Thomson v Luxford

the CAUSES OF ACTION 2 In the course of its practice Hicksons publishes the "Hicksons Transport Trade and Energy E-Bulletin" (the "E-Bulletin"). Mr Thomson alleges that the E-Bulletin is distributed to Hicksons' former, present and prospective clients and other persons. It is common ground that an edition of the E-Bulletin was published in December 2010. That edition contained an article (the "article") concerning Mr Thomson. In these proceedings, Mr Thomson alleges that Mr Luxford was the author of the article, and that it: breached s 52 of the Trade Practices Act 1974 (Cth); and was defamatory of him. 3 He claims damages and other relief.

THE ORIGINAL PROCEEDINGS 4 The article concerned previous admiralty litigation in this Court (the "original proceedings") in which Hicksons acted for STX Pan Ocean Co Ltd ("STX") a Korean company engaged in the business of maritime transportation. STX was the plaintiff in those proceedings. The defendants were Bowen Basin Coal Group Pty Ltd ("Bowen Basin"), Mr Thomson and Beach Building and Civil Group Pty Ltd ("Beach Building"). Mr Thomson alleges that Mr Luxford had carriage of the matter on behalf of Hicksons. Mr Thomson was, in the original proceedings, found to be the sole director and shareholder of Bowen Basin. It seems that he was also effectively in control of Beach Building. 5 During February 2010 Mr Thomson caused Bowen Basin to enter into an agreement with a company in administration for the purchase of two cargoes of coal, each of about 42,000 tonnes, to be shipped between 1 and 30 March 2010. On 12 March 2010 in Perth, Bowen Basin entered into a charterparty with STX to ship the two cargoes from Kwinana to ports in China. The first shipment was eventually delivered, but there were significant delays in loading and unloading, so that Bowen Basin became indebted to STX in an amount well beyond the amount initially payable pursuant to the charterparty. The delays appear to have been attributable to the fact that Bowen Basin lacked the funds necessary to meet its obligations to the seller of the coal and to STX. Eventually, STX concluded that Bowen Basin had, by its conduct, repudiated the charterparty, accepted such repudiation, cancelled the second shipment and claimed damages for breach. That claim was the subject of the original proceedings. Insofar as concerned Bowen Basin, the claim was pursuant to the charterparty. As against Mr Thomson, the claim was based upon his conduct in arranging the charterparty and thereafter. I need not identify the basis of the claim against Beach Building. 6 The matter was listed for trial before Rares J, commencing on 1 July 2010. On that day Bowen Basin appeared but did not oppose the entering of judgment against it in the sum of USD2,483,296.25, with costs. It subsequently went into administration. Subsequently, STX recovered judgment against Mr Thomson for $509,771.10 and 80% of its costs.

the PLEADED ALLEGATIONS 7 The article gave an account of the dealings which led to the original proceedings and of those proceedings. The account is a mixture of factual assertions, references to the trial Judge's findings and comments. Mr Thomson complains about three aspects of the article which he describes in the statement of claim as: the "procurement of forgery" allegation; the "findings of fraud" allegations; and the "significant damages" allegation. He pleads that all such allegations were: untrue in fact; misleading or deceptive, or likely to mislead or deceive; and defamatory of him.

THE RESPONDENTS' MOTION 8 The respondents move for: summary judgment pursuant to s 31A of the Federal Court of Australia Act 1976 (Cth) (the "Federal Court Act") on the ground that Mr Thomson has no reasonable prospect of successfully prosecuting the proceedings; an order pursuant to O 20 r 4 of the Federal Court Rules (the "rules") that the proceedings be dismissed on the ground that no reasonable cause of action is disclosed; further or other orders; and costs.

