HER HONOUR: These proceedings are before the Court today for determination of the matters required to be determined at the second listing in accordance with Practice Note SC CL 4. The parties raised four issues for the Court's determination.
First, the plaintiff has taken objections to the contextual imputations pleaded by the defendant in an amended defence filed on 1 May 2015. The first contextual imputation objected to is A, as follows:
A. The plaintiff betrayed Nexus Energy shareholders, in that he resigned as Chairman of Nexus Energy without ensuring that they were informed that a takeover offer was made by Seven Group of 5.3 cents per share and was allowed to lapse, and the subsequent acquisition of Nexus by Seven Group, of which he was CEO, rendered their shares valueless.
The plaintiff complains that the imputation is bad in form as it contains more than one sting and is confusing. I would accept that submission. In particular, in my view it is unclear by reason of the addition of the consequence in the second clause of the imputation precisely what act it is alleged is imputed or attributed to the plaintiff by the matter complained of. In my view, that imputation must be struck out.
Imputations B and C may be dealt with together. They are:
B. The plaintiff's conduct in resigning as Chairman of Nexus Energy without having ensured that its shareholders were informed that a takeover offer was made by the Seven Group, but allowed to lapse, was such as to warrant complaint by Nexus shareholders to ASIC over a takeover of Nexus by Seven Group, of which he was CEO.
C. The plaintiff's conduct in resigning as Chairman of Nexus Energy without having ensured that its shareholders were informed that a takeover offer was made by the Seven Group, but allowed to lapse, was such as to anger Nexus shareholders and cause them to take court action to block a takeover of Nexus by Seven Group, of which he was CEO.
In short, the objection to those imputations was that they add nothing to the notion of betrayal of the shareholders and, put colloquially, "jumping ship" already captured in the imputations pleaded by the plaintiff. In the case of those two imputations, whilst there may be some force in the plaintiff's objection, I think there is a slight or at least arguable difference in sense and, accordingly, I would not be inclined to strike those contextual imputations out. As I understand them, they convey the notion that the combination of the plaintiff's resignation and the circumstance that, while he remained chairman of the company, a takeover offer had remained secret and been allowed to lapse was such as to warrant, in each case, the reaction identified, namely, first the complaint by shareholders to ASIC and secondly the commencement of a Court action by the shareholders.
There is no objection to contextual imputation D.
The second issue raised by the plaintiff was an objection to the categories for discovery sought by the defendant. Each of those objections was dealt with during argument. If the parties require a formal order reflecting the rulings given, a form of order should be brought in by delivery to my associate.
The third issue is the defendant's objections to the plaintiff's proposed interrogatories and discovery. That objection raises an interesting question as to the vexed issue of the matter of defeasance required to be pleaded by a plaintiff where a defendant relies upon the defence under s 31(3) of the Defamation Act 2005 (NSW) commonly referred to as the defence of comment of a stranger (in fact the third party is referred to in the statute as "the commentator").
The form of interrogatories proposed by the plaintiff in aid of proof of the matter of defeasance pleaded in the plaintiff's reply mirrors a form of interrogatories commonly allowed in cases where there is a defence of qualified privilege. The interrogatories seek, broadly, answers as to the information held by the defendants at the time of publication in respect of any of the matters contained in the matter complained of.
In Kermode v Fairfax Media Publications Pty Limited (No 2) [2011] NSWSC 646, I was persuaded to allow interrogatories of that kind where there was no defence of qualified privilege pleaded but where the defence of comment was pleaded under s 31 of the Act. It was understood in that case that the defence related to comment, not of a commentator, but of the defendant or an employee or agent of the defendant.
The matter of defeasance required to be pleaded in reply to either of those defences is in slightly different terms from the matter of defeasance required to be pleaded where the defence is comment of a commentator. Further, it may be observed that, since the publication of that decision, the Chief Justice has promulgated the Practice Note, which is plainly calculated to focus the attention of parties, perhaps with greater care and greater attention, in particular to the issue of proportionality. In that context, it cannot be assumed that interrogatories which find support in cases decided before the promulgation of the Practice Note will automatically be allowed.
In any event, I think it was accepted during argument on behalf of the plaintiff that the present form of interrogatories might more appropriately be honed with specificity to the matter of defeasance identified in s 31(4) of the Act. It might be arguable that answers to the interrogatories as presently formulated, which would give the plaintiff the universe of information held by the defendants at the time of publication, would be capable of informing the question whether the defendant had reasonable grounds to believe that the opinion of the commentator was not honestly held by that person, but it is doubtful whether interrogatories in that form satisfy the test of being "necessary".
In my view, any interrogatories proposed in aid of the defence should be honed to the precise issue stated in the statute, namely, whether the relevant thinking minds of the defendant believed that the opinion of the commentator was honestly held by that person and, if so, what grounds they had for holding that belief.
Questions might also be directed to information obtained by the defendant from the commentator himself, rather than more broadly, or questions as to any information the defendant had as to the information held by the commentator. The present interrogatories I think are broader than is necessary for the resolution of the issue raised by the statute. The categories for discovery, which mirror the interrogatories on that issue, equally will, I think, have to be more specifically honed.
A separate submission was put in respect of interrogatories 22 to 24 as to enquiries made by the defendant whether the matters relied upon as proper material for comment were true or not. I think the correct position is as submitted by Mr Polden, who appears for the defendant, that the making of any such enquiries is not relevant, the critical issue being whether, as an objective fact, the matters relied upon as proper material for comment were true. Interrogatories in the present form of 14 to 24 will not be allowed but, absent agreement, the Court will consider any further form of interrogatories proposed.
The final issue relates to a category of discovery objected to which is item 2 seeking "a copy of all drafts of the matter complained of prior to publication, including all unedited footage taken for the purpose of the matter complained of". That category was defended on the strength of a particular of aggravated damages in the further amended statement of claim, which alleges that the plaintiff's harm was aggravated by the defendant's misrepresentation, in the matters complained of, of the information in its possession. Mr Polden submitted that that was not a sufficient handle on which to hang that category for discovery. I disagree. Absent any suggestion that the plaintiff had no proper basis for pleