Plaintiff v Defendant

2 Mr Charan alleges that an article published in The Australian on 20 November 2015 is defamatory of him. He asserts that there are eight separate imputations which can be drawn from the article. Nationwide contends that the imputations cannot be drawn, but then goes on to assert that four of the imputations can be justified as substantially true. The February particulars include several new matters not contained in Nationwide's consolidated particulars of truth filed in December 2016 ("The December particulars").

3 The question that now arises is, essentially, whether it is in the interests of justice to permit Nationwide to amend the December particulars so as to rely upon the February particulars (with an inevitable consequential adjournment if granted) or whether Nationwide should be confined to the particulars it originally filed.

4 A secondary issue has also arisen as to the adequacy of the discovery provided by Mr Charan and particularly his alleged failure to disclose emails from his private Gmail account.

5 The eight pleaded imputations in the statement of claim read as follows: -

(a) The plaintiff, as head of the Australian Careers Network (ACN) has amassed a fortune by engaging in unscrupulous business practices that take advantage of vulnerable consumers and government funding schemes in the education and training sector.

(b) There are reasonable grounds to suspect that the Plaintiff, as head of ACN, amassed a fortune by engaging in unscrupulous business practices that take advantage of vulnerable consumers and government funding schemes in the education and training sector.

(c) The plaintiff, as head of ACN, has been marketing education and training courses to vulnerable consumers in a manner that constitutes misleading and deceptive and unconscionable conduct in breach of the law.

(d) There are reasonable grounds to suspect that the Plaintiff, as head of ACN, has been marketing education and training courses to vulnerable consumers in a manner that constitutes misleading and deceptive and unconscionable conduct in breach of the law.

(e) The plaintiff, as head of ACN, has been carrying on business in a manner that involves unscrupulous door-to-door marketing practices in relation to vulnerable consumers in the training and education sector.

(f) There are reasonable grounds to suspect that the plaintiff, as head of ACN, has been carrying on business in a manner that involves unscrupulous door-to-door marketing practices in relation to vulnerable consumers in the training and education sector.

(g) The plaintiff, as head of ACN, has been carrying on business in a manner that involves significant non-compliance with the quality standards required from providers of vocational educations services.

(h) There are reasonable grounds to suspect that the plaintiff, as head of ACN, has been carrying on business in a manner that involves significant non-compliance with the quality standards required from providers of vocational educations services.

6 Nationwide's original defence merely asserted that the imputations were not defamatory and that it had published an apology. On 5 October 2016, it successfully applied to an Associate Justice to amend its defence to plead justification to four of the eight imputations. The trial date of 2 November 2016 was vacated and the Associate Justice indicated that the proceeding could be re-listed in late February 2017. However, on 12 October 2016, at a mention hearing, the proceeding was re-listed for trial on 12 December 2016 on a four day estimate (which was patently unrealistic).

7 Shortly prior to that trial date, Nationwide served the December particulars on Mr Charan's solicitors. It was accepted by all parties that the trial could not proceed on that date given the time allotted, and I subsequently heard (on 14 December 2016) an application for summary dismissal by Mr Charan of parts of the justification defence. I dismissed that application and gave leave to the parties to file further outlines of evidence and to issue subpoenas. I fixed the trial date for 20 February 2017.

8 Since the hearing in December 2016, Nationwide has issued a large number of subpoenas and filed many outlines of evidence of witnesses it proposes to call (some outside the stipulated time limits). Over the past month it has received further material - as a result of both the subpoenas and from unnamed sources - relevant to its justification defence. The February particulars were the end result of that exercise.

9 During this time the parties continued to pursue discovery and there were exchanges of discoverable documents accompanied by salvos of correspondence.

10 The solicitors for Mr Charan and for Nationwide both swore affidavits. Justin Quill for Nationwide deposes as to the circumstances surrounding the acquisition of the information now contained in the February particulars and voices complaints about the discovery provided by Mr Charan.

11 The affidavit of Katarina Klaric, the solicitor for Mr Charan, set out the basis for the opposition to the filing of the February particulars and details the consequences for her client if the amendment is allowed. It also deals with the question of the adequacy of Mr Charan's and Nationwide's discovery.

12 In Jackson v Bruty[2], I set out a series of principles relevant to an application for an amendment (whether late or otherwise) and the interaction of decisions such as Aon Risk Services Australia Limited v Australian National University[3] and the Civil Procedure Act 2010 (Vic), I repeat here parts of that ruling.

