HER HONOUR: These proceedings raise a difficult question as to the proper exercise of the Court's discretion to set aside service of an originating process on a foreign defendant.
In 2015, Rabbi Feldman gave evidence before the Royal Commission into Institutional Responses to Child Sexual Abuse as to events that occurred at the Yeshivah College during a period when he was the rabbinical director of the College.
One of the issues explored by counsel assisting the Royal Commission was Yeshivah's response to a complaint made by a boy who had attended a camp at which a rabbinical student was assisting as a volunteer. The questioning by counsel assisting included questions directed at the issue whether Rabbi Feldman "knew" at the time he became aware of that complaint that certain conduct, described in different terms at different points of the evidence, was a crime. The Rabbi's evidence in response to those questions was widely reported in the press and prompted a number of concerned responses from within the Jewish community condemning the views attributed to him.
Rabbi Feldman considers that his evidence was misrepresented, with individual answers he gave before the Royal Commission being taken out of context. He has commenced a substantial number of separate actions for defamation in this Court seeking to vindicate his reputation against the wide criticism published about him during that period.
The present action arises out of the publication of an article by a New York journalist in a newspaper owned by The Daily Beast LLC, a company incorporated in Delaware and having its principal place of business in New York. The Daily Beast accepts that the relevant originating process, the second amended statement of claim filed on 13 February 2017, was served on it by Rabbi Feldman in New York. It has moved to have service set aside pursuant to r 12.11 of the Uniform Civil Procedure Rules.
Rule 12.11(1) provides:
12.11 Setting aside originating process etc
(1) In any proceedings, the court may make any of the following orders on the application of a defendant:
(a) an order setting aside the originating process,
(b) an order setting aside the service of the originating process on the defendant,
(c) an order declaring that the originating process has not been duly served on the defendant,
(d) an order discharging:
(i) any order giving leave to serve the originating process outside New South Wales, or
(ii) any order confirming service of the originating process outside New South Wales,
(e) an order discharging any order extending the validity for service of the originating process,
(f) an order protecting or releasing:
(i) property seized, or threatened with seizure, in the proceedings, or
(ii) property subject to an order restraining its disposal or in relation to which such an order is sought,
(g) an order declaring that the court has no jurisdiction over the defendant in respect of the subject-matter of the proceedings,
(h) an order declining to exercise jurisdiction in the proceedings,
(i) an order granting such other relief as the court thinks appropriate.
Feldman v The Daily Beast Company LLC [2017] NSWSC 831 | Case summary | Zoe
The rule confers a discretion the exercise of which is not the subject of express statutory guidance within the provisions of the rule itself. The proper approach to the exercise of a discretion of that kind was considered by the High Court in Agar v Hyde (2000) 201 CLR 552; [2000] HCA 41. The Court said, at [55]:
On an application to set aside service, or to have the Court decline to exercise jurisdiction, attention might be directed to any of a number of features of the proceeding, the claims made in it, or the parties to it, in aid of the proposition that the Court should not exercise jurisdiction. Part 10 r 6A is cast in general terms and it would be wrong to attempt some exhaustive description of the grounds upon which the rule might be invoked. Nevertheless, it may be expected that three common bases for doing so are first, that the claims made are not claims of a kind which are described in Pt 10 r 1A, secondly, that the Court is an inappropriate forum for the trial of the proceeding and thirdly, that the claims made have insufficient prospects of success to warrant putting an overseas defendant to the time, expense and trouble of defending the claims. Whether the Rules prescribe a different test for determining questions of inappropriate forum from that developed at common law is a question which we need not stay to consider. In these cases, it is necessary to deal only with the last of the bases we have mentioned. It was on this that the appellants chiefly relied.
That statement identifies two principles of importance in the present case. First, the scope of the discretion is not amenable to exhaustive description. Secondly, the proper grounds for setting aside service include that the Court is an inappropriate forum to hear the case and that the case enjoys insufficient prospects of success to warrant putting an overseas defendant to the time, expense and trouble of defending a claim.