CONTENT OF THE ARTICLE 9 Before considering the allegations of which Mr Thomson complains, I should outline the content of the article in more detail. Its title was "Lies, Lies and Damned Lies: A Sorry Saga of Shipping and Coal not always Mixing". It might be thought that the title was designed to catch attention rather than to create anticipation of a learned article. The opening paragraph asserted that the original proceedings demonstrated: … what can go wrong when a party, new to the business and keen to cash in on a seemingly booming market, finds itself out of its depth to the extent that it is financially unable to honour its commitments and ends up engaging in misrepresentation and deceit with its trading partner amounting to fraud. The history of the relevant dealings was then set out, followed by a description of the original proceedings. On p 2, it was asserted that: Mr Justice Rares found that Mr Thomson had acted fraudulently against STX and awarded approximately US$510,000 in damages and interest plus costs against Mr Thomson. On p 3, under the heading "Fraud" the author set out the "respects" in which, as it was alleged, the Court had found Mr Thomson to have "acted fraudulently against STX". Broadly speaking, the "respects" were Mr Thomson's: statements as to his own assets; dishonest representation as to his belief that funding would be available "at any moment", with the intention of inducing STX to keep the charterparty on foot; execution of a "letter of indemnity" for the purpose of causing STX to give up possession of the first cargo over which it claimed a lien; and causing a worthless cheque to be delivered to STX's local representative as an earnest of good faith, knowing that Bowen Basin was then hopelessly insolvent. It was asserted that STX acted in reliance upon the first two matters and thereby incurred substantial expense. Under the hearing "Conclusion", the author asserted that: the Court's decision was "a first in Australia" in holding a sole shareholder and director to be personally liable for damages for his/her own fraudulent misrepresentations and conduct on behalf of the company in a "post contractual situation"; the Court had allowed STX to "pierce the corporate veil" by finding Mr Thomson to be "personally liable as the "controlling mind" of STX due to his fraud"; the Court had awarded significant damages against Mr Thomson for expenses incurred by STX as a result of his "post contractual fraud", from the commencement of that fraud on 6 May through to 17 May, the date upon which STX cancelled the second shipment; and shipping proceedings can be prosecuted and brought to trial very quickly in the Federal Court.

THE STATEMENT OF CLAIM 10 In the statement of claim in these proceedings, the "procurement of forgery allegation" is dealt with in paras 25 - 28. Mr Thomson identifies certain statements which appear in the article and alleges that such statements are untrue, misleading or deceptive, or likely to mislead or deceive, and are defamatory of him. The "findings of fraud allegations" are dealt with in paras 29 - 32. Mr Thomson alleges that such allegations were as to findings made by Rares J. He asserts that the allegations (as to such findings) are untrue, misleading or deceptive, or likely to mislead or deceive, and are defamatory of him. The "significant damages allegation" are dealt with in paras 33 - 36 of the statement of claim. Mr Thomson pleads that the description of the actual award of damages as "significant" meant, and was intended to mean that the award made was "'significant' in light of the claim … for approximately USD2,760,000". Mr Thomson pleads that such imputation is untrue, misleading or deceptive, or likely to mislead or deceive, and is defamatory of him. 11 Notwithstanding these subtle differences in the treatment of the three aspects of the claim, the following passage indicates the limited nature of Mr Thomson's case. In the transcript at p 8, ll 26 - 34 the following passage appears: Mr McClintock: The first proposition I wish to put to your Honour though is to justify the point that I made, so to speak, in opening, which is that this statement of claim depends crucially on an alleged disjunct between what was said in the Hicksons E-Bulletin, that is, the publication, on the one hand and what appears in Rares J's judgments on the other. That is apparent - - - Mr Morris: Your Honour, if it will shorten matters, I concede that that is so if what was published was an accurate and fair summary of Rares J's judgement. I accept we have no case either under the Trade Practices Act or in defamation. 12 At p 42, l 43 to p 43, l 4, Mr Morris QC, Senior Counsel for Mr Thomson said: … If your Honour is satisfied that this publication is capable of conveying the meaning that Mr Thomson procured the forgery, then that is defamatory. And the relevance of the judgment is then that there is no justification or no fair reported judicial proceedings. So the defence goes out the window. In other words, what we are saying is if the publication accurately reports what was said in the reasons for judgment, and by accurately I mean in a way that does not reasonably, fairly convey a different meaning to the relevant audience or to some members of the relevant audience, then we accept that there would be a complete answer to the claim and the proceeding should be dismissed. 13 In light of those statements, I shall outline the pleadings and the relevant facts as they appear from the reasons and findings.

