Mount v Dover Castle Metals Pty Ltd [2021] FCA 1356 | Case summary

BROMWICH J: 1 This is an application for preliminary discovery under rr 7.22 and 7.23 of the Federal Court of Australia Rules 2011 (Cth) in aid of deciding whether to bring a defamation proceeding. The prospective applicant, Mr Ryan Mount, was, in the period from 18 March 2021 until 6 April 2021, or perhaps until 10 April 2021, in a contractual relationship with the first prospective respondent, Dover Castle Metals Pty Ltd, until he was advised that his contract had been terminated. He maintains that he was employed as the Chief Executive Officer (CEO) of Dover. While that title and indeed the existence of an employment relationship at all is in dispute, the role of CEO will suffice for present purposes. 2 Rules 7.22 and 7.23 provide as follows: 7.22 Order for discovery to ascertain description of respondent (1) A prospective applicant may apply to the Court for an order under subrule (2) if the prospective applicant satisfies the Court that: (a) there may be a right for the prospective applicant to obtain relief against a prospective respondent; and (b) the prospective applicant is unable to ascertain the description of the prospective respondent; and (c) another person (the other person): (i) knows or is likely to know the prospective respondent's description; or (ii) has, or is likely to have, or has had, or is likely to have had, control of a document that would help ascertain the prospective respondent's description. (2) If the Court is satisfied of the matters mentioned in subrule (1), the Court may order the other person: (a) to attend before the Court to be examined orally only about the prospective respondent's description; and (b) to produce to the Court at that examination any document or thing in the person's control relating to the prospective respondent's description; and (c) to give discovery to the prospective applicant of all documents that are or have been in the person's control relating to the prospective respondent's description. Note 1: Control and description are defined in the Dictionary. Note 2: For how discovery is to be made, see rule 7.25. (3) The prospective applicant must provide the person with sufficient conduct money to permit the person to travel to the Court. Note: Conduct money is defined in the Dictionary. 7.23 Discovery from prospective respondent (1) A prospective applicant may apply to the Court for an order under subrule (2) if the prospective applicant: (a) reasonably believes that the prospective applicant may have the right to obtain relief in the Court from a prospective respondent whose description has been ascertained; and (b) after making reasonable inquiries, does not have sufficient information to decide whether to start a proceeding in the Court to obtain that relief; and (c) reasonably believes that: (i) the prospective respondent has or is likely to have or has had or is likely to have had in the prospective respondent's control documents directly relevant to the question whether the prospective applicant has a right to obtain the relief; and (ii) inspection of the documents by the prospective applicant would assist in making the decision. (2) If the Court is satisfied about matters mentioned in subrule (1), the Court may order the prospective respondent to give discovery to the prospective applicant of the documents of the kind mentioned in subparagraph (1)(c)(i). 3 By an interlocutory application, Mr Mount seeks the following orders, supported by two affidavits from him, and one affidavit from his solicitor: 1. Ryan Mount, the Prospective Applicant, applies under Rule 7.22 for an order that: a. Dover Castle Metals Pty Ltd; b. Wayne Clare: C. Matthew Azar; d. Richard Colreavy; e. Frances Joslin; f. Matthew Hancock; and g. Sequoia Financial Group Limited, give discovery to the Prospective Applicant of all documents or things in their control relating to the prospective respondent's description limited to communications, electronic or otherwise, including emails, text messages (whether by SMS, WhatsApp, social media platform or any other electronic communication platform), social media posts, letters or faxes created in the period 22 March 2021 to 18 June 2021 concerning the performance of Ryan Mount as Chief Executive Officer of Dover Castle Metals Pty Limited or the reasons for the termination of Ryan Mount from that position on or about 6 April 2021. 2. Further, or in the alternative, Ryan Mount, the Prospective Applicant, applies under Rule 7.23 for an order that: a. Dover Castle Metals Pty Ltd; b. George Tucker; c. Simon Tripp; and d. Matthew Haindl (the Prospective Respondents) give discovery to the Prospective Applicant of communications, electronic or otherwise, including emails, text messages (whether by SMS, WhatsApp, social media platform or any other electronic communication platform), social media posts, letters or faxes in their control and created in the period 22 March 2021 to 18 June 2021 concerning the performance of Ryan Mount as Chief Executive Officer of Dover Castle Metals Pty Limited or the reasons for the termination of Ryan Mount from that position on or about 6 April 2021. It should be noted that relief is no longer sought against Mr Matthew Azar or Mr Richard Colreavy (who would have been the prospective sixth and seventh respondents) as Mr Azar has already provided some documents to Mr Mount, and Mr Colreavy has not been served. 