The plurality noted at [42] of the judgment that considerations of comity and consequent restraint have informed many of the earlier reported decisions but emphasised that provisions for service outside a jurisdiction are now commonplace. The Court noted that the degree of "inconvenience and annoyance" to which a foreign defendant will be put is of a different order (by which I understand the Court to have meant it is of a lesser order) in modern times.
The starting point, as the Court emphasised, must be the terms of the relevant rules. Of course, since the decision in Agar v Hyde, the rules of Court in this jurisdiction now include the mandatory provisions of the Civil Procedure Act 2005 (NSW) and the case management provisions of the Uniform Civil Procedure Rules 2005 (NSW).
So far as the authorities to which my attention was drawn during argument reveal, the basis for the present application is not one which has previously been recognised. The defendant submitted, in short, that the Court should set aside service of the originating process on the basis that the resources that the Court and the parties will have to expend to determine the claim are out of all proportion to the interest at stake. There is a hint of such an argument in Agar v Hyde in the phrase "to warrant putting an overseas defendant to the time, expense and trouble of defending the claims", but that was a reference to prospects of success without regard to proportionality.
In support of an application on the basis of proportionality (more accurately, alleged disproportion) the third defendant relied on my decision in Bleyer v Google Inc [2014] NSWSC 897. That decision raised a different issue, but the defendant submits that the principles considered in my judgment apply by analogy to the present case.
In Bleyer, the plaintiff had sued Google Inc as proprietor of the well-known search engine. The matter complained of was the publication of the results of searches on the internet. As in the present case, Google Inc was a foreign defendant but there was no application to set service of the originating process aside. The application brought forward was for a stay of the proceedings on the grounds of disproportion.
For the reasons stated in my published judgment, I granted that application. The decision was not appealed and, so far as I am aware, has not been disapproved at an appellate level. I would expect the third defendant to have brought any decision to that effect to my attention if it had.
However, the decision did not receive universal approval. It was the subject of relatively stern criticism in a decision of the District Court of Queensland in Smith v Lucht [2014] QDC 302. That was a case in which the plaintiff, a solicitor, sued for defamation after his, I apprehend, soon-to-be ex-son-in-law referred to him in the presence of other family members as Dennis Denuto, a reference to the fondly-regarded incompetent solicitor from the fictional film The Castle.
The defendant sought to have the proceedings stayed on the grounds of my decision in Bleyer. Judge McGill refused the application, giving a damning assessment of my reasoning in Bleyer and concluding that in Queensland at least a plaintiff who has a good cause of action according to the law of that State is entitled to pursue it even where the Court concludes that the resources required of the Court and the parties to determine the claim will be vastly disproportionate to the interest at stake.
I accept that there is force in the view that the Court's primary and immutable function is to determine any cause properly invoking its jurisdiction. I did not lightly hold otherwise in Bleyer v Google.
Having given careful consideration to the strong criticism of my reasoning in Bleyer v Google expressed by his Honour in Smith v Lucht, I remain of the view that this Court at least, having inherent power to protect the integrity of its processes, can and should decline to determine a civil claim on the grounds of disproportionality. As I emphasised in my judgment in Bleyer, the circumstances in which a Court might do so will be narrowly constrained. Bleyer was a unique case. But the Court should not, in my respectful opinion, shirk the difficult task of ensuring that its valuable and expensive resources, which are funded by taxpayers, are not committed to disproportionately small ends.
Some comparison or at least assessment of relativity might appropriately be drawn by considering the resources expended on civil claims and those available in the determination of important questions regarding a person's liberty, such as applications in the Bail List which in this Court, owing to the listing pressures on the Court, are ordinarily allocated only a short period for hearing (12 matters are usually listed each day; the burden in lower courts would be significantly greater) even where an applicant for bail in proceedings on indictment will, if bail is refused, in all likelihood remain in custody for up to two years and sometimes more.
