Plaintiff v Defendants

1 This proceeding was issued on 10 January 2018 by the plaintiff, Mr Issac Brott, alleging that the defendants defamed him by preparing or contributing to a letter sent by a firm of accountants, PKF, to the Australian Taxation Office ('ATO') on 4 August 2016 ('PKF letter'). It is not necessary for the purposes of the current application to go into any detail as to the alleged defamation: rather, the wider context is of greater significance. The PKF letter was sent to the ATO on the instructions of Mr Brott's former de facto partner, Ms Natalie McAra. Since approximately October 2013, Mr Brott and Ms McAra have been engaged in a Family Court proceeding concerning the distribution of the asset pool of the relationship ('Family Court proceeding'). The first defendant in this proceeding is the firm of solicitors acting on Ms McAra's behalf in the Family Court proceeding, Farrar Gesini Dunn ('FGD'). The second defendant is the solicitor with FGD with primary carriage of the Family Court proceeding on behalf of Ms McAra, and the third defendant (who has not been served), is a barrister engaged by FGD on Ms McAra's behalf in the Family Court proceeding.

2 The PKF letter was the subject of an earlier proceeding in this Court brought by Mr Brott against Ms McAra and PKF ('first proceeding'). The first proceeding was brought in September 2016, not long after Mr Brott became aware of the PKF letter (when it was tendered in evidence in an application in the Family Court proceeding) on 19 August 2016. The first proceeding was resolved at or after a judicial mediation on or about 31 July 2017.

3 On 18 August 2017 (the day before the expiry of the one year limitation period under s 5(1AAA) of the Limitation of Actions Act 1958 (Vic) ('Act'), the solicitors for Mr Brott, who are also his solicitors in this proceeding and the Family Court proceeding, sent to FGD a detailed 'concerns' notice within the meaning of s 14(2) of the Defamation Act 2005 (Vic) ('concerns notice'). FGD replied to the concerns notice on 21 August 2017. This letter stated as follows:

We refer to your letter to our Mr Dunn of 18 August 2017.

It is disappointing after the success at recent mediation and given that the writer is preparing a proposal to your client on behalf of our client's finalised family law matters to receive the letter. There is no cause of action against us and if there were a cause of action it would in event be statute barred.

We will write to you regarding other matters shortly.

4 As noted above, this proceeding was issued on 10 January 2018.

5 On 20 February 2018, the first and second defendants ('defendants') issued a summons seeking the following orders:

1. Until further order of the Court and the hearing and determination of this application the first and second defendants are not required to file a defence to the plaintiff's statement of claim.

2. Pursuant to ss 62 and 63 of the Civil Procedure Act 2010 (Vic) and Rule 22.16 of the Supreme Court (General Civil Procedure) Rules 2015, there be summary judgment for the first and second defendants against the plaintiff.

6 The summons is supported by a brief affidavit sworn by Mr Samuel White of Minter Ellison, the solicitors for the defendants. This affidavit makes it clear that the defendants rely solely upon the terms of s 5(1AAA) of the Act in support of their application for summary judgment, which provides that actions for defamation must be brought within 12 months of the date of publication of the allegedly defamatory communication. Orders were made by John Dixon J on 2 March 2018 referring the application to me for hearing and determination, and providing that any further application and accompanying material be filed and served by 19 March 2018. Notwithstanding the above orders, a draft summons and affidavit in support seeking an extension of time under s 23B of the Act was served on behalf of Mr Brott electronically upon the solicitors for the defendants and the Court in the middle of the afternoon of Sunday, 8 April 2018, the day prior to the hearing. Over the objections of the defendants, and with some misgivings, I allowed Mr Brott to make the application and rely upon Mr Efron's affidavit on the basis that the consequences of him not being able to proceed with the application, given the concession made by his counsel that the proceeding had been brought out of time, were quite draconian. In any event, both parties were ready to proceed on that day.