13 In Northern Health v Kuipers, and in the context of a late amendment to a pleading (in that case a defence), the Court of Appeal noted:

The Civil Procedure Act 2010 ("Act") is pivotal to the resolution of disputes about case management issues in civil proceedings to which the Act applies. The Act is applicable to the proceeding below and to the application for leave to appeal to this court. As the present case demonstrates, it is important that, in resolving such disputes, trial judges engage with the Act's provisions in balancing the competing interests of the parties and those of the administration of justice more generally.[4]

14 There are a number of relevant provisions of the Civil Procedure Act 2010 ('the CPA') which I need not set out.[5] It is, however, helpful to set out section 9 of the CPA:

Court's powers to further the overarching purpose

(1) In making any order or giving any direction in a civil proceeding, a court shall further the overarching purpose by having regard to the following objects -

(a) the just determination of the civil proceeding;

(b) the public interest in the early settlement of disputes by agreement between parties;

(c) the efficient conduct of the business of the court;

(d) the efficient use of judicial and administrative resources;

(e) minimising any delay between the commencement of a civil proceeding and its listing for trial beyond that reasonably required for any interlocutory steps that are necessary for -

(i) the fair and just determination of the real issues in dispute; and

(ii) the preparation of the case for trial;

(f) the timely determination of the civil proceeding;

(g) dealing with a civil proceeding in a manner proportionate to -

(i) the complexity or importance of the issues in dispute; and

(ii) the amount in dispute.

(2) For the purposes of subsection (1), the court may have regard to the following matters -

(a) the extent to which the parties have complied with any mandatory or voluntary pre-litigation processes;

(b) the extent to which the parties have used reasonable endeavours to resolve the dispute by agreement or to limit the issues in dispute;

(c) the degree of promptness with which the parties have conducted the proceeding, including the degree to which each party has been timely in undertaking interlocutory steps in relation to the proceeding;

(d) the degree to which any lack of promptness by a party in undertaking the proceeding has arisen from circumstances beyond the control of that party;

(e) the degree to which each person to whom the overarching obligations apply has complied with the overarching obligations in relation to the proceeding;

(f) any prejudice that may be suffered by a party as a consequence of any order proposed to be made or direction proposed to be given by the court;

...

15 Of course the Supreme Court (General Civil Procedure) Rules 2015 ('the Rules') also provide that the Court may make, at any stage, an order that a pleading be amended or that a party have leave to amend a pleading.

16 In addition to the provisions of the CPA and the Rules, there are statements of principle of the High Court, particularly in Aon Risk Services Australia Ltd v Australian National University.[6]

17 With each of these matters in mind, I have identified the following factors as being relevant to the consideration of an amendment to a pleading:

(a) whether there will be a substantial delay caused by the amendment;

(b) whether there is an irreparable element of unfair prejudice caused by the amendment;

(c) concerns of case management arising from the stage in the proceeding when the amendment is sought;

(d) whether the grant of the amendment will lessen public confidence in the judicial system; and

(e) whether a satisfactory explanation has been given for seeking the amendment at the stage when it is sought. [7]

18 To this list I would add the following observation which, I am afraid, is trite: each case turns on its own circumstances and that, at the end of the day, the primary question must be: what do the interests of justice dictate? In reaching any determination, one does not look solely at the question of injustice for the party seeking the amendment but also to any consequential effects upon his or her opponents and, perhaps not equally as important but no doubt relevant, the Court in the management of its business.[8]

19 Senior Counsel for Mr Charan referred me to a decision of the Court of Appeal in Eaton v ISS Catering Services Pty Ltd[9], in which the Court upheld the decision of a trial judge to refuse an adjournment during the early stages of a trial on the basis that the Plaintiff's lawyers wished to obtain a further expert opinion as to the cause of the Plaintiff's injury.

20 That case, I suggest, is simply a reflection of its own facts in the context of the principles I have referred to. It was a personal injury claim with the trial taking place some six years after the accident with no explanation (or at least adequate explanation) proffered for the failure to obtain the additional report. The application was made on the second day of the trial and repeated on several subsequent occasions. It bears little, if any, resemblance to the facts of the present case.

21 There are many examples of cases where Courts in this state have allowed either late amendments or the late filing of documents, relying on the principles in Aon and the Civil Procedure Act,[10].

