accepted by the primary judge, there is evidence that Mr Cowper had forged documents, in the sense explained below. There is evidence that Mr Cowper directed his assistant to bring into existence, years after the event, documents purporting to be contemporaneous records of things that had occurred. The documents support the inference that the reason for doing so was to bolster the evidentiary material supportive of the position of Mr Cowper, in relation to a complaint made by a former client, on the basis that a purportedly contemporaneous note is apt to provide relatively powerful evidence where recollections, years later, have become vague or have diverged.
11. More generally, directing the creation of documents which falsely represented that they were contemporaneous records is something which feeds directly into the allegations of forgery. One can forge a document without forging a signature. Even if all that was being done was the reconstruction, to the best of his and his assistant's recollection, of the documents which should have been on the file, it remains the fact that by creating documents which gave the impression that they were contemporaneous record of events, a false appearance was created. In the present case, the documents suggest that the records were being created after the Bank's position had been advised to, and rejected by, Ms Thomas. That in turn supports the inference that the false impression of contemporaneity was being done deliberately. For that reason, the evidence is capable of supporting the defendants' case that Mr Cowper forged documents. This in substance is the second House v The King error identified in the defendants' supplementary submissions dated 16 November 2016.
12. When what emerges from the documents is viewed in the manner stated above, we respectfully conclude that there was a material error of fact in the reasoning of the primary judge, on a matter which was central to the decision to refuse the defendants' applications. We regard the error as sufficiently clear to warrant appellate intervention. It follows that it is necessary to re-exercise the discretion. It is not necessary to consider the other errors identified by the defendants.

The re-exercise of discretion

1. The essential matters informing the exercise of discretion, as we see them, are as follows.
2. The matter which gives rise to the urgency of this appeal, and the competing considerations advanced by the parties, is the fact that the amendment application is so close to the hearing date. It is necessary, by reason of s 58(2) of the Civil Procedure Act 2005 (NSW), to attempt to assess to what extent each party has contributed to that.
3. The letter dated 19 March 2009 to Mr Cowper extracted above should have been discovered by him. Mr Smark SC candidly and properly acknowledged as much. Mr Cowper was directed in November 2015 to give verified discovery by 29 January 2016. He swore an affidavit of discovery on 29 February 2016 but, on the basis that he would not give discovery until the defendants had done likewise, it was not served until August 2016.
4. It is not necessary to determine whether the failure by the defendants to provide discovery in accordance with the directions applying to them excused Mr Cowper from his own obligation to give discovery. It seems from the correspondence that that was not a complaint made by the defendants' lawyers at the time.
5. Irrespective of whether Mr Cowper's discovery was 1 month or 7 months late, it was materially incomplete. Even if, as may be the case, the letter dated 19 March 2009 was held by the (different) solicitors who acted for Mr Cowper in connection with the cessation of his employment with NAB, it was still required to be discovered. It is difficult to accept that Mr Cowper, who brought proceedings for defamation based on imputations that he had reconstructed files and forged documents when at NAB, could have overlooked the investigation conducted by NAB in the months prior to his leaving the bank, and the formal letter written to him which, it may be inferred, led to his retaining solicitors to act for him. Indeed, his current solicitor had requested the file from those solicitors on 4 February 2016, a request which, so far as the evidence discloses, was not followed up for some months. Yet the affidavit of discovery did not state that there were other documents in the possession of Mr Cowper's former solicitors which he was in the process of seeking to recover.
6. In terms of prejudice, it is difficult in those circumstances to see any material prejudice to Mr Cowper occasioned by the amendment. Mr Cowper was a primary participant in the events the subject of the newly discovered documents. He may or may not wish to obtain evidence from one or both of his former assistants. But he has at all times known of the internal NAB investigation, and he has known since 25 October 2016 that the defendants' lawyers knew of it, and that irrespective of the success or failure of the amendment, it would be raised at his trial (if only as a matter going to credit). There was no evidence that he was significantly prejudiced from making inquiries which he wished to make.
7. This is not a case where Mr Cowper suffers prejudice in responding to the new defences relied on by the defendants. Nor, given the deficiency in his own discovery, can much force be attributed to the complaint that the defendants should have issued the subpoena to NAB earlier than they did, some two months before the hearing. Indeed, had proper discovery been given, it seems likely that the disputes in relation to that subpoena would have contracted.
8. In those circumstances, leave to amend should be granted. That is not for a moment to express a view that the defence will ultimately be made out. It may be, as Mr Cowper submits, that it turns out to be a weak defence (we note in particular that the new material does not of itself suggest any forging of a client's signature), but that does not disentitle the defendants from relying on it.
9. We turn now to the application to vacate the hearing date. The defendants claim that the hearing should be vacated in order that they can fully explore the matters arising from the newly available documents. They wish to interview the NAB employees who spoke with Mr Cowper in 2009, and have not as yet done so. There are other documentary inquiries they wish to make. They wish to subject the file notes to forensic examination. They say they wish to attempt to speak with Ms Mitchell.
10. Against this, there is no particular reason to think that the bank's current and former employees will be willing to speak to the defendants' lawyers, especially given the tension between the documents provided to Mr Cowper when he resigned and the documents associated with NAB's internal fraud investigation. There is no reason to think that the bank's current and former employees will not be subject to obligations of confidence. And there is no reason to think that they will have any clear recollection of events leading to the cessation of Mr Cowper's employment more than seven years ago. Even if that turns out to be unduly pessimistic, the defendants' lawyers have now had more than three weeks since the documents were produced to pursue inquiries, and of course there is no reason why those inquires may not proceed even after the trial has commenced.
11. It is not established that it is impossible to undertake a forensic examination of the documents, nor to obtain an expert report if indeed there is shown to be utility in doing so (precisely what utility there might be was not identified by the defendants). Although the trial is listed to start on Monday 21 November, it is listed to run for four weeks.
12. A familiar feature of litigation is that it is commonly possible to identify further steps which could be taken to prepare a party's case. That does not mean that those steps should be taken. Still less does it mean that a long-standing hearing date should be vacated so as to permit a party to take additional steps not shown to be necessary in order to achieve a fair hearing. The important obligations in ss 56-60 of the Civil Procedure Act 2005 (NSW) impose a discipline on litigants and their lawyers to focus on spending time and money on the steps which matter in order to achieve the overriding purpose of facilitating the just, quick and cheap resolution of the real issues.
13. This Court is required by s 57(1) of the Civil Procedure Act to have regard to (a) the just determination of the proceedings, (b) the efficient disposal of the business of the court, (c) the efficient use of available judicial and administrative resources and (d) the timely disposal of the proceedings, and all other proceedings in the court, at a cost affordable by the respective parties. It is plain that (b), (c) and (d) all point in favour of preserving the hearing date. So too does (a). Delay of itself leads to injustice. The recollections of the circumstances relating to material published in February 2015 will fade if the matter is adjourned. The unfortunate circumstances of one of the defendants, and (so the Court was told) another potential witness, illustrate that the prejudice flowing from delay can be more than faded memories. There is uncontroverted evidence on information and belief as to the stress the litigation and its potential delay is causing to Mr Cowper and his family.
14. Delay will inevitably lead to additional costs. There was unchallenged evidence that the adjournment would lead to substantial costs thrown away by Mr Cowper. It is likely that the same would be true for the defendants. While the issues are important to the parties, and importance is not measured merely in dollars, it is to be recalled that the vast majority of important litigation in Australian courts takes less than four weeks to hear and determine. Especially in defamation actions where there is a statutory limit on damages for non-economic loss, the obligation in s 60 of the Civil Procedure Act to ensure that the parties' costs are proportionate to the importance and complexity of the subject-matter is not unimportant.
15. We have had regard to the unfortunate position of the fourth defendant. The essential difficulty is that there can be no assurance that in six months' time her position will have materially improved, and it is difficult to assess the true prejudice the remaining defendants would suffer by her absence. The application to vacate is to be determined on a basis which did not involve the defendants waiving privilege and giving secondary evidence of the evidence in chief she was expected to give. Indeed, there is much to be said for the proposition that, from her perspective, the sooner the litigation is resolved (even without her active involvement), the better. Accordingly, her position does not significantly affect the analysis set out above.
16. The question of the severance of Mr Cowper's claim for special damages is a matter rightly left to the trial judge. The trial judge is much better placed than this Court to assess the most appropriate way of determining the entirety of his claim, in light of ss 56-60 of the Civil Procedure Act.