4 After Mr Mount's contract was terminated, and in the course of seeking alternative employment in the natural resources industry, he says he found out that he was probably being defamed by certain directors of Dover. He is uncertain as to the precise nature and scope of the defamations and precisely who may have published them to various people. He seeks the documents described above in order to determine whether to commence proceedings for defamation in this Court. He already has a Fair Work Act 2009 proceeding in this Court against Dover and the three other prospective respondents, Mr Matthew Haindl, Mr George Tucker and Mr Simon Tripp (together the Prospective Respondents). The remaining respondents are other persons from whom he seeks documents, so they are respondents to this interlocutory application, but not prospective respondents (the Other Persons). 5 In the case of the r 7.23 orders sought, Mr Mount contends that he needs the class of documents identified to be discovered to be able to identify with precision any publications which are defamatory and upon examination of them to plead any defamatory imputations with precision. He contends that this will be impossible unless there is available to him a record of the terms of any oral or written publication, and any written record of oral publications or publications heard of through third parties. Apart from two specific instances that he deposes to, he only knows paraphrased hearsay renditions of some publications and one written defamation which was accidentally published only to him, so is not actionable. He contends that the evidence he has adduced bears out that written defamations, especially emails or text messages, are likely to exist that contain defamatory statements of him. 6 In the case of the r 7.22 orders sought, Mr Mount contends that he needs the class of documents identified to be discovered to be able to identify the publisher or publishers of a defamatory publication so the correct respondent can be sued, citing Urbanchich v Drummoyne Municipal Council [1991] Aust Torts Rep 81-127 at 69,193. He points out that a document such as an email may identify an author and a distributor who are different people. This identification is sought to be made by connecting the name or other identifying facts with the publication, so as to meet the description in r 7.22 of "relating to the prospective respondent's description". 7 In support of his application, Mr Mount submits that while he is aware in vague and general terms of some oral statements that have been reported to him by others, and overheard one oral statement by Mr Tucker, he has an obligation to ensure that any proceedings commenced are not trivial, noting that more recently courts have been willing to strike out applications where proceedings have concerned trivial publications, a publications on the internet to only one or a small number of people, or where the resources of the parties and the court are wholly disproportionate to the plaintiff's interest at stake, citing Bleyer v Google Inc [2014] NSWSC 897; (2014) 88 NSWLR 670. 8 The principles applicable to this application, as opposed to their application, are not in dispute. In Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd [2017] FCAFC 193; 257 FCR 62, Perram J, with whom Allsop CJ agreed said; [120] The following propositions about preliminary discovery applications should be accepted: (i) the prospective applicant must prove that it has a belief that it may (not does) have a right to relief; (ii) it must demonstrate that the belief is reasonable, either by reference to material known to the person holding the belief or by other material subsequently placed before the Court; (iii) the person deposing to the belief need not give evidence of the belief a second time to the extent that additional material is placed before the Court on the issue of the reasonableness of the belief. That belief may be inferred; (iv) the question of whether the belief is reasonable requires one to ask whether a person apprised of all of the material before the person holding the belief (or subsequently the Court) could reasonably believe that they may have a right to obtain relief; and (v) it is useful to ask whether the material inclines the mind to that proposition but very important to keep at the forefront of the inclining mind the subjunctive nature of the proposition. One may believe that a person may have a case on certain material without one's mind being in any way inclined to the notion that they do have such a case. [121] In practice, to defeat a claim for preliminary discovery it will be necessary either to show that the subjectively held belief does not exist or, if it does, that there is no reasonable basis for thinking that there may be (not is) such a case. Showing that some aspect of the material on which the belief is based is contestable, or even arguably wrong, will rarely come close to making good such a contention. Many views may be held with which one disagrees, perhaps even strongly, but this does not make such a view one which is necessarily unreasonably held. Nor will it be an answer to an application for preliminary discovery to say that the belief relied upon may involve a degree of speculation. Where the language of FCR 7.23 relates to a belief that a claim may exist, a degree of speculation is unavoidable. The question is not whether the belief involves some degree of speculation (how could it not?); it is whether the belief resulting from that speculation is a reasonable one. Debate on an application will rarely be advanced, therefore, by observing that speculation is involved. See also the summary of the principles concerning preliminary discovery contained in my judgment in Poole v Australian Pacific Touring Pty Ltd [2017] FCA 424 at [39], at least parts of which were cited with apparent approval in Pfizer Ireland. 9 The substance of Mr Mount's application turns on the response to "whistleblower" reports that he made to some of the Dover directors on 22 and 23 March 2021, the Monday and Tuesday following his contract commencing the previous Thursday. It is convenient to reproduce his written submissions on what transpired, which he contends are reasons why he reasonably believes that he may have a right to obtain relief from the Prospective Respondents (footnotes omitted): Reasons why Mr Mount reasonably believes he may have a right to obtain relief from the Prospective Respondents 23. During his employment by DCM, on 22 and 23 March 2021 Mr Mount made disclosures in whistleblower reports to some of the directors of DCM namely, Mr Perdikaris, Mr Stewart, Mr Tripp (the Fourth Respondent). The reports disclosed safety risks at the Petford Mine operated by DCM and inappropriate use of DCM's funds by a former director, Mr Nettelbeck, and two current directors, Mr Haindl (the Second Respondent) and Mr Tucker (the Third Respondent), who was also employed by Sequoia. 24. On 24 March Mr Tripp saw Mr Perdikaris, and in a discussion with him about the whistleblower reports, said that he had met with Messrs Haindl, Tucker and Hancock, an employee of DCM and a respondent to the application, and that they had decided that Mr Mount was to be dismissed. It is reasonably likely that Mr Tripp had disclosed the whistleblower reports to Messrs Haindl and Tucker, and they had all formed negative views about Mr Mount. 25. On 1 April, Mr Hancock, who had been present at the meeting told Mr Mount that "they" were upset about what Mr Mount had been reporting and were saying that Mr Mount could not be trusted and was trying to cripple DCM's business, and that Mr Tucker and Mr Haindl had told him Mr Mount was to be dismissed. "They", it can be safely inferred, were Tucker, Haindl and Tripp, though Mr Mount does not know which of them said exactly what to Mr Hancock, or others at that time about Mr Mount. 26. Mr Mount was notified of his dismissal on 10 April 2021 by email from Mr Haindl, though no reasons were given8. 27. Subsequent to his dismissal, Mr Mount has been told by other persons in the natural resources investment community, including people Mr Mount had approached about employment, that Mr Tucker has been making defamatory statements about him over a period of time up to June 2021. These statements, as reported, referred to Mr Mount as a "fraud" and that he shut down the Petford mine for no valid reason, though, being hearsay statements reported verbally, the full terms of the statements are not known to Mr Mount. There is evidence that these statements are being circulated in the community of DCM and natural resources investors, through the "grape vine". Most of these comments have been attributed to Mr Tucker, but not all have identified who has made them. 28. Mr Mount has experienced directly two occasions demonstrating Mr Tucker's casual tendency to make serious defamatory statements about Mr Mount, once on 7 April 2021 by text message intended to be sent to someone else, but mistakenly sent to Mr Mount, and once on 12 April 2021 when Mr Mount overheard Mr Tucker talking on speaker phone to Fred Jaja. The first statement is not actionable as it was only made to Mr Mount (as far as he knows). Apparently, the text was intended to be sent to Mr Haindl. The second is a single instance publication to one person. Nonetheless the evidence establishes Mr Tucker's willingness to proliferate defamations about Mr Mount orally and in writing. 