Menulog Pty Ltd v TCN Channel Nine Pty Ltd

Supreme Court of NSW|2012-08-06|Before: McCallum J, Davies J, Hislop J

Judgment 1These are proceedings for injurious falsehood. The plaintiff, Menulog Pty Limited, conducts an on-line business providing restaurant ordering services. In March of this year, Channel Nine prepared a television article titled "Home Delivery Food Con" concerning the conduct of that business. The article told the story of a food substitution scam allegedly run by Menulog in which orders placed on its website for one restaurant would be filled from another. 2The story was promoted for broadcast on "A Current Affair" on 16 March 2012. Within hours before the scheduled broadcast, Menulog commenced these proceedings and obtained an interlocutory injunction restraining publication of the story. The only relief now sought by Menulog is the permanent continuation of that injunction. 3Channel Nine has sought further and better particulars of Menulog's claim, which Menulog has refused to provide. This judgment determines Channel Nine's application for an order that further particulars be provided.

Circumstances in which the application is brought 4The proceedings were commenced by summons, no doubt due to the urgency with which the interlocutory application had to be brought. The interlocutory injunction was granted by Davies J: Menulog Pty Ltd v TCN Channel Nine Pty Ltd [2012] NSWSC 247. An application by Channel Nine to dissolve the injunction shortly afterwards on the strength of an alleged material change in circumstances was refused by Hislop J: Menulog Pty Ltd v TCN Channel Nine Pty Ltd [2012] NSWSC 440. 5Following the hearing before Hislop J, the matter proceeded on pleadings. The statement of claim was filed on 16 June 2012. 6The evidence before Davies J revealed that the plaintiff first learned of the proposed broadcast when its managing director was confronted outside Menulog's business premises by a male reporter, presumably from Channel Nine, who asked him "whether it was good to rip off a small Brisbane based family restaurant and rip off customers": at [12] of the judgment of Davies J. 7Following that confrontation, Menulog ascertained that the programme was apparently based on a single incident in which an order placed on its website for Vecchia Roma restaurant in Queensland was met by supplying food obtained from a different restaurant. The promotional broadcast alleged that the story would expose "an elaborate home delivery swindle". Menulog's solicitors wrote to Channel Nine's legal department explaining that the order in question, although placed on Menulog's website, was referred to Cuisine Courier, a company with which Menulog has an affiliate arrangement. The letter asserted that Menulog had no reason to believe or suspect that there was any substitution of the food ordered on the website. 8The further evidence on which the application to dissolve the injunction was based was, in short, that orders placed for food from Vecchia Roma had in fact been filled with food obtained from a different restaurant on three occasions. Menulog in turn adduced further evidence of a search it had undertaken of its database to identify all orders sent to Cuisine Courier over a period of almost five years with a view to identifying any further anomalies. The search revealed 44,364 orders, from which four anomalies were identified: at [21] of the judgment of Hislop J. Two of those were orders placed by the journalist who prepared the story sued on in these proceedings. Hislop J held that the evidence did not establish a systematic scheme of food substitution: at [30]. As already noted, his Honour declined to dissolve the injunction.

Particulars as to affiliation with Cuisine Courier 9The first dispute as to particulars relates to Menulog's alleged affiliation with Cuisine Courier. The statement of claim identifies a number of representations allegedly conveyed by the promotional broadcast relating (broadly) to the story's claim that Menulog is involved in a food home delivery con or swindle. Paragraph 5 of the statement of claim alleges that each of the pleaded representations was false. 10The pleading provides a lengthy series of particulars in support of that contention. In summary, the particulars allege that, in respect of approximately 98% of orders placed with Menulog, the food ordered by the customer is supplied directly by the restaurant to the customer (either by home delivery by the restaurant or collection by the customer). The particulars further allege that, prior to 16 March 2012 (the date of the threatened broadcast), Menulog had "an affiliation" with Cuisine Courier under which Cuisine Courier provided delivery services for restaurants that did not have their own delivery service. The particulars provide considerable detail about the respective roles or practices of Menulog and Cuisine Courier. However, the particulars do not identify the basis of the relationship. 11By its request for particulars dated 18 June 2012, Channel Nine sought what lawyers would describe as "the usual particulars" of the affiliation between Menulog and Cuisine Courier. The plaintiff's basis for refusing to provide those particulars was that the request sought "further particulars of particulars already supplied". That says nothing as to the defendant's entitlement to the particulars sought, which must be judged according to the nature of the claim and the content of the particulars already supplied. Ultimately, the question is whether those particulars adequately expose the case the defendant will have to meet at trial. 12The premise of the case identified in the particulars to paragraph 5 of the statement of claim is that the food order placed with Menulog's website was processed not by Menulog but by Cuisine Courier in accordance with Menulog's "affiliation" with Cuisine Courier. I am of the view that the defendant is entitled to know the facts, matters and circumstances relied upon in support of the alleged affiliation. 13Separately, the defendant asked for copies of two documents referred to in the statement of claim. Although that is not strictly a matter for particulars, there is an express entitlement under the rules to have those documents produced by notice to produce: see rule 21.10 of the Uniform Civil Procedure Rules 2005. Accordingly, to avoid further expense, I propose to order that those documents be provided to the defendant.