7 As noted above, Mr Brott relied upon the affidavit of Mr Graham Efron dated 6 April 2018, but sworn on the day of the hearing. Mr Efron deposed, in summary, as follows:

(a) Mr Brott first became aware of the PKF letter on 19 August 2016 when it was exhibited to an affidavit sworn by Ms Emese Colaneri of PKF on Ms McAra's behalf in the Family Court proceeding. Ms McAra's counsel in the Family Court proceeding referred to the statements in the PKF letter in open court;

(b) Mr Brott sent a concerns notice to PKF and Ms McAra on 16 September 2016, and commenced the first proceeding on 29 September 2016;

(c) in the first proceeding he delivered interrogatories for the examination of Ms McAra on 23 June 2017, including interrogatories concerning the circumstances in which the information in the PKF letter was provided to and approved by Ms McAra;

(d) on 27 June 2017, PKF sent a further letter to the ATO ('retraction letter') which included the following:

That the statements had been made based on the explanations of our client, Ms McAra, and her legal representatives, including (but not limited to) Farrar Gesini Dunn.

(e) on 25 July 2017, Ms McAra answered the interrogatories, and stated that the PKF letter was 'created by Emese Colaneri and Norman Rosenbaum, with the assistance of Sean Dillon of PKF and provided to Ms McAra for review in counsel's chambers on 4 August 2016'; and

(f) the first proceeding settled at a judicial mediation on 30 July 2017; and

(g) Mr Efron deposed as follows:

As a result of the second letter, and Ms McAra's answers to interrogatories, it became apparent that the sources of the information contained in the defamatory letter included FGD and Mr Rosenbaum. Farrar Gesini Dunn is the first defendant in this proceeding and employs the second defendant (who has principal responsibility for the Family Court proceedings since the commencement of the litigation). Mr Rosenbaum is the third defendant and is one of Ms McAra's counsel in the Family Court proceedings (although he has not appeared in court in that matter).

8 Mr Efron also deposed to the steps taken after PKF sent the retraction letter and Ms McAra delivered her answers to interrogatories, as follows:

(a) on 18 August 2017 Mr Brott sent a concerns notice to FGD;

(b) on 21 August 2017 FGD responded to the concerns notice. Mr Efron deposed as follows:

While by this time it was sufficiently clear that FGD was involved in the preparation of the defamatory letter (hence the sending of the concerns notice), it was less clear which other individuals were involved.

...

It was necessary for the plaintiff to make various enquiries to determine whether that senior counsel was involved in the preparation of the defamatory letter.

(c) Mr Efron also deposed to there being further 'complications', including Ms Colaneri's status as a consultant to PKF, such that there was some doubt as to whether she was bound by the settlement agreement in the first proceeding;

(d) Mr Brott made enquiries of HWL Ebsworth, PKF's solicitor in the first proceeding, in late 2017, following which HWL Ebsworth confirmed that the legal representatives referred to in the retraction letter referred only to FGD and Mr Rosenbaum (the third defendant in this proceeding);

(e) a number of legal issues arose in respect of the involvement of Ms McAra's legal representatives in the formulation of the PKF letter; and

(f) Mr Efron attempted to engage the same counsel, Mr Dibbs, who acted in the first proceeding, but Mr Dibbs was unwilling to accept the brief owing to an unrelated dispute between him and Mr Efron.

9 Mr Efron then goes on to depose about Mr Brott's personal circumstances and continuing commitments in the Family Court proceeding. He deposed, in summary, as follows:

First, the plaintiff has been a bankrupt and has limited financial resources and Mr Efron is acting for him on a 'credit basis' in this proceeding and in the Family Court proceeding. His sole source of income is Centrelink.

In the Family Court proceeding, approximately $8 million of unencumbered assets have been frozen since October 2015 pending final judgment.

(a) applications were made by Mr Brott on 20 September 2017 and 8 December 2017 in the Family Court proceeding for maintenance and for the purpose of funding this proceeding;

(b) a number of applications and appeals have been heard in the Family Court and the Full Court of the Family Court involving some 45 hearings to date; and

(c) the writ in this proceeding with payment was submitted electronically on 25 December 2017 but returned by the Prothonotary in early January 2018 requesting procedural amendments.

Defamation

(1) A person claiming to have a cause of action for defamation may apply to a court for an order extending the limitation period for the cause of action.

(2) A court, on an application under subsection (1), must, if satisfied that it was not reasonable in the circumstances for the plaintiff to have commenced an action in relation to the matter complained of within 1 year from the date of the publication, extend the limitation period mentioned in section 5(1AAA) to a period of up to 3 years from the date of the publication.

(3) A court may not order the extension of the limitation period for a cause of action for defamation other than in the circumstances specified in subsection (2).