Orders

1. For those reasons, this Court made the following orders at the conclusion of the hearing: 1. Leave to appeal is granted. 2. The appeal is allowed in part. 3. Set aside that part of the orders made by Rothman J on 14 November 2016 dismissing the appellant's application to file further amended defences. 4. Grant leave to the appellants to amend their defences in the form of proposed further amended defences which are annexures A and B to the affidavit of Hugh Bennett affirmed 27 October 2016.
2. The summons seeking leave to appeal and the draft notice of appeal were defective. First, not all of the defendants were joined to the proceedings. It is necessary to do so, not merely to comply with the rules, but also so that the orders made by the primary judge cease to apply to them. Secondly, the draft notice of appeal (which predated the delivery of reasons by the primary judge) did not specify grounds and was not supplemented. That deficiency was cured in substance by the supplementary submissions which did identify grounds, some of which have been mentioned above. The defendants will be directed to file a notice of appeal correctly identifying the parties to the appeal and specifying the grounds identified in their supplementary submissions.
3. Both parties in this Court have had a measure of success. It would appear that the defendants' principal goal was to vacate the hearing date. They have been unsuccessful in that attempt. Against this, in large measure the dispute has arisen from the deficient discovery from Mr Cowper, and his late particulars of special damages. The appropriate order as to costs is for each party's costs in this Court to be that party's costs in the proceedings at first instance.
4. Out of an abundance of caution, these reasons will not be published until the completion of that part of the trial which involves the jury. That said, the parties should regard themselves as free to apply to the trial judge to vary that position, if it seems appropriate to them to do so.
5. The further orders made by the Court are: (5) Direct Fairfax Media Publications Pty Ltd and the Australian Broadcasting Corporation to file within 7 days of today a notice of appeal joining all parties to the proceedings and incorporating the grounds of appeal contained in the supplementary submissions dated 16 November 2016, and otherwise dispense with the requirements of service under the rules. (6) Each party's costs in this Court to be that party's costs in the proceedings at first instance.

Amendments 06 December 2016 - Coversheet, "Publication Restriction" - "See [42]" replaced by "See [41]" DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 06 December 2016