The "Procurement of Forgery" Allegation 14 Paragraphs 25 to 28 of the statement of claim are as follows: 25. Under the subheading "The Proceedings", the [article] contained the following statement (herein called "the procurement of forgery allegation"); namely - … for reasons never explained by Mr Thomson, Mr Thompson procured an LOI [letter of indemnity] containing a forged signature of STX's Australian brokers purporting to bind STX to the LOI in favour of third parties. 26. In their ordinary and natural meaning, and in the context of the [article] as a whole, the procurement of forgery allegation meant and was intended and understood to mean that: (a) the Applicant had procured the forging of a signature, purporting to be that of STX's Australian brokers, on a letter of indemnity; (b) evidence that the Applicant had done so: (i) was adduced in the STX proceeding; and (ii) stood uncontradicted by the Applicant; and (c) this Honourable Court found that the Applicant had done so. 27. In truth and fact: (a) no evidence was adduced in the STX proceeding that the Applicant had procured the forging of a signature, purporting to be that of STX's Australian brokers, on a letter of indemnity; and (b) relevantly, in the 12 November Reasons, this Honourable Court made the following findings; namely - (i) at paragraph 89: Since there was no evidence that Bowen Basin or Mr Thomson sought to present the letter of indemnity or caused it to be used, it is not open to find that it amounted to any representation made to STX. (ii) at paragraph 96: However, there is no evidence that he [the Applicant] caused the letter of indemnity to be deployed. 28. In the premises, the procurement of forgery allegation was: (a) untrue in fact; (b) misleading or deceptive, or likely to mislead or to deceive; and (c) defamatory of the Applicant. 15 After the execution of the charterparty on 12 March 2010, Bowen Basin was contingently liable for moneys which were to become payable to STX pursuant thereto. It had previously incurred liability for the cost of the coal. Prior to 16 April 2010, Bowen Basin had no committed purchaser for either shipment. On that day, Bowen Basin executed a contract for the sale of both shipments to Loyal Strategic Investment Ltd ("Loyal"). The price at which the coal was sold was insufficient to cover the cost of its purchase price and the shipping costs payable pursuant to the charterparty, quite apart from any further liability which might arise by way of demurrage or otherwise. Rares J found that by 16 April 2010, Mr Thomson knew that Bowen Basin's loss for the two shipments would be "well in excess of USD 1.3 million." Further liability to STX was accruing. On 19 April 2010, STX sent an invoice for just under USD 1.3 million. The amount of the invoice was payable within five banking days after the signing and release of the bill of lading for the first shipment. On 22 April 2010, Bowen Basin invoiced Loyal for the sale price of the first shipment. The bill of lading was released on 28 April 2010, so that payment was due on 5 May 2010. 16 It is at this point that the letter of indemnity (the "LOI") emerged. Its provenance is unclear. No doubt the respondents suspect that it was produced at the behest of Mr Thomson, or by arrangement between him and Loyal, but there is no evidence or finding to that effect. It seems that Loyal sent an email to Bowen Basin, with a copy to Mr Thomson. The email stated that Loyal would return the "signed and sealed" LOI to Bowen Basin so that the latter could provide it to STX in order to obtain release of the first shipment if the bill of lading were not presented. Loyal also said that it would be remitting the purchase price for the coal and inquired as to when Bowen Basin would be paying STX. 17 The LOI was in evidence before Rares J, but not before me. It was addressed to STX and requested the discharge of the first shipment without production of the bill of lading, upon the strength of Bowen Basin's promise to pay the amount due to STX. The letter was signed by Mr Thomson, and the seal of Bowen Basin was affixed. The letter was also purportedly executed by a Mr da Silva under the "stamp" of Sea Corporation Pty Ltd ("Sea Corp"). Sea Corp was a shipbroker, based in Perth. Mr da Silva was an officer or employee of Sea Corp. In that capacity, he had negotiated the charterparty on behalf of STX. 18 On 4 May 2010, Bowen Basin paid to STX the sum of USD500,000 (less bank charges) but has paid no further amount. At that time it asserted that it had remitted the balance through its banker. This seems not have been the case. After 5 May 2010, Bowen Basin was in default of payment. Mr da Silva gave evidence that he first saw the LOI on 17 May 2010. He denied that he or Sea Corp had signed it. His Honour accepted this evidence. There is no evidence that STX had any prior knowledge of the LOI. However there is also no evidence that Mr Thomson made any attempt to use it so as to induce STX to deliver the first shipment without insisting upon prior payment.