29. In light of the joint action to dismiss Mr Mount by Messrs Tripp, Haindl and Tucker, Mr Mount submits that there is reason to believe they have made defamatory statements about Mr Mount in communications within DCM, and within the control of Sequoia because Mr Tucker uses a Sequoia email address, and to investor in DCM and the natural resources investment community. 10 Senior counsel for Mr Mount took the Court to the evidence said to support the above assertions. It is not necessary to spell out, letter and verse, what that evidence is. The above submissions capture the essence of what that evidence discloses, subject to the further consideration below. 11 In written and oral submissions for the Prospective Respondents and for the Other Persons, it is contended that neither the evidence adduced in support of the application, nor the submissions made, go far enough to entitle Mr Mount to the relief sought. Aspects of those arguments go too far, for example in asserting a higher degree of particularity as to the relief that Mr Mount may have a right to obtain than is supported by the authorities, as summarised above in the passage quoted from Pfizer Ireland. Nor do I find compelling the assertion that more is needed to be stated as to the requirements of rr 7.22 or 7.23, or the need to be spelled out for the documents sought, at least in the present circumstances. However the arguments of greater force were to the effect: (a) that Mr Mount's belief, as later spelled out in terms in his second, much shorter, affidavit, in truth either does not rise any higher than suspicion as to a possibility that defamatory statements have been made, or is not supported by a reasonable basis for such a belief; (b) that Mr Mount has not identified a sufficient basis for this Court to have jurisdiction to hear the defamation proceeding that may be commenced, essentially because there is no suggestion of publication in the Australian Capital Territory (ACT) or in the Northern Territory (NT), so as to take advantage of the jurisdiction bestowed by s 9(3) of the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth): see Crosby v Kelly [2012] FCAFC 96; (2012) 203 FCR 451 per Robertson J, with whom Bennett and Perram JJ agreed; see also Rana v Google Inc [2017] FCAFC 156; (2017) 254 FCR 1 per Allsop CJ, Besanko and White JJ at 24]. 12 In reply written submissions and his oral submissions, Mr Mount submits that there is a sufficient basis established for his belief, and that, while there is no suggestion of any publication in either the ACT or NT, alternative bases for jurisdiction are identified by reference to authority. In Oliver v Nine Network [2019] FCA 583, Lee J said (and again quoted in Mulley v Hayes [2021] FCA 1111 in part of [11]): [10] I will come back to how federal jurisdiction is indubitably attracted in relation to this matter below, but before doing so, it is worth observing that it is now somewhat unusual for there to be any issue as to the jurisdiction of this Court where the complaint arises in relation to a mass media or social media publication. Apart from the obvious point that most such publications would, one expects, be published to persons within the Territories, there are other bases upon which jurisdiction may be attracted. Without seeking to delimit these circumstances, for the purposes of illustration, I will mention a few. [11] The first merits mentioning notwithstanding it requires a short explanation of how federal jurisdiction works. For those interested (and everyone practising in courts exercising federal jurisdiction should be), the principles are explained in detail by Allsop J (as the Chief Justice then was) writing extracurially in the article Federal Jurisdiction and the Jurisdiction of the Federal Court of Australia in 2002 (2002) 23 Aust Bar Rev 29). The starting point is s 39B(1A)(c) of the Judiciary Act 1903 (Cth) (JA) which provides: The original jurisdiction of the Federal Court of Australia also includes jurisdiction in any matter: ... (c) arising under any laws made by the Parliament, other than a matter in respect of which a criminal prosecution is instituted or any other criminal matter. (emphasis added) [12] The "matter" is the justiciable controversy between the actors involved, comprised of the substratum of facts representing or amounting to the dispute or controversy between them. It is not the cause of action and is identifiable independently of a proceeding or proceedings brought for its determination: Fencott v Muller (1983) 152 CLR 570 at 603-608; Australian Securities and Investments Commission v Edensor Nominees Pty Limited [2001] HCA 1; (2001) 204 CLR 559 at 584-585 [50]. [13] When s 39B(1A)(c) of the JA was introduced in 1997, Parliament changed this Court from being a court of specific federal jurisdiction into a court of more general federal jurisdiction, extending its reach to all controversies or "matters" across all areas with respect to which the Parliament of the Commonwealth has made laws. So long as a "matter" can be said to "arise under" a law of the Parliament, then the Federal Court is vested with jurisdiction to hear the whole of the dispute. It follows that once the jurisdiction of the Court has been invoked by reference to a justiciable issue within federal jurisdiction (say, a related claim under a federal statute), the Court has "accrued" jurisdiction to determine the whole "matter" or controversy between the parties: Re Wakim; Ex parte McNally [1999] HCA 27; (1999) 198 CLR 511 at 584-588 [136]-[147]. Accordingly, as a matter of impression and practical judgment, if a claim for defamation not otherwise within federal jurisdiction arises out of the same "matter" which is within federal jurisdiction, then it will form part of the one justiciable controversy and, if the jurisdiction of this Court is invoked, it will be the duty of this Court, exercising Chapter III judicial power, to quell the whole controversy. It is, of course, heterodox to speak of any notion of concurrent state and federal jurisdiction. [14] Secondly, the Federal Court has original jurisdiction to hear a "pure" defamation action (that is, without the addition of any other cause of action or defence arising under a federal statute) where the publication somehow involves the consideration of the implied constitutional freedom of communication on governmental and political matters even if, as will commonly be the case, it is contended that the implied constitutional freedom will be raised by a respondent by way of defence. I have already made reference above to s 39B(1A) of the JA. Subsection (b) of that section provides that the original jurisdiction of the Court also includes jurisdiction in any matter "arising under the Constitution, or involving its interpretation". [15] Thirdly, again focussing on s 39B(1A)(b) of the JA, where there is a publication in more than one "Australian jurisdictional area" being a State (see ss 11(1) and (5) of the Defamation Act 2005 (NSW) (Act) and its cognates), the full faith and credit provision of the Constitution (s 118) is engaged so as to enable courts to recognise and apply the provisions of the various uniform Defamation Acts as modifications of the laws of each Australian jurisdictional area and the common law of Australia. This is because where publications in more than one Australian jurisdictional area are sued upon, the law of each place of publication will create a substantive right to sue on that publication in that jurisdiction: see Dow Jones & Co Inc v Gutnick [2002] HCA 56; (2002) 210 CLR 575. [16] Fourthly, and more broadly, as Gibbs CJ, Mason, Wilson, Brennan, Deane and Dawson JJ explained in LNC Industries Limited v BMW (Australia) Limited (1983) 151 CLR 575 at 581, a federal matter arises if a right, duty or obligation in issue in the matter "owes its existence to federal law or depends upon federal law for its enforcement" including where the right claimed is in respect of a right or property that is the creation of federal law. Whether or not a matter arises does not depend upon the form of the relief sought: LNC Industries at 581. This would involve when a right or duty based on a Commonwealth statute in issue arises (even where it has not been pleaded by the parties, or a federal issue is unnecessary to decide). A common example illustrates the potential breadth of this concept. It seems to me arguable that if a respondent is a corporation, the relevant matter arises under a law made by the Parliament within the meaning of s 39B(1A)(c) of the JA. Chapter 2B of the Corporations Act 2001 (Cth) provides for the basic features of a company. As is explained in Ford, Austin & Ramsay's Principles of Corporations Law (Lexis) at [4,050], the capacity of a company created under the Corporations Act, including its ability to be sued, is to be found in s 119 when it provides that a company on registration comes into existence as a body corporate. It is s 124(1) which gives the entity powers of a body corporate (as to a company registered before the commencement of the relevant Commonwealth law, being the Corporations Act, s 1378 provides that registration under earlier state law has effect as if it were registration under Pt 2A.2 of the Corporations Act). The ability to sue the respondent as an entity now arises under and depends upon a law of the Commonwealth. 