Malice 14The next dispute as to particulars relates to the issue of malice. Malice is an element of the cause of action for injurious falsehood. Paragraph 6 of the statement of claim pleads that element in the following terms: The defendant was actuated by express malice in broadcasting the Promotional Broadcast and the Promotional Representations. Particulars (a)The defendant broadcast the Promotional Broadcast and the Promotional Representations knowing them to be false. (b)Further and in the alternative, the defendant broadcast the Promotional Broadcast and the Promotional Representations with reckless indifference as to their truth or falsity. 15Channel Nine requested particulars of the facts, matters and circumstances to be relied upon in support of each of the allegations in those particulars. 16Menulog responded in the following terms: This is not a proper request for particulars. Rather, it is a matter for argument, and a matter for inference from the conduct of the defendant in failing to have regard to matters raised in our letter dated 15 March 2012. 17The letter referred to in that response is the letter referred to above sent by Menulog's solicitors to Channel Nine's legal department before the application for an interlocutory injunction. At the hearing of the application before me, whilst maintaining that the request was not a proper request, Channel Nine expanded upon that response by indicating that the plaintiff sought to rely upon the letter dated 15 March 2012 and the "audit", evidently a reference to the evidence of the database search adduced at the application before Hislop J (summarized at [21] of his Honour's judgment). Menulog submitted that Channel Nine's failure to have regard to the matters raised in the letter was canvassed fully in each of the interlocutory applications and that, "as such, the defendant is clearly on notice of the plaintiff's case". Separately, Menulog indicated that it will rely upon Channel Nine's defence of these proceedings and its continuing intention to broadcast the program. 18In light of the position taken by Menulog on that issue, it is useful to bring to mind the purpose of particulars, which is "to concentrate and define the issues of fact and to prevent surprise and consequent delay": Bass v TCN Channel Nine Pty Ltd [No 2] [2006] NSWCA 343 at [42]. The exchange between the parties in the present case illustrates the vice to which the obligation to give particulars is directed. The plaintiff first asserted that there was no obligation to provide particulars, but volunteered that it would rely upon the failure to have regard to the matters raised in the letter dated 15 March 2012. The outline of written submissions added reference to the defendant's perseverance in defending the proceedings and its continuing intention to broadcast the program; in oral submissions, reliance upon the "audit" was added to the list. 19It was noted in Bass, and is trite law, that it is no answer to a request for particulars to say that all of the relevant facts are within the knowledge of the party seeking the particulars. The content of the entitlement is to have identified the specific case the plaintiff proposes to make at the trial, so as to avoid surprise and other botheration. 20In my view, the particulars given in the statement of claim suffer from the vice identified in Gross v Weston [2007] NSWCA 1; (2007) 69 NSWLR 279 at [32]: they "merely assert various states of mind on the part of [the defendant] as conclusions". As there stated by Hunt AJA, the defendant is entitled to know "the detailed factual basis on which the plaintiff relies to establish those states of mind (but not the means by which that factual basis is to be proved)": at [32]; Handley and McColl JJA agreeing at [1] and [2] respectively.

Actual or special damage 21The final dispute as to particulars relates to the issue of actual damage. It is an element of the cause of action of injurious falsehood that the plaintiff has suffered actual damage (which may include a general loss of business) as a result of the statement. Paragraph 9 of the statement of claim pleads that element in the following terms: "it is probable that the plaintiff will suffer actual damage if the defendant broadcasts the Promotional Broadcast or any of the Promotional Representations". 22Channel Nine sought the following further particulars of that allegation: Please supply all facts, matters and circumstances to be relied upon in support of the allegation that it is probable that the Plaintiff will suffer actual damage if the Defendant broadcasts the Promotional Broadcast or any of the Promotional Representations. In relation to the allegation that it is "probable" that the Plaintiff will suffer actual damage, please specify: (a)the nature of the actual damage; (b)the amount of the actual damage; and (c)the manner of computation. 23It was common ground at the hearing before me that, where the only relief sought in a claim in injurious falsehood is injunctive relief, the plaintiff does not have to establish actual damage in fact suffered, but only a probability that damage would be suffered if the injunction were not granted: see AMI Australia Holdings v Fairfax Media Publications [2010] NSWSC 1395 at [38] per Brereton J; referring with approval to my decision in Australand Holdings Limited v Transparency & Accountability Council Inc [2008] NSWSC 669; see also my decision in Mahon v Mach 1 Financial Services Pty Ltd [2012] NSWSC 651 at [22]. That is no more than a logical corollary of the proposition that injunctive relief, if granted early, prevents the actual damage that would otherwise have occurred. 24Menulog submitted that the precise nature of such damage is impossible to characterize or quantify and that it ought not be required to speculate. In my view, there is some force in that submission. The content of the obligation to provide particulars must always be assessed by reference to the nature of the issue to be established at the hearing. The matter to be established by Menulog is both prospective and hypothetical. It is not susceptible of the same degree of particularization as past, actual damage. 25However, Channel Nine is entitled to be guarded against surprise. In my view, a response should have been provided to specify, at least, whether Menulog will rely only upon the likelihood of a downturn in trade or whether actual damage of any particular kind will be sought to be proved at trial (such as the loss of the contract with Cuisine Courier, the loss of relationships with any particular restaurants or the like). Accordingly, I am satisfied that the plaintiff should provide a direct answer to the request. If the answer says no more than that the precise nature of the damage is not able to be characterized or quantified, that answer will have served the purpose of preventing surprise. 26For those reasons, I am satisfied that the defendant is entitled to the order sought. 27I order the plaintiff to provide further answer to questions 3, 4, 5, 6, 7, 9, 10, 13, 14 and 15 of the letter dated 18 June 2012 from Johnson Winter & Slattery to Diamond Conway Lawyers (page 14 of Exhibit A).

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: 10 August 2012

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