The "Findings of Fraud" Allegations 19 Mr Thomson pleads, at paras 29 - 32 of the statement of claim as follows: 29. Under the subheading "Fraud", the [article] contained the following statement (herein called "the findings of fraud allegations"); namely - The Court found that Mr Thomson acted fraudulently against STX in the following respects: 1. … 2. … 3. … 4. Mr Thomson's purpose in signing the LOI was to cause STX to lose possession of its only source of being paid namely its control over the coal on board the Yong An 2 and then in China over which it claimed its lien under the voyage charterparty. 5. Mr Thomson caused the STX's local representative to be given a worthless cheque drawn by another company in the Thomson group as an earnest of good faith knowing that [Bowen Basin] was then hopelessly insolvent. 30. In their ordinary and natural meaning, and in the context of the [article] as a whole, the findings of fraud allegations meant and were intended and understood to mean that: (a) the Applicant had defrauded STX by: (i) signing a forged letter of indemnity; and (ii) passing a worthless cheque; and (b) this Honourable Court expressly found that the Applicant had so defrauded STX. 31. In truth and fact: (a) in the STX proceeding, this Honourable Court: (i) expressly rejected the case that the Applicant had defrauded STX by signing a forged letter of indemnity; and (ii) made no finding that the Applicant had defrauded STX by passing a worthless cheque; (b) as to the forged letter of indemnity, in the 12 November Reasons, this Honourable Court made the following findings; namely - (i) at paragraph 89: Since there was no evidence that Bowen Basin or Mr Thomson sought to present the letter of indemnity or caused it to be used, it is not open to find that it amounted to any representation made to STX. (ii) at paragraph 96: However, there is no evidence that he [the Applicant] caused the letter of indemnity to be deployed. (c) as to the worthless cheque, in the 12 November Reasons, this Honourable Court: (i) made the following findings at paragraph 35; namely - On 7 May Mr Kang [an officer of STX] waited at Bowen Basin's offices to speak to Mr Thomson but instead he met Mr Jenkins. Mr Jenkins told him that they were trying to arrange finance. That afternoon Mr Jenkins and Chantal Horton, an executive assistant at Bowen Basin, met with Mr Kang. They gave him a cheque for $1,000,000 drawn by Beach Building & Civil Group Pty Ltd on a Sydney branch of Bank of China. The cheque was dated 7 May 2010 and it was signed by Mr Thomson. Ms Horton told Mr Kang that the cheque was security over the coming weekend for the outstanding freight and demurrage Bowen Basin owed to STX. She said, however, that the cheque could not be honoured because there was no money in the account and they were still trying to arrange finance. Ms Horton asked Mr Kang to ring before trying to bank the cheque and that they could remit the money after they had received funding. Mr Kang replied that STX's head office required payment by telegraphic transfer, not cheque. [emphasis added (in the pleading)] (ii) made no finding that STX was induced to believe that the cheque had value; and (iii) made no finding that STX acted in reliance on a belief that the cheque had value. 32. In the premises, the findings of fraud allegations were: (a) untrue in fact; (b) misleading or deceptive, or likely to mislead or to deceive; and (c) defamatory of the Applicant. 20 Mr Thomson's case is that the article asserts that he defrauded STX by signing the LOI and by passing the worthless cheque. 21 In his reasons for judgment, under the heading "The Post-Contractual Representations", Rares J deals with the LOI and various subsequent assertions by Mr Thomson concerning attempts by Bowen Basin to meet its commitment to STX. As to the LOI, his Honour concluded that: Since there was no evidence that Bowen Basin or Mr Thomson sought to present the letter of indemnity or caused it to be used, it is not open to find that it amounted to any representation made to STX. His Honour then concluded that from 6 May 2010, Mr Thomson had sought to induce STX to maintain the charterparty on foot. He sought to convince Mr da Silva that Bowen Basin was negotiating with a bank to pay the amounts due for the first shipment, and to enable loading of the second shipment. There was no evidence that Bowen Basin had the capacity to raise the necessary funds. Mr Kang, a representative of STX in Australia, travelled to the Gold Coast to meet with Mr Thomson. Mr Thomson told him that payment would be made on 7 May. Mr Thomson also told Mr Kang that he was personally very wealthy, describing some of his assets and business interests. 