(4) If a court orders the extension of a period of limitation applicable to a cause of action under this section, that period of limitation is accordingly extended for the purposes of an action brought by the applicant in that court on the cause of action that the applicant claims to have.

(5) An order for the extension of a limitation period, and an application for such an order, may be made under this section even though the limitation period has already expired.

11 There was limited, if any, disagreement between the parties as to the principles governing applications under s 23B of the Act. In particular, both counsel agreed that the first limb of the test is mandatory, in that if it was not reasonable for the plaintiff to have commenced an action within the 12 month period prescribed by the Act, the Court must extend the limitation period. However, the period of any such extension was a matter of the Court's discretion, exercised judicially of course, and the Court is not limited in the exercising of its discretion to extend time only to cover the period in which it was unreasonable for the plaintiff to bring the claim.[1] Further, the policy underlying limitation provisions is a relevant factor, albeit not determinative, of the Court's exercise of discretion, which remains unfettered. The parties agree that if the Court finds that an extension of time is warranted, it is not bound to extend the period of time to the date that a plaintiff ultimately commenced the proceeding.

12 The relevant principles governing applications for an extension of time are set out in the decision of Beach J in Casley v Australian Broadcasting Corporation,[2] as follows:

(a) First, under s 23B the burden is on the applicant for an extension of time to point to circumstances which make it not reasonable in the circumstances to have commenced a proceeding within one year from the date of the publication.

(b) Secondly, the circumstances that might give rise to an extension are left at large.

(c) Thirdly, the test posed by s 23B(2) is an objective one. It is not satisfied by showing that the applicant believed that he or she had good reason not to sue.

(d) Fourthly, if the court is satisfied that it was not reasonable in the circumstances for the plaintiff to have commenced a proceeding within the one year period, then it must extend the limitation period. Unlike other extension of time provisions, there is no discretion whether or not to extend the time. However, a discretion exists as to the length of the extension to be granted which, in any event, may not exceed three years from the date of the defamatory publication.

(e) Fifthly, the section requires more of an applicant than to show that it would have been reasonable not to commence a proceeding until after the one year period had expired: the court must be satisfied that it was not reasonable in the circumstances for the plaintiff to have commenced a proceeding within the one year period.

(f) Sixthly, the circumstances must be sufficiently compelling to satisfy the court that it was not reasonable in the circumstances to commence a proceeding within the one year period the law ordinarily requires litigants to commence proceedings.

(g) Seventhly, s 23B of the Act proceeds on the assumption that there may be circumstances where it will not be reasonable for a plaintiff to commence a proceeding to vindicate his or her legal rights in accordance with that time limit.

13 The above formulation has been approved by the Court of Appeal,[3] and referred to in a number of first instance decisions in Victoria and interstate. What is noteworthy for current purposes is that while the types of circumstances which might be taken into account in these applications is not limited, the language of s 23B of the Act means that those circumstances must be quite compelling for the Court to achieve the necessary degree of satisfaction before an extension of time is to be granted.

14 Counsel for the defendants submitted that Mr Brott had not established from the undisputed facts evident from the documents before the Court, or Mr Efron's evidence, that it was not reasonable for him to have commenced an action against the defendants in relation to the PKF letter prior to the expiry of the 12 month limitation period.

15 Counsel for Mr Brott relied upon the following matters in support of his contention that it was unreasonable for Mr Brott to bring this proceeding by 19 August 2017:

(a) there was nothing on the face of the PKF letter to suggest that Ms McAra's lawyers were involved in its preparation;

(b) while Mr Brott became aware of the publication of the PKF letter to the ATO on 19 August 2016, he did not become aware of the involvement of the defendants and possibly others until after PKF published the retraction letter on 27 June 2017, and the service of answers to interrogatories sworn by Ms McAra on 25 July 2017;

(c) neither the retraction letter or the answers to interrogatories identified with any precision the identity of the lawyers and other parties involved in the publication of the PKF letter;

(d) it was reasonable for Mr Brott and his lawyers to make enquiries to identify all possible defendants prior to issuing a proceeding. The making of such enquiries is also consistent with Mr Brott and his lawyers complying with their obligations under the Civil Procedure Act 2010 (Vic), to ensure that they had a proper basis to issue the proceeding;

(e) other complications delayed the issue of the proceeding, such as the need to investigate and consider certain matters, such as the status of Ms Colaneri as a 'consultant' with PKF, ethical issues associated with bringing a proceeding against Ms McAra's lawyers involved in the Family Court proceeding, and whether there were any potential breaches of any Harman undertaking, and the refusal of Mr Brott's counsel in the first proceeding to accept a brief from Mr Efron;

(f) Mr Brott's impecuniosity limited his ability to fund the issue and conduct of this proceeding; and

(g) the relevant delay was relatively modest (just over four months), and there is no evidence of any prejudice to the defendants of any delay.