It might be noted, by way of epilogue, that when the matter of Smith v Lucht was finally determined the plaintiff was unsuccessful: Smith v Lucht [2015] QDC 289. For completeness, however, I should record that the judge who determined the claim, Judge Moynihan QC, against the risk of being wrong in the determination that the plaintiff's claim should be dismissed, quantified damages in the sum of $10,000. That sum on the one hand vindicates Judge McGill's conclusion that he could not be persuaded only nominal damages would be awarded but, on the other hand, starkly defines the proportionality issue the defendant had sought to raise at the interlocutory application, the hearing of the proceedings having taken five days.
In any event, this case raises a different question and, upon analysis, seeks to invoke the principle in Bleyer only by analogy. The question raised by the third defendant's application is whether the considerations to which it points provide a basis for setting aside service of an originating process on a foreign defendant under r 12.11. While those considerations were collected in argument under the banner of the "proportionality" principle held in Bleyer, upon analysis, the application in substance invokes a more orthodox application of principle, namely, whether in all the circumstances the Court should allow the plaintiff to bring a foreign defendant to town.
Three considerations were identified as warranting the conclusion that the Court should set service aside. First, the defendant contends that the plaintiff's claim is confined to a limited number of downloads of the matter complained of. Secondly, the defendant relies upon the fact that the plaintiff has brought many other proceedings for defamation in this Court to vindicate his reputation against the publication of like imputations. Finally, the defendant submits that any judgment obtained by the plaintiff in these proceedings faces hurdles in its enforcement in the United States of America where the defendant is resident.
The basis for the contention that the scope of publication is small arises from steps taken or not taken by Rabbi Feldman prior to the commencement of the present proceedings against The Daily Beast.
The proceedings were originally brought against a parent company of that company. Service of the originating process as against that entity was set aside in my earlier judgment in Feldman v IAC/InterActiveCorp [2016] NSWSC 1302, a decision which reflected an orthodox application of the principles concerning the application of rule 12.11. Following the publication of that decision, Rabbi Feldman filed a second amended statement of claim seeking to sue the Daily Beast. As actions for defamation have a limitation period of one year, and as a result of the timing of the filing of the second amended statement of claim against The Daily Beast, Rabbi Feldman is now limited to suing in respect of downloads of the article in the 12 month period preceding 13 February 2017, in accordance with the principles stated by the High Court in Dow Jones & Company Inc v Gutnick [2002] HCA 56.
The plaintiff submitted that he could have obtained an extension of the limitation period such as to allow him to sue on the original printed publication of the matter complained of which, it may be expected, would have been read more broadly on the day it was first published. Having regard to the curious wording of the provision which enables a plaintiff to obtain an extension of the limitation period in actions for defamation, that may be doubted. But in any event, no such application has been made and I am constrained to deal with the matters before the Court in the existing circumstances.
The evidence relied upon by the third defendant as to the number of downloads was, to say the least, confusing. The defendant put on an affidavit presenting all that it has been able to ascertain as to downloads of the matter complained of. That material curiously showed that the matter complained of has been downloaded during the relevant period on 10 occasions, five times on each occasion.
The relevant material is contained in exhibit A, which is an exhibit to the affidavit of Justine Munsie sworn 11 May 2017. Ms Munsie has included within that material her own analysis of the downloads by reference to the dates on which events happened in these proceedings. The spread sheet she provides indicates that the matter complained of has been downloaded 50 times during the relevant period and that those 50 occasions comprise five downloads on each of the 10 separate dates. Most of the dates are close in proximity to dates on which one or other of the parties to the present application would have had occasion to download the article, suggesting a more confined scope of publication. Confusingly, however, the downloads identified by Ms Munsie do not include any download on the one date on which Rabbi Feldman asserts he knows the article was downloaded.
Paragraph 4 of the second amended statement of claim states that the matter complained of was downloaded by Daniel Kaye of Bellevue Hill in the State of NSW on 8 September 2016. There is no record in Ms Munsie's material of the article having been downloaded on that date.
