Time for Monkeys Enterprises Pty Ltd v Southern Cross Austereo Pty Ltd

The basis of the application

1. Although the principal reason for the application is the plaintiff's ineligibility to sue by reason of s 9 Defamation Act 2005 (NSW), the defendants bring this application on four bases: 1. The plaintiff has admitted, both of a consequence of failure to dispute a Notice to Admit Facts (Exhibits A and B) and in correspondence (Exhibit C), that the plaintiff employs 10 persons, and cannot therefore satisfy the "excluded corporations" exemption in s 9(2) Defamation Act 2005 (NSW); 2. There is a total failure to comply with UCPR r 14.30 in terms of the content of the matter complained of, the imputations pleaded and the relief and damages claimed; 3. Mr Bourne's failure to file the relevant affidavit material pursuant to UCPR r 7.2; and 4. The conduct of the proceedings to date, including an application by the plaintiff for default judgment which was electronically filed on 18 December 2014 but not served.
2. I shall deal with each of these grounds in turn.

Section 9 and "excluded corporation"

1. Section 9 Defamation Act 2005 (NSW) provides: "9 Certain corporations do not have cause of action for defamation (1) A corporation has no cause of action for defamation in relation to the publication of defamatory matter about the corporation unless it was an excluded corporation at the time of the publication. (2) A corporation is an excluded corporation if: (a) the objects for which it is formed do not include obtaining financial gain for its members or corporators, or (b) it employs fewer than 10 persons and is not related to another corporation, and the corporation is not a public body. (3) In counting employees for the purposes of subsection (2) (b), part-time employees are to be taken into account as an appropriate fraction of a full-time equivalent. (4) In determining whether a corporation is related to another corporation for the purposes of subsection (2) (b), section 50 of the Corporations Act 2001 of the Commonwealth applies as if references to bodies corporate in that section were references to corporations within the meaning of this section. (5) Subsection (1) does not affect any cause of action for defamation that an individual associated with a corporation has in relation to the publication of defamatory matter about the individual even if the publication of the same matter also defames the corporation. (6) In this section: "corporation" includes any body corporate or corporation constituted by or under a law of any country (including by exercise of a prerogative right), whether or not a public body. "public body" means a local government body or other governmental or public authority constituted by or under a law of any country."
2. Section 9 Defamation Act 2005 (NSW) was based on s 8A Defamation Act 1974 (NSW), which came into effect in February 2003. It is a threshold bar to any corporation that is not "excluded" from bringing defamation proceedings, and since the enactment of s 9 in the uniform legislation applies to the bringing of proceedings in relation to any cause of action arising from publication in the States and Territories of Australia.
3. The evidence is as follows. The plaintiff was served with a Notice to Admit Facts on 30 January 2015 as follows: "1. As at 15 October 2014 the Plaintiff employed 10 persons. 2. As at 15 October 2014 the Plaintiff employed 10 persons on a full time basis."
4. The defendants draw the following to my attention: 1. No notice disputing fact has been filed and it must be taken that such an admission is made. 2. The plaintiff has in any event failed to comply with its obligation to specify in the statement of claim that it is in fact an excluded corporation. 3. Additionally, as Exhibit C makes clear, the plaintiff, in a letter of 9 December 2014 (part of which is a "without prejudice" communication and which, following Mr Bourne's objections on 19 December, has been masked by the defendants), volunteered the information that it had 10 employees. The relevant extract from this letter is as follows: "As preciously [sic] advised Time for Monkeys Enterprises currently has 10 employees at the time of broadcast of the "offending" material. I have attached at attachment two and three copy's [sic] of the employee listing for the company as of the date of the "Offending" material being broadcast [sic] (15th October 2014). Please note that for employee privacy only the first and last letter of the employees name has been provided. If the defendants wish to view that attached document in full then they should make arrangements to view the documents in person. It is our number one priority to abide by the privacy act [sic] and ensure our employee's [sic] details are kept securely."
5. The evidence that the plaintiff is not an excluded corporation is very strong. While an admission in correspondence may not be as binding as an admission in a pleading or a Notice to Admit Facts (Attorney General of New South Wales v Homeland Community Ltd [2015] NSWCA 15), the plaintiff has in fact volunteered that it has 10 employees. This admission was made under cover of a letter of 9 December 2014 in circumstances where the letter from the solicitors for the defendants dated 4 November 2014 (Exhibit A, p 4) clearly drew the following provisions to the attention of the plaintiff, in response to earlier correspondence, which stated, in relation to a previous representation to this effect: "Further, we note your advice that the Plaintiff has exactly 10 employees and it is necessary that the relevant particulars be provided pursuant to UCPR Regulation 15.20 of the corporation's capacity to assert a cause of action for defamation."
6. These proceedings should therefore be summarily dismissed on this basis alone. I shall, however, set out my findings in relation to the other bases upon which this application has been brought.