22 The new particulars are summarised below and can be broadly grouped into the following categories: paid scribes, mass enrolment of vulnerable migrants, enrolment incentives and Mr Charan's financial interest in Certificate II courses.

23 Paragraphs 35A and 35B assert that student workbooks in courses operated by Mr Charan had been fraudulently completed by paid scribes (rather than students) so that, in the event of an audit by the Department of Education, it would appear as though students had participated in the training course, when in fact they hadn't.

24 Paragraph 41A asserts that sometime in 2014, Mr Charan (at the very least) facilitated and/or participated in a mass enrolment of vulnerable new migrants from Africa and the Middle East into government-funded training courses.

25 Paragraphs 41B, 41C and 41D assert that various incentives were approved by Mr Charan in knowing breach of the funding contract with the Department of Education. According to the proposed particulars, Mr Charan approved the giving of various incentives to potential students, including iPads, SurfacePro laptops, Samsung tablets and cash incentives upon completion of certain courses (Certificate II and Diploma). In addition to the giving of incentives to students, it is also said that Mr Charan approved the payment of $1000 to clubs or organisations for each enrolment (after the first three enrolments) into the Diploma course and similarly, $200 per new enrolment into the Certificate II. It is further alleged that Mr Charan actively sought to conceal the giving of such incentives.

26 Paragraph 42A asserts that Mr Charan, via a complex corporate structure, concealed his "special interest" in Certificate II at the relevant time and that Mr Charan did not disclose his interest to the Department of Education. It is asserted that it was this interest which drove Mr Charan to attempt to maximise student enrolments via the methods outlined above.

27 The nub of the argument put on behalf of Mr Charan is, in effect, that 'enough is enough'. If allowed, the amendments contained in the February particulars will inevitably result in the third adjournment of the case. This, it was said, was in the light of the late amendment to the defence to plead justification, and this is where all the trouble began. It was inimical, especially in the context of a defamation case, for Mr Charan's trial to be put off for a third time.

28 There is some force in these submissions. However they need to be balanced against the following propositions.

29 First, I am satisfied that each of the new matters introduced by the February particulars are relevant to the justification defence. Each goes to the conduct of Mr Charan in his management of Community Training Initiatives ("CTI") and associated companies prior to the sale of his shares in ACN, the company which floated in December 2014. If made out, then that evidence may substantiate one or more of the allegations of justification covered in the February particulars.

30 Second, whilst I regard it as unfortunate (indeed unfortunate in the extreme) that this trial may have to be adjourned as a result of the amendment, this is not a case in which there is any protracted delay between the publication and the trial date. Indeed, Associate Justice Daly noted in her ruling of 5 October 2016 that "a trial date in late February 2017 is still only 14 months after the date of issue of the proceeding. This is not an undue delay in this Court, or others no doubt". I assume that any adjournment would be for a relatively short period of time, so it would still mean that Mr Charan would be able to get his case heard within 16 months or so of the publication. Whilst I accept that Mr Charan will naturally be disappointed that he has not had the opportunity to vindicate himself at the earliest point of time, he will have the opportunity to do so in the near future.

31 Third, there is, in my opinion, a reasonable explanation proffered by Mr Quill in his Affidavit as to the basis of the new matters contained in the February particulars. Nationwide has obtained information from a number of sources, including material provided under subpoena and an undisclosed source. Moreover, the information contained in the particulars does not come as a total surprise to Mr Charan -witness statements have been filed and a number of the allegations now contained in the February particulars are within some of those witness statements (see the schedule to Mr Quill's Affidavit annexed to these reasons). I accept that once the witness statements were received it was open for Mr Charan's solicitors to investigate the accuracy or otherwise of those statements. If they were ignored, as Ms Klaric's affidavit might suggest for tactical reasons, then that was a forensic decision made by Mr Charan's lawyers. I should make it clear, however, that some of the statements were not received by the lawyers until mid-February, and so the opportunity to undertake further investigation into those matters was limited.

32 Having considered the matters contained in both affidavits, I am satisfied that Nationwide's solicitors have acted reasonably in their prosecution of the defence of justification.

33 Fourth, I am unable to discern any true prejudice to Mr Charan, other than the forensic disadvantage of having to meet a broader case than that which he previously had to meet. He will be given the opportunity, if he so wishes, to prepare his defence to the allegations and in particular to confer with witnesses and consider what other documents he may wish to rely upon at the trial.

34 Once leave was granted to plead the justification defence, it was inevitable that further investigations would be carried out by Nationwide. The trial dates of November and December were untenable, and submissions based upon the number of adjournments need to be viewed in this light.