In the circumstances, Rabbi Feldman submitted, with some force, that the Court should be hesitant to place too much reliance upon the material tendered. I do not think the factual contest as to that question is one that can appropriately be resolved on an application of this kind. It is appropriate to proceed on the basis that the matter complained of may have been downloaded on more occasions than is revealed on Ms Munsie's material. It may be that the number of downloads is small but I do not think I could properly conclude that it is insignificant, by contrast with the very small number of downloads with which I was concerned in my decision in Bleyer.
The more compelling considerations raised by the defendant are the second and third matters referred to above. As to the fact that the Rabbi has brought numerous other proceedings in this Court, the defendant put on evidence in the form of a second affidavit by Ms Munsie, sworn on 13 July 2017, exhibiting material produced in response to a notice to produce to Rabbi Feldman, together with a number of additional statements of claim not produced by the Rabbi but of which Ms Munsie was aware.
The imputations sued on in those other proceedings and in these proceedings are helpfully summarised in a supplementary written submission provided by the defendant dated 13 July 2017.
In these proceedings, Rabbi Feldman sues on an imputation that he, "a Rabbi and a rabbinical administrator, displayed reprehensible ignorance of the fact that it was against the law for an adult or a rabbi to massage the genitals of a child".
The further imputations are, in the alternative, that he "committed perjury" and, thirdly, that he "failed to notify the police when a parent told him that a teacher had massaged her son's genitals". Rabbi Feldman submitted that his cause of action in respect of those imputations in the present case is significantly different from the many other proceedings in which he has sued owing to a factual mistake in the present article, which makes it significantly more defamatory than other material published about him.
In particular, the matter complained of in these proceedings does, as the imputations suggest, include the phrase "massaged her son's genitals". In his evidence before the Royal Commission, the Rabbi at no stage said that he was not aware it was a crime for a teacher to massage a child's genitals. The language of the evidence before the Royal Commission was that the Rabbi was not aware it was against the law for an adult to touch a child's genitals and, in later evidence, that the Rabbi was aware that it would be a crime for an adult to fondle a child's genitals sexually. Those are not the precise words of the transcript but that is the burden of the point put by the Rabbi, who represents himself in these proceedings.
Against that argument, it is necessary to give close consideration to the imputations sued on in other proceedings before the Court, as summarised in the submissions.
In proceedings against Nationwide News which are listed for hearing in May next year, the Rabbi has sued on imputations that he "displayed reprehensible ignorance of the fact that it was against the law for an adult to sexually touch the genitals of a child" and that he "displayed reprehensible ignorance of the fact it [sic] is wrong for an adult to sexually touch the genitals of a child".
In proceedings against the ABC, also listed for hearing in May next year, he has sued on imputations that he "displayed reprehensible ignorance of the fact that it is against the law for an adult to touch the genitals of a child for sexual gratification" and that he was "ignorant of the fact that sexually abusing a child was against the law".
In separate proceedings against the ABC arising from a different program, Rabbi Feldman has sued on the imputation that he was "reprehensibly ignorant of the fact it [sic] is against the law for an adult [to] touch a child sexually". The third defendant was not aware of the current status of those proceedings.
In separate proceedings against the SBS listed for hearing in May of next year, the Rabbi has sued on an imputation that he "displayed reprehensible ignorance of the fact that it was against the law for an adult to sexually touch the genitals of a child".
In proceedings against GNM Australia Pty Limited, which remain in the interlocutory stages following Rabbi Feldman's success in the Court of Appeal in Feldman v GNM Australia Pty Limited [2017] NSWCA 107, he sues on imputations that he "displayed reprehensible ignorance or didn't have a clue that a teacher 'massaging' the genitals of his student for sexual gratification was against the law or might be a criminal matter"; that he was "ignorant of the fact that sexually abusing a child was against the law"; that he was "reprehensibly ignorant of the fact that for an adult to sexually touch the genitals of a child is against the law"; that he was "reprehensibly ignorant of the fact that for a teacher to sexually touch the genitals of a child whom [sic] is a minor is against the law"; that he "displayed reprehensible ignorance of the fact that an adult 'massaging' the genitals of a minor for sexual gratification was or might be against the law"; that he "displayed reprehensible ignorance of the fact that a staff member 'massaging' the genitals of one of his young students for sexual gratification was or might be against the law"; that he was "of the view that massaging a child inappropriately was not (whatever the circumstance) a criminal act" and that he was "of the view that sexually abusing children was not a criminal act".
Those proceedings have not yet come before the Court for a first listing. It seems likely that there will be some challenges to the form of the imputations but that is what presently stands on the pleading.
In proceedings against the proprietor of the Australian Jewish News, which I heard in the week commencing 10 July 2017, the Rabbi has sued on imputations that he "displayed reprehensible ignorance of the fact that to touch a child for sexual gratification on the genitals was a crime"; that he "displayed reprehensible ignorance of the fact that it was a crime for a teacher to touch a child sexually on the genitals"; that he "gave evidence that he was not aware in 2002 that for a man to touch a child sexually on the genitals was a crime and was, therefore, shockingly ignorant and morally depraved"; and that he was "reprehensibly ignorant because he was not aware in 2002 that it was illegal for an adult to touch a child on the genitals for sexual gratification".
Finally, in proceedings against International Business Times Pty Limited, which have settled, Rabbi Feldman has sued on an imputation that he "displayed reprehensible ignorance of the fact that it was against the law for an adult to sexually touch the genitals of a child".
I have listed only the imputations relating to the question of massaging or touching or sexually touching the genitals of a child. I have not referred to other imputations in other proceedings in which the Rabbi has sued.
There are in all 12 sets of proceedings in this Court commenced by Rabbi Feldman, all arising out of his evidence before the Royal Commission. Plainly, the imputations I have set out above reveal that there is a measure of overlap between those proceedings.
I accept that the matter complained of in these proceedings raises different considerations in terms of the Rabbi's desire to vindicate his reputation because of the alleged errors referring to his having given evidence about conduct described as massaging rather than touching. The difficulty with that submission, however, is that, as indicated in the matters recited above, all of the imputations on which the Rabbi sues where the imputations refer to the evidence about his knowledge of what was or was not against the law include in reference to touching the genitals of a child the notion of the touching being sexual.
While it is no longer the law in this State that the cause of action consists of the imputation itself, the essence of the cause of action now being the publication of defamatory matter, the imputations still guide the issues in the proceedings for a number of reasons. Among others is the fact that a number of the statutory defences (such as the defence of truth and the defence of contextual truth) expressly invite attention to the imputation rather than the content of the publication.
There is no imputation sued on by Rabbi Feldman to the effect that he displayed reprehensible ignorance of the fact that it is against the law for an adult to touch the genitals of a child. All of the imputations that raise that issue include the notion that the touching was sexual. In this context, the difference between touching genitals or touching someone sexually for sexual gratification or massaging someone's genitals, in my view, is inconsequential.
I am satisfied that the premise of the defendant's submission is correct in that the plaintiff has numerous other proceedings in this Court in which he seeks to vindicate his reputation against imputations of substantially the same kind. While that would not be a basis for declining to determine a claim properly brought against a defendant present in the jurisdiction, in my view it is a powerful consideration in determining whether service of the originating process should be set aside on the grounds relied upon by the defendant.
The third basis for the application is that any judgment obtained by Rabbi Feldman will be unenforceable. The basis for that submission was identified in Ms Munsie's first affidavit. Ms Munsie stated:
I am informed by Mr Rosenhouse that the United States has in force a law commonly known as the "Speech Act", the effect of which is to limit the enforcement of non-US libel judgments from overseas jurisdictions where the relevant free speech standards in those jurisdictions are not as protective as those provided under libel laws of the United States.
Ms Munsie's affidavit annexed the relevant sections of the Securing the Protection of our Enduring and Established Constitutional Heritage (SPEECH) Act provided to her by Mr Rosenhouse. Ms Munsie also annexed the relevant section of the law of the State of New York, which Mr Rosenhouse said has in force its own State-based legislation known as the Libel Terrorism Protection Act, providing similar protections.
The submissions on behalf of the third defendant on this issue appeared, at first at least, to invite the Court to conclude that any judgment obtained by Rabbi Feldman would ultimately be unenforceable upon an application of those provisions. I apprehend, however, that, as the matter rested at the conclusion of argument, Mr Latu, who argued this issue on behalf of the third defendant, accepted that the highest the matter could be put was that there would be a further procedural step required to be taken by Rabbi Feldman in order to enforce a judgment, which was relied upon as being relevant in the consideration of the proportionality issue.
Rabbi Feldman submitted, or at least stated from the bar table, that he has been advised that the defamation of him in this jurisdiction would be enforceable in the United States if judgment were obtained against the third defendant because, as he has been informed, the defamation would be actionable in that country. Plainly, however, I cannot resolve that question on an application of this kind.
I think I should approach this issue on the basis, as suggested by Rabbi Feldman, that the third defendant did not prove that any judgment would be unenforceable. To the extent that the argument rested on the fact that the disproportionality consideration includes the need for it probably to be tested again in the United States to enforce any judgment obtained, it is a relevant consideration, raising the likelihood of further costs incurred before any judgment could be enforced. I note in that respect that the provisions included in Ms Munsie's affidavit provide that either a plaintiff or a defendant can bring up that issue, although a different onus would apply, depending on who sought the determination whether the judgment was unenforceable.
Apart from the three grounds relied upon by the defendant, it is necessary for me to have regard to the cause of action sued on by Rabbi Feldman.
Defamation is unique in at least this respect, that the dissemination widely throughout the media of a particular defamatory imputation can give rise to multiple causes of action. When the court is considering an application to set aside an originating process against a foreign defendant, I think that is a relevant consideration. The position is not as with other torts, where there might be a single cause of action against a foreign defendant, failure to pursue which will result in a plaintiff being left without a remedy.
The multiplicity of causes of action and the Court's interest in the efficient management of multiple causes of action is, if not unique to the Defamation List, at least a concern which it seems likely arises most commonly in this list. It is necessary for me to have regard to that consideration in the context that defamation is a cause of action for which damages are capped. There is no claim for special damages pleaded in the present case. Most importantly, it is necessary for me to have regard to the fact that the existence of the other proceedings is a factor upon which the defendants in all proceedings are entitled to rely in accordance with the provisions of s 38 of the Defamation Act.
Finally, I must have regard to the evidence, brought forward by Ms Munsie, as to the likely costs of The Daily Beast defending these proceedings. The task for the Court at this stage is not to consider the likely outcome of the proceedings if they were to proceed to trial. Indeed, for the reasons explained in Agar v Hyde, the Court should not embark upon that task.
It is, however, relevant to have regard to the fact that, if the plaintiff were to succeed on the imputations in the present case, the Court would be required to have regard to evidence of the other proceedings and the evidence relied upon in these proceedings in determining the likely quantum of damages. In other words, I must have regard to the fact that Rabbi Feldman's interest in the prosecution of the present action is substantially diluted by the many other actions he has brought based on the same or similar imputations.
The matters relied upon by the defendants have persuaded me that there is, in the present case, vast disproportion between the interest at stake and the resources that would be required to be expended both by the court and the defendant in defending the claim.
For those reasons, I am persuaded that that is a proper basis for exercising the discretion to set aside service of the originating process and that I should exercise that discretion in the present case.
Accordingly, I make order 1 sought in the notice of motion filed 27 March 2017 that, pursuant to r 12.11 of the Uniform Civil Procedure Rules, service of the second amended statement of claim on the third defendant be set aside.
[Discussion re costs]
Unless the third defendant makes an application for its costs within seven days, I make no order as to costs.
[2]
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Decision last updated: 14 September 2017