16 In my view, having regard to the chronology of events, and the involvement of Mr Brott and his solicitors in the first proceeding and the Family Court proceeding, Mr Brott has not established that the circumstances were such that it was not reasonable for him to bring the proceeding prior to the expiry of the 12 month limitation period, that is, by 19 August 2017. The following matters are relevant to my reaching the conclusion that the application must fail, and the proceeding be dismissed.

17 First, while the publication of the retraction letter and the delivery of the answers to interrogatories took place not long before the expiry of the limitation period, these events occurred a matter of weeks, rather than a matter of days prior to the expiry of the limitations period. Mr Efron certainly had sufficient information as at 18 August 2018 to send a detailed concerns notice to the defendants. There is no reason why that could not have been sent in the days following the receipt of the answers to interrogatories, rather than three weeks later. Given that Mr Brott's solicitors in this proceeding and the first proceeding were the same solicitors, and this publication was the same publication complained of in the first proceeding (which, as an aside, seems to have been concluded at a relatively leisurely pace), it is implausible that as at 25 July 2017, both Mr Brott and his solicitors were unaware that date of the expiry of the limitation period was close on the horizon.

18 Mr Brott relied upon a number of difficulties and complications which impeded his ability to bring the proceeding within the 12 month limitation period. I accept that some issues arose which needed to be considered, but I do not accept that they were insurmountable obstacles to bringing this proceeding, at least against the defendants and Mr Rosenbaum, prior to 19 August 2017. I shall deal with these matters in turn.

19 First, by 25 July 2017, Mr Efron's own evidence was that it was apparent to him that the sources of the information in the PKF letter were FGD (and, by implication from the inclusion of Ms Thomson as a defendant in this proceeding, the solicitor with conduct of the Family Court proceeding on behalf of Ms McAra), Ms Colaneri, and Mr Rosenbaum (the third defendant). The only other potential defendant would be senior counsel for Ms McAra in the Family Court proceeding, and, given that PKF's solicitors were able to rule him out following inquiries by Mr Brott of PKF's solicitors in the first proceeding in late 2017, it somewhat mystifies me why these enquiries took months to be made and resolved. Similarly, while I accept that there may have been some ambiguities concerning Ms Colaneri's status as a consultant to PKF, and as such, whether she was covered by the settlement agreement reached between Mr Brott and PKF on or before 27 June 2017. However, she had been specifically identified by Ms McAra in her answers to interrogatories, and the question of whether she was covered by the settlement agreement would have been a matter of construction of the settlement agreement, which was likely to have been a relatively simple document, and was no doubt in Mr Efron's possession. Again, the contention that resolution of this issue took a matter of months is difficult to comprehend.

20 I accept that there is a tension between the policy considerations underlying limitation provisions, particularly quite strict limitation provisions applicable to defamation proceedings, and the obligations imposed upon parties and legal practitioners not to bring proceedings without a proper basis for doing so.[4] However, in the current case, the tension could have been resolved by the exercise of some common sense. As at 25 July 2017 (at the latest), Mr Brott and his solicitors knew there was a proper basis to bring a proceeding against the defendants and Mr Rosenbaum. The only unresolved questions concerned the status of Ms Colaneri and the possible involvement of Mr Bartfeld QC, Ms McAra's senior counsel in the Family Court proceeding. If Mr Brott had issued the proceeding in its current form within time, and made a timely application for joinder and an extension of time once further enquiries were made, any such application would have had better prospects of success than the current application. Of course, hindsight shows no such application would have needed to have been made.

21 Secondly, while I accept that the issue of whether Mr Brott's use of Ms McAra's answers to interrogatories in the first proceeding to draw the statement of claim in this proceeding may have breached his Harman undertaking in the first proceeding needed to have considered, along with the ethical implications of issuing proceedings is against the solicitors for another party in another proceeding, again, these are discrete issues, and Mr Brott had solicitors acting for him at all relevant times. After all, it is difficult to see, from an ethical perspective, the distinction between sending a concerns notice making allegations that the recipient has defamed the sender, and issuing a proceeding in relation to the alleged defamation. Finally, while issuing a concerns notice may be good practice, it is not a precondition to bringing a proceeding.

22 Thirdly, Mr Brott relied upon his inability to retain his counsel of choice as a relevant circumstance in support of his contention that it was unreasonable for him to have commenced this proceeding prior to 19 August 2017. A number of observations can be made about that submission. The statement of claim in this proceeding is a relatively short, simple document, and, upon review of the court file in the first proceeding, is substantially similar to the statement of claim in the first proceeding. The statement of claim in this proceeding was not signed by counsel, and the dispute between Mr Efron and counsel was not resolved until February 2018, after the issue of this proceeding, such that the unavailability of counsel turned out to be no real impediment to issuing the proceeding.

23 Fourthly, Mr Brott relied upon his poor health as impeding his ability to bring this proceeding. Apart from the fact that the evidence about Mr Brott's health is somewhat vague, and most issues seemed to have resolved by 2016, this assertion sits uncomfortably with the evidence that Mr Brott has given instructions to bring and defend applications and appeals in the Family Court proceeding involving some 45 hearings over recent years. While no doubt the Family Court proceeding has consumed Mr Brott's and his solicitor's time and resources, the Family Court proceeding did not impede his ability to issue and conduct the first proceeding, which was issued quite promptly, some six weeks after Mr Brott became aware of the PKF letter. Further, it is not an overly complicated exercise to at least issue a proceeding of this nature.

24 Fifthly, given Mr Brott's ability to conduct the Family Court proceeding and the first proceeding, and Mr Efron's evidence that his providing his services to Mr Brott 'on a credit basis', it is difficult to see how Mr Brott's financial position would have impeded his ability to issue this proceeding within time. I accept that there might be difficulties down the track, such as briefing counsel for trial, but that of itself does not excuse the delay in issuing the proceeding. Further, Mr Efron's assertion that Mr Brott has endeavoured to seek funding for this proceeding by making applications to the Family Court for maintenance (which were apparently unsuccessful) is not borne out by the documents produced at the hearing of the application.

25 Finally, for completeness, there was no conduct on the part of the defendants which caused Mr Brott to remain unaware of their involvement, or possible involvement, in the PKF letter prior to June 2017. The interrogatories for the examination of Ms McAra, which were in part expressly directed at the involvement of others in the preparation of the PKF letter, were not delivered until 23 June 2017, some nine months after the issue of the first proceeding, and two months prior to the expiry of the limitation period. There is no evidence of any other enquiries being made about the identity of others involved in the preparation of the PKF letter. There was no obligation upon the defendants or either of them to disclose their involvement in the preparation of the PKF letter. The circumstances in the current case are quite different to the circumstances discussed by John Dixon J in Johnston v Holland (No 2),[5] where his Honour found that it was unreasonable to expect the plaintiff to bring an action within the limitation period because, among other things, delaying conduct on the part of a defendant and a proposed defendant 'constituted a concealment of the tort and of the identity of a tort feasor'.[6]

26 Accordingly, I will dismiss the application for an extension of time under s 23B of the Act. Given the concession made by counsel during the course of the hearing, the defendants are entitled to judgment in their favour, although that leaves the position of the third defendant, who has not been served, a little unclear.

27 For completeness, while the question of the exercise of my discretion does not arise, I would add that, if it had arisen, I would not have extended the relevant period of time to 10 January 2018 (or 25 December 2017, being the date on which the statement of claim was apparently first filed with the Court). If I had found, say, that it was unreasonable for Mr Brott to have issued this proceeding until a reasonable time after FGD had responded to the concerns notice on 21 August 2017, in my view, a reasonable period of time would have been no greater than one month after that date, that is, 21 September 2017.

28 I shall hear further from the parties concerning the form of orders and the question of costs.

FGD PTY LIMITED T/as FARRAR GESINI & DUNN (ABN 44 075 255 006)

[1] Johnston v Holland (No 2) [2017] VSC 597, [56].

[2] [2013] VSC 251, [28].

[3] [2013] VSCA 182.

[4] Section 18 of the Civil Procedure Act 2010 (Vic).

[5] [2017] VSC 597.