Inadequate pleading

1. The statement of claim is hopelessly pleaded. I particularly note the following: 1. The matter complained of is not attached. What little information appears in paragraphs 1 and 2 of the statement of claim as to what was said by the defendants' radio presenters does not indicate that it was identified by name; 2. No imputations are pleaded, although it would appear that the plaintiff asserts that it was "called frauds and scams [sic]"; 3. A claim is made for $80,000 as well as "associated fees, including lost wages and income". The nature of these damages, and whether they are special damages, is not identified.
2. While these are substantial defects, they could be cured by granting leave to replead. However, there is no point in considering a grant of leave to amend given the inability of the plaintiff to bring these proceedings by reason of s 9 Defamation Act 2005 (NSW).

Failure to comply with UCPR r 7.2

1. Rule 7.2 UCPR provides: "7.2 Affidavit as to authority to commence and carry on proceedings in Supreme Court or District Court (1) A person who commences or carries on proceedings in the Supreme Court or District Court: (a) as the director of a company within the meaning of the Corporations Act 2001 of the Commonwealth, or (b) as the authorised officer of a corporation (other than a company within the meaning of the Corporations Act 2001 of the Commonwealth), must file with the originating process, notice of appearance or defence, as the case may be, an affidavit as to his or her authority to act in that capacity, together with a copy of the instrument evidencing that authority. (2) The affidavit made by the director of a company within the meaning of the Corporations Act 2001 of the Commonwealth must contain: (a) a statement to the effect that: (i) the director is a director of the company, and (ii) the director has been authorised by a resolution of the directors duly passed at a meeting of directors held on a specified date (which must not be earlier than 21 days before the date of the affidavit) to commence and carry on the proceedings, as the case requires, and (iii) the authority has not been revoked, and (iv) the director is aware that he or she may be liable to pay some or all of the costs of the proceedings, or (b) a statement to the effect that: (i) the director is the managing or governing director of the company and has authority to exercise the powers of the directors, and (ii) the director is aware that he or she may be liable to pay some or all of the costs of the proceedings. (3) The affidavit made by the authorised officer of a corporation (other than a company within the meaning of the Corporations Act 2001 of the Commonwealth) must contain a statement to the effect that: (a) the officer is the holder of a specified office within the corporation, and (b) the officer has been authorised by the corporation to commence and carry on the proceedings, and (c) the authority has not been revoked, and (d) the officer is aware that he or she may be liable to pay some or all of the costs of the proceedings."
2. These documents have never been filed, and the company is effectively unrepresented.
3. While, of itself, failure to comply with UCPR r 7.2 is not a matter that would warrant the dismissal of proceedings, it does not reflect well on the plaintiff's conduct of the matter to date that there has been failure to comply with this requirement, despite these matters having been drawn to the attention of Mr Bourne previously.