35 In Ms Klaric's affidavit, at paragraph [21], she lists the investigations that may be necessary if the amendment is granted. For my part, I regard the assertions as containing an element of hyperbole. Putting to one side that the witness statements filed by Nationwide (filed incrementally between December 2016 and February 2017) provided a ready guide as to where the defence was going, I do not accept that such a vast amount of work will be necessary. It must be remembered that these allegations in the main relate to Mr Charan's actions, and that he will be the best source from which to seek material to refute those assertions. Certainly I do not accept that there is any 'irreparable prejudice' to Mr Charan by granting the amendment.

36 Notwithstanding the new paradigm of the Civil Procedure Act, the overriding exercise is to ensure that the interests of justice prevail, within reason. I accept that there are cases where a court will shut a party out from running a defence (or a fresh claim) or adducing evidence because of its conduct[11] - and particularly in circumstances where a fresh allegation is delivered on the eve of trial. On the other hand, the fundamental task of a court is to do justice between the parties and to shut a party out from maintaining what I regard as potentially significant arguments at trial would, when the balancing exercise is completed, be unjust.

37 It follows that Nationwide should be permitted to file its February particulars, but on certain conditions. The first is that it is inevitable that the trial will be adjourned, and I will give priority to any suggestion made by Mr Charan's lawyers as to the fixing of an adjourned trial date. The second is that, absent exceptional circumstances, Nationwide should not be allowed to amend its particulars of justification again. It has now had a number of months to get its house in order and the information from its subpoena exercise is now all but completed. The case should now go forward on the February particulars and Nationwide held to those particulars unless, as I say, something exceptional occurs.

38 It is accepted by Nationwide that Mr Charan's involvement with ACN and its associated companies ceased prior to its listing on the Australian Stock Exchange on 15 December 2014.

39 At the hearing, Nationwide applied for orders relating to discovery of emails from Mr Charan's personal Gmail account. It wished to examine the emails in their 'original' electronic form and have a computer forensic specialist review the emails and their meta-data.

40 Whilst I am satisfied that the discovery provided by Mr Charan in relation to documents which came into existence in 2015, was not entirely satisfactory, I do not consider that it is necessary to make the orders sought by Nationwide.

41 Based on Ms Klaric's affidavit of 20 February 2017, it appears that discovery of the emails contained in Mr Charan's personal email account was limited to documents:

relevant to his role(s) at ACN and its associated entities during the relevant period up to the date that he ceased to be a director of the companies that formed the ACN on the 30 September 2014 and up to the listing of ACN on the Australian Stock Exchange on 15 December 2014 and relevant to the Justification Defence.

42 Nationwide has obtained, from a confidential source, a series of emails from 2015 between Mr Charan's personal Gmail account and a Mr McAllister which, it can be inferred, arguably relate to Mr Charan's conduct of ACN (or associated companies) in the period before 2015.

43 Ms Klaric explains in her affidavit that she did not believe it was necessary to conduct any further examination of the Gmail account after the listing date and that she gave such advice to Mr Charan.

44 I do not accept Nationwide's criticism of Ms Klaric that this was an unreasonable approach to discovery - there had to be a limit to discovery, consistent with the provisions of the CPA.

45 It is, however, now apparent that there may have been material in the personal Gmail account which is relevant to this proceeding, as the McAllister/Charan exchange demonstrates. Rather than make the orders sought by Nationwide, which are draconian in nature I consider that the appropriate course is to order that Mr Charan make further discovery of any emails from his personal Gmail account relevant to the allegations contained in the justification defence and the February Particulars.

[1] Referred to as "The Defendant's second consolidated particulars of truth".

[3] [2009] HCA 27

[4] [2015] VSCA 172, [22] (Kyrou and McLeish JJA) ('Northern Health') (citations omitted).

[5] Sections 7, 8 and 25 and Part 4.2 relating to case management.

[6] (2009) 239 CLR 175, [5] (French CJ), [111], [113] See also: (Gummow, Hayne, Crennan, Kiefel and Bell JJ).

[7] See Ultra Thoroughbred Racing v Those Certain Underwriters (Ruling) [2011] VSC 370, [8].

[8] Northern Health [2015] VSCA 172, [33].

[9] (2013) 42 VR 635

[10] For instance, the Court of Appeal in Northern Health v Kuipers.[2015]VSCA172