13 Mr Mount also relies upon the observations of Wigney J in Lin v Google [2021] FCA 1113: [25] It should perhaps be added, in this context, that Mr Lin has also established that this Court may have jurisdiction to entertain an action by him in defamation against the person who caused the defamatory publication to be published. The Court has jurisdiction to hear actions for defamation in respect of publications in the Australian Capital Territory and the Northern Territory by virtue of s 4(2) of the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth): Crosby v Kelly (2012) 203 FCR 451; [2012] FCAFC 96 at [35]. For the Court to have jurisdiction to entertain any action in defamation by Mr Lin, however, he will have to demonstrate that the relevant negative review was downloaded or read by someone in the Australian Capital Territory: Dow Jones & Company Inc v Gutnick (2002) 210 CLR 575; [2002] HCA 56 at [44]. [26] While Mr Lin has not adduced any evidence that the negative review was read or downloaded in either of those territories, I am nevertheless satisfied that Mr Lin has demonstrated that that may well be the case. The fact that a Google review is visible to the public in the Northern Territory and Australian Capital Territory, along with the rest of Australia, has previously been found, in analogous circumstances, to be sufficient to establish that the Court may have jurisdiction to hear the prospective claim: Kabbabe at [16]; Colagrande v Telstra Corporation Limited [2020] FCA 1595 at [15]; Boyd at [48]-[49]; Seven Consulting at [17]. Mr Lin's affidavit evidence also suggests that Strathfield Autobody's Google business page was widely downloaded and read. The autobody shop's business page had over 10,000 views per month, with over 60 calls having been made to the shop via the Google page in September 2020, 53 in October and 54 in November 2020. This perhaps fortifies the inference that the review may have been downloaded and read in the Northern Territory or the Australian Capital Territory. If, however, Mr Lin does eventually commence proceedings in this Court for defamation, he will have to positively proof that the review was relevantly published in those jurisdictions. 14 I do not consider that Lin v Google assists Mr Mount. Wigney J was describing a situation where the publications in question were undoubtedly online, and sufficient material was available to support the inference that a downloading of that material in the ACT was likely to be able to be established. That is nothing like the present situation. 15 Mr Mount asserts two other pathways to jurisdiction. First, he asserts that it is his intention, if he does commence a proceeding for defamation, to have them included with the existing Fair Work Act proceeding, or for the two of them to be heard together, and to thereby fall within the pathway identified by Lee J in Oliver at [13], reproduced above. He submits that there is a sufficient connection and overlap because in seeking relief for his dismissal in one part of the Fair Work Act proceeding, he asserts that a detriment was visited upon him by the Prospective Respondents. This is alleged to include the distress caused to him by Dover's conduct and Mr Tucker's derogatory statements to others about him. He asserts that this approach would clearly be in the interests of efficient and costs effective management of the disputes. He also relies upon one of the Other Persons residing in Queensland, so as to enliven the inter-state basis for jurisdiction identified by Lee J in Oliver at [15], reproduced above. 16 In relation to jurisdiction, the Prospective Respondents and the Other Persons rely upon the following passages in Apache Northwest Pty Ltd v Newcrest Mining Ltd [2009] FCAFC 39 182 FCR 124: [7] In our opinion, Newcrest has failed to establish the existence of a reasonable cause to believe it has a cause of action under s 82. Different considerations arise in relation to the contractual claim but it is unnecessary to detail them. We say that because we would refuse preliminary discovery as a matter of discretion in circumstances such as the present where it is not established that there is a reasonable cause to believe the existence of a right to obtain relief in relation to the federal aspect of the claim which, if ultimately pursued, would engage the jurisdiction of the Federal Court. [8] The power of a judge of this Court to order preliminary discovery exists in aid of the exercise of the jurisdiction of the Court. If it is not apparent from the material filed in support of the application that the jurisdiction might be regularly invoked, then, in our opinion, no order should be made. That is not because we have concluded that the present application for preliminary discovery itself is colourable in the sense discussed in Burgundy Royale Investments Pty Ltd v Westpac Banking Corporation (1987) 18 FCR 212. We have not. An application can fail without being stigmatised in this way. It is, in our opinion, unnecessary to enter the debate of whether, as a matter of power, preliminary discovery could be ordered in the present circumstances as, for the reasons we have set out, no such order should be made in any event. However, we do not doubt that this Court has jurisdiction to hear and determine this application.

Mount v Dover Castle Metals Pty Ltd

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