The plaintiff's conduct of the litigation

1. These proceedings were commenced in the Parramatta Registry. They were listed before Assistant Registrar Evans on 18 November 2014, who discontinued proceedings pursuant to a Notice of Discontinuance the plaintiff filed on 15 November 2014. The Registry then decided that this discontinuance had to be set aside, as consent to the discontinuance was not provided by the defendants as required by UCPR r 12.1, (but c.f. Packer v Meagher [1984] 3 NSWLR 486). Whatever the basis for the making and unmaking of these orders (which appears to have taken a considerable amount of registry time), the proceedings were discontinued by mistake in that, while the plaintiff had mistakenly sent a Notice of Discontinuance to the court, both parties had written to the registry seeking a consent order for the proceedings be transferred to the Sydney Registry.
2. On 9 December 2014, the Registrar made a further order in chambers transferring the matter to Sydney, at the request of the parties. This order was made despite the Registry discovering, in the interim, that the plaintiff's cheque for the filing fee was dishonoured, and being uncertain what to do about this. The Registry staff then placed a signed post-it note in the file requiring the court to remind the plaintiff that payment was required "plus the dishonour fee".
3. This raises the question of whether the proceedings had ever been "filed" in the first place. In Brierley v Reeves (2001) 51 NSWLR 689, the appellant appealed from an order dismissing his application for costs to be assessed, which had been made on the basis that the costs assessor had no jurisdiction to assess the bill of costs, as the filing fee was unpaid. The Court of Appeal dismissed the appeal, holding that, on a proper construction of s 203(4) Legal Profession Act 1987 (NSW), the fee had to be paid, or alternatively an application for waiver or postponement must be made before the period expired, neither of which had occurred. Other courts have similarly held that they have no jurisdiction where the filing fee required for lodgement of a court document is not paid: Druett v Minister for Immigration and Citizenship [2012] FMCA 568; Kirk v Minister for Immigration and Multicultural Affairs (1998) 87 FCR 99; Khan v Minister for Immigration and Citizenship [2009] FCA 443 at [17]; Braganza v Minister for Immigration and Multicultural Affairs (2001) 109 FCR 364.
4. The explanation for failure to pay in some cases has been that the applicant had sought, or was seeking, a waiver of the filing fee. In Thurston v Thurston [2011] FamCAFC 250, the appellant was informed he needed to pay a filing fee, or to seek a reduction, and failed to do either; the appeal was dismissed, although on the basis that it was without merit in any event (see also Daniels v Deputy Commissioner of Taxation [2007] SASC 114; Jordan v Van Schoubroeck (2003) 34 SR (WA) 325; but c.f. Caltabiano v Electoral Commission of Queensland (No 2) [2009] QSC 138 at [66]). However, no application for waiver of the filing fee was made in these proceedings.
5. Whether an extension of time to pay the fee can be granted may depend upon the legislation. In Aristocrat Australia Pty Ltd v Commissioner of Patents (2009) 112 ALD 363, the agent of a party misunderstood advice contained in a letter and formed the view that no filing fee was payable. An extension of time was granted on the basis that it would not prejudice the applicant. However, that was a case where the relevant legislation was flexible, in that the failure to provide a fee amounted to an "error" for the purposes of s 232(2)(a) of the Patents Act 1990 (Cth).
6. The relevant rule in these proceedings is UCPR r 4.10(5), which provides: "(5) An officer of the court may refuse to accept a document for filing in the following circumstances: (a) in the case of originating process: (i) if the location specified in the document as the venue at which the proceedings are to be heard is a location at which the court does not sit, or (ii) if the person on whose behalf the originating process is sought to be filed is the subject of an order of the Supreme Court declaring the person to be a vexatious litigant, (b) in the case of a document for which a filing fee is payable, if the fee has not been paid or arrangements satisfactory to the officer of the court have not been made for its payment."
7. This rule is infelicitously drafted, in that it appears to differentiate between "originating process" and "a document for which a filing fee is payable", but clearly the statement of claim would be an example of such a filing fee. I could not find any cases, or statutory provision, dealing with the possibility that a cheque for a filing fee would be dishonoured. It is unheard of.
8. I am satisfied that, as the cheque has been dishonoured, the filing fee has not been paid, and that this would constitute a basis for holding either that the court has no jurisdiction or that the proceedings have never been validly commenced. It would have been open to the Parramatta Registry to reject and return the statement of claim, or refuse to make further orders, but busy court registries should not have to concern themselves with such issues.
9. In my view, having regard to the principles discussed in the authorities set out above, the statement of claim should be struck out on this basis as well.
10. A further matter relied upon by the defendants is the filing by the plaintiff of an application for default judgment on 18 December 2014 in circumstances where this application was snapped on, with no prior notice to the defendants. Mr Bourne, on behalf of the plaintiff, sent the following email to my associate at 7:04am on 19 December 2014: "Mr Mok, For the ease of the court I have lodged an [sic] Defult [sic] Judgement [sic] Motion yesterday though the online portal on the Justice Link Website. I have not served this on the Defendants as I am not required to do so IAW the UPCR's. I have attached a copy of the motion to this email and I would appreciate that her honour is provided a copy of the motion for the directions hearing today. If you have any further questions please let me know on [Mr Bourne's mobile number], this is also the number I will be on for the Phone Hearing today. If I am able to ask that Parramatta to be heard first I might be able to appear in front of Her Honour today (as preferred). I will contact your office if this is the case otherwise I will attend by phone."
11. The absence of a defamation list in suburban and country registries exposes defendants in defamation proceedings to risks of this kind, as default judgments are not available in defamation proceedings only if they are in a specialist list: Altarama Ltd v Forsyth [1981] 1 NSWLR 188; District Court Civil Practice Note 6 does not apply to proceedings outside the Sydney registry and many of the protections afforded by a specialist list, including the entitlement to take objections to pleadings before having to file a defence, may not be considered to apply (Boros v Swann [2014] NSWDC 227).
12. However, it was improper for the plaintiff to have filed such an application without notice or service, particularly given the time of year, in that it was the last day of term; any default judgment entered over the Christmas vacation could have caused considerable inconvenience to the defendants. In my view, this would amount to "sharp conduct": Ipex ITG Pty Ltd (ACN 007 433 623) (in liq) (receivers appointed) v Victoria [2014] VSCA 315 at [22].

Final orders and costs

1. The plaintiff is not entitled to bring proceedings for defamation by reason of s 9 Defamation Act 2005 (NSW), and these proceedings accordingly fail in limine.
2. The defendants seek costs orders not only against the plaintiff for these proceedings, but also against Mr Trent Malcolm Bourne, pursuant to s 98 Civil Procedure Act 2005 (NSW).
3. The defendants draw to my attention a consideration of the relevant principles in May v Christodoulou (2011) 80 NSWLR 462. In those proceedings, a director of a company who had not strictly complied with procedural requirements set by r 7.2 UCPR was ordered to be jointly and severally liable with the company to pay the plaintiff's costs. On appeal that order was set aside, on the basis that the director in question had done no more than represent the company in proceedings (albeit somewhat ineffectively), and that in those circumstances the discretionary power to make an order for costs had miscarried.
4. The circumstances in these proceedings are very different. The plaintiff was at all relevant times on notice, as was Mr Bourne, that these proceedings were hopeless. The potential for such an order to be made is discussed in FPM Constructions Pty Ltd v Council of the City of Blue Mountains [2005] NSWCA 340, and the evidence before warrants the making of such an order. I note in this regard that despite my request to attend, Mr Bourne has not attended today, and that he appears to be the author of the unserved application for default judgment. It is my view that the costs should be payable by Mr Bourne personally. Additionally, while it is uncertain that Mr Bourne is himself responsible for this conduct, the filing of proceedings in the District Court by payment of a cheque which is subsequently dishonoured is a practice to be discouraged.
5. Further, the manner in which these proceedings were commenced and conducted in the Parramatta Registry caused inconvenience to that court's Registry and staff (see, similarly, Boros v Swann), the snapping on of default judgment applications in defamation proceedings should be prevented, and no litigant should expect the court to incur cheque dishonour fees. I accordingly propose to forward a copy of this judgment to the Rules Committee.

Orders 1. Plaintiff called three times at 2:10pm - no appearance. 2. Plaintiff called a second time three times at 2:35pm - no appearance. 3. Grant leave to the defendant to file in court the Affidavit of Natalie Buck affirmed on 16 February 2015 and the Affidavit of Natalie Buck affirmed on 19 February 2015. 4. Pursuant to r 13.4 Uniform Civil Procedure Rules 2005 (NSW), the proceedings are dismissed. 5. The plaintiff is to pay the defendants' costs of the proceedings. 6. Pursuant to s 98 Civil Procedure Act 2005 (NSW), Mr Trent Malcolm Bourne, a director of the plaintiff, is jointly liable for the costs of the proceedings.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 25 February 2015