22 On 7 May, Mr Kang attended at Bowen Basin's office to speak to Mr Thomson. He was unable to do so but spoke to employees of that company. They gave him a cheque for $1 million drawn on Beach Building. The cheque was dated 7 May 2010 and was signed by Mr Thomson. It was said to be security for the outstanding amounts "over the coming weekend". He was told that the cheque would not be honoured as there was no money in the account, and that Bowen Basin was still trying to arrange finance. The employees asked Mr Kang to telephone before presenting the cheque. He said that STX required payment by telegraphic transfer, not by cheque. Mr Thomson sent an email to Mr da Silva saying that "we have issued Danny [Kang] with a check (sic) for 1 million USD to be presented Monday close of business". He also asked that the cargo be unloaded in order to avoid further expense. 23 Thereafter, STX's London solicitors became involved, and demands were made. Negotiations continued. Bowen Basin indicated that the second shipment would be available for loading, and that bank funding was imminent. Finally, on 17 May 2010, STX advised that it had accepted Bowen Basin's repudiation of the charterparty and cancelled the second shipment. The original proceedings were commenced on 21 May 2010. STX alleged pre-contractual and post-contractual misrepresentations by Bowen Basin and Mr Thomson. His Honour rejected the case based on alleged pre-contractual representations. As to post-contractual representations, his Honour found that the LOI was not used in such a way as to constitute a representation. However Rares J accepted that other conduct on behalf of Bowen Basin constituted misrepresentation, including Mr Thomson's statements as to his own wealth and other statements which he had caused employees of Bowen Basin to make concerning Bowen Basin's efforts to acquire finance, and its prospects of doing so. 24 Although his Honour found that the LOI was not a representation made by Bowen Basin or Mr Thomson, he treated it as relevant to the so-called post-contractual fraud case (at [96]). It seems that Rares J must have concluded that Mr Thomson had arranged and signed the LOI with the intention of obtaining discharge of the cargo without payment, and that his Honour relied upon that intention in making his finding that other conduct by Mr Thomson, or caused by him was motivated by a desire to induce STX to keep the charterparty on foot. 25 His Honour's use of the evidence as to the cheque is not so clear. Rares J certainly concluded that by causing the cheque to be delivered to Mr Kang with the accompanying statements, Mr Thomson was seeking to further his attempts to induce STX to keep the charterparty on foot. Such conduct may have led STX to believe that there was still a chance that Bowen Basin would obtain the necessary funds. The conduct could be interpreted as representing a belief on the part of those in control of Bowen Basin that the funds might still be obtained, a belief which, as his Honour concluded, could not have been honestly held. Thus the conduct concerning the cheque may have comprised a false representation as to such belief. However it is difficult to see how STX could be said to have relied on it, given Mr Kang's statement that STX required a telegraphic transfer, not a cheque. 26 Alternatively, his Honour may have used the evidence for the same purpose as, in my view, he used the evidence concerning the LOI, as going to Mr Thomson's general intention to induce STX to keep the charterparty on foot. The difference between the two bodies of evidence is that in the case of the LOI evidence, there was no evidence that Mr Thomson caused it to be disclosed to STX whereas, in the case of the evidence concerning the cheque, there was evidence that Mr Thomson caused it to be delivered to STX and the making of the accompanying statements. 27 In the end I favour the former view. I consider that his Honour treated the delivery of the cheque and the accompanying statements as part of the history of delay and prevarication in which Mr Thomson caused Bowen Basin to participate. There is no real reason for treating this body of evidence in any other way. As I have suggested, there may be doubts about the extent to which STX acted upon this evidence, given Mr Kang's statement, but it would be artificial to look at it in isolation from the other evidence. 28 I note that on appeal from his Honour's decision, the Full Court seems to have taken a similar view concerning his Honour's use of the evidence relating to the cheque. See Thomson v STX Pan Ocean Co Pty Ltd [2012] FCAFC 15 at [14].

The "Significant Damages" Allegation 29 This aspect of Mr Thomson's case is pleaded at paras 33 - 36 of the statement of claim as follows: 33. The [article] contained: (a) under the subheading "The proceedings", the following statement, namely - STX claimed damages of approximately USD$2,760,000 against Mr Thomson for the wasted expenditure incurred under its head time charters for both vessels, namely hire, bunkers consumed by both vessels, and port charges incurred by the Yong An 2 in China, during the period of the voyage charterparty. (b) under the subheading "Conclusion", the following statement (herein called "the significant damages allegation"); namely - The Court awarded significant damages against Mr Thomson for the days during which STX incurred expenses under its time charterparty as a result of the post contractual fraud by Mr Thomson from the commencement of that fraud on 6 May through to 17 May when the second shipment on the Izola was cancelled. 34. In their ordinary and natural meaning, and in the context of the [article] as a whole, the significant damages allegation meant and was intended and understood to mean that the damages awarded against the Applicant represented an amount which was "significant" in light of the claim by STX for approximately USD 2,760,000. 35. In truth and fact: (a) on the grounds set out in the 12 November Reasons and the 26 November Reasons, this Honourable Court: (i) expressly rejected the claim by STX for approximately USD 2,760,000; and (ii) awarded STX, by way of damages, the sum of only USD 509,771.10; (b) the sum so awarded: (i) represented less than 18.5% of the sum of approximately USD2,760,000 claimed by STX; and (ii) did not represent an amount which was "significant" in light of the claim by STX for approximately USD 2,760,000. 36. In the premises, the significant damages allegation was: (a) untrue in fact; (b) misleading or deceptive, or likely to mislead or to deceive; and (c) defamatory of the Applicant. 30 It is a little difficult to know whether this complaint is that a reader might assume that: the description of the award as "significant" denoted an award which was greater than the sum actually awarded; or in the circumstances, the award actually made should be treated as being "significant". The actual amount of the award was disclosed in the first full paragraph on p 2 of the article. It is described as "approximately US$510,000 in damages and interest plus costs". Thus it seems that Mr Thomson's complaint must be that such an award cannot be accurately described as "significant". This was the approach taken in argument by counsel for both sides.

NO REASONABLE PROSPECTS OF SUCCESS 31 The respondents seek summarily to determine these proceedings pursuant to s 31A of the Federal Court Act and O 20 r 4 of the former Federal Court Rules. However, for present purposes, O 20 r 4 has no application. Section 31A provides: (1) The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if: (a) the first party is prosecuting the proceeding or that part of the proceeding; and (b) the Court is satisfied that the other party has no reasonable prospect of successfully defending the proceeding or that part of the proceeding. (2) The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if: (a) the first party is defending the proceeding or that part of the proceeding; and (b) the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding. (3) For the purposes of this section, a defence or a proceeding or part of a proceeding need not be: (a) hopeless; or (b) bound to fail; for it to have no reasonable prospect of success. (4) This section does not limit any powers that the Court has apart from this section. (5) This section does not apply to criminal proceedings. 32 The High Court considered this provision in Spencer v Commonwealth (2010) 241 CLR 118. At [60] the majority said: Rather, full weight must be given to the expression as a whole. The Federal Court may exercise power under s 31A if, and only if, satisfied that there is "no reasonable prospect" of success. Of course, it may readily be accepted that the power to dismiss an action summarily is not to be exercised lightly. But the elucidation of what amounts to "no reasonable prospect" can best proceed in the same way as content has been given, through a succession of decided cases, to other generally expressed statutory phrases, such as the phrase ''just and equitable'' when it is used to identify a ground for winding up a company. At this point in the development of the understanding of the expression and its application, it is sufficient, but important to emphasise that the evident legislative purpose revealed by the text of the provision will be defeated if its application is read as confined to cases of a kind which fell within earlier, different, procedural regimes. 33 I note also the following observations by French CJ and Gummow J at [25] - [26]: 25 Section 31A(2) requires a practical judgment by the Federal Court as to whether the applicant has more than a "fanciful" prospect of success. That may be a judgment of law or of fact, or of mixed law and fact. Where there are factual issues capable of being disputed and in dispute, summary dismissal should not be awarded to the respondent simply because the Court has formed the view that the applicant is unlikely to succeed on the factual issue. Where the success of a proceeding depends upon propositions of law apparently precluded by existing authority, that may not always be the end of the matter. Existing authority may be overruled, qualified or further explained. Summary processes must not be used to stultify the development of the law. But where the success of proceedings is critically dependent upon a proposition of law which would contradict a binding decision of this Court, the court hearing the application under s 31A could justifiably conclude that the proceedings had no reasonable prospect of success. 26 Where an application under s 31A requires consideration of apparently complex questions of fact, then the caution uttered by Lord Hope is relevant… . The importance of those considerations is amplified if the case involves resolution of issues of law and fact, or mixed law and fact. 34 I should add that, although counsel referred to the relatively new statutory regime relating to the law of defamation, it was not suggested that I should refer to it.

Forgery 35 This aspect of the case arises out of a paragraph on page 2 of the article as follows: In the meantime for reasons never explained by Mr Thomson, Mr Thompson procured an LOI containing a forged signature of STX's Australian brokers purporting to bind STX to the LOI in favour of third parties. Mr Thomson gave no evidence explaining this LOI and both STX and the brokers provided evidence that it had been procured without their knowledge or authority. Interestingly STX first became aware of this LOI when it was produced to its local agents by the Chinese sub buyers of the coal. Two questions arise concerning this paragraph. The first is its meaning. The second is the extent to which it accurately reflects his Honour's reasons. Mr Thomson's case is that the passage meant, and was intended to mean that he had procured the forgery, that there was evidence to that effect and that the Court had so found. The respondents submit that the article asserts only that he had procured a document which contained a forgery. 36 The actual LOI was not before me, and so I am not aware of its precise terms. Counsel offered different, and somewhat contradictory views as to its effect. The paragraph cited above suggests that it purported to bind STX, as against Loyal as purchaser of the coal, presumably on the basis that Sea Corp had signed the LOI as agent for STX. In the end it is probably safe to infer that the content of the document was designed to induce STX to release the first shipment, notwithstanding the fact that it had not been paid pursuant to the charterparty. 37 The context in which the paragraph appears must be kept in mind. That context includes the title of the article, with the repeated use of the word "lies", and the reference in the first paragraph to "misrepresentation and deceit with its trading partner amounting to fraud". In context, the reference is to the conduct of Bowen Basin and of Mr Thomson. In that context, it is quite likely that a reader would understand the passage to assert that Mr Thomson had brought about the forgery in order to mislead STX (its "trading partner") in some way. 38 Rares J did not find that Mr Thomson had procured the forgery for the purpose of misleading STX for his own benefit or that of Bowen Basin. His Honour found only that Mr Thomson had "arranged and signed" the LOI, and that his purpose in so doing was to induce STX to release the first shipment without first receiving payment. There was nothing necessarily dishonest about Mr Thomson's seeking to obtain discharge of the cargo without production of the bill of lading. Any dishonesty could only have been in seeking to induce STX so to release the cargo by dint of dishonest statements. In this case, a finding of dishonesty could only be justified on the basis that Mr Thomson knew that Sea Corp's apparent execution of the LOI was a forgery. As far as I can see, there was no direct evidence to that effect. Perhaps his Honour could properly have drawn such an inference, based on the other evidence as to the document's provenance, but he seems not to have done so. I am unable to conclude that the case based on para 26(a) of the statement of claim enjoys no reasonable prospects of success. 39 As to the allegations in paras 26(b) and (c) of the statement of claim, the matter is a little more complicated. It is possible to read the article as treating the LOI issue as a discrete aspect of the case. However a reader might also reasonably infer that it was part of the basis upon which the trial Judge found that Mr Thomson had acted dishonestly, leading to the award of damages against him, presumably upon the basis of the evidence. It follows that I cannot conclude that Mr Thomson's case based on paras 26(b) and (c) enjoys no reasonable prospects of success.

Fraud 40 Mr Thomson's case depends upon the section of the article headed "Fraud", in particular paras 4 and 5 which are set out in para 29 of the statement of claim. 41 Mr Thomson asserts that this passage meant, and was intended to mean that he had defrauded STX by signing the forged letter of indemnity and by passing a worthless cheque, and that the Court had so found. The respondents submit that Rares J found fraud as alleged. As I understand Mr Thomson's position it is that his Honour found fraud, but not in connection with his signing of the letter of indemnity, and not in connection with the cheque. 42 I have already indicated that I do not understand his Honour's reasons to contain any finding of fraud or dishonesty arising out of Mr Thomson's conduct concerning the LOI. His conduct certainly did not amount to actionable fraud, given that he did not cause the LOI to be presented to STX, and so he did not induce that company to act in reliance upon it. His Honour found that Mr Thomson had "arranged" the LOI, but he did not directly address any question of dishonesty in that regard. To the extent that Mr Thomson's case relies upon the statement concerning his conduct in connection with the LOI, it is not without reasonable prospects of success. 43 As to the worthless cheque, I have concluded that Rares J held that Mr Thomson caused its delivery to Mr Kang and associated representations by Bowen Basin employees. His Honour found that this course of conduct was designed to induce STX to keep the charterparty on foot. Delivery of the cheque and the associated representations were, as his Honour found, dishonest representations as to Bowen Basin's prospects of obtaining the necessary funds to meet its obligations to STX. His Honour must also have found that STX acted to its detriment in reliance upon the relevant representations. It follows that Mr Thomson has no reasonable prospects of success to the extent that he relies on paras 30(a)(ii), 31(a)(ii) and 31(c) of the statement of claim.

Damages 44 Under the heading "Conclusion" in the article, the author said: 3. The Court awarded significant damages against Mr Thomson for the days during which STX incurred expenses under its time charterparty as a result of the post contractual fraud by Mr Thomson from the commencement of that fraud on 6 May through to 17 May when the second shipment on the Izola was cancelled. 45 Mr Thomson claims that the words "significant damages" would be understood as referring to an amount which was significant, having regard to the amount claimed, around USD2,760,000, and that the amount awarded, USD509,771.10, was not significant in that sense. 46 One might doubt whether an amount in excess of USD500,000 could ever sensibly be described as other than significant, save in ranges of transactions with which few people are familiar. However, in the present case, it is not necessary to speculate about such matters. On page 2 of the article, in the first full paragraph, the author states that STX was awarded judgment against Mr Thomson in the approximate amount of US$510,000 as damages and interest plus costs. Thus the reader would know the amount which was said to be "significant" and could make his/her own judgment. In the context of the article as a whole, the impugned statement cannot be misleading or deceptive, likely to mislead or deceive or defamatory of Mr Thomson. To the extent that Mr Thomson relies on paras 33 to 36 of the statement of claim his case enjoys no reasonable prospects of success. 47 By their notice of motion the respondents also seek an order that Mr Thomson verify his statement of claim, presumably by affidavit. In oral argument, counsel indicated that to the extent that the statement of claim withstands the respondents' attack, I should order that it be so verified. At the hearing I indicated that I would consider that application but might choose to leave the decision to a later stage in any ongoing proceedings. I am not presently inclined to make such an order. The application seems little more than a suggestion that I draft appropriate interrogatories. After the parties have considered these reasons and made any necessary amendments to the pleadings, the matter may be reconsidered.

orders 48 I shall receive submissions as to appropriate orders and costs. I certify that the preceding forty-eight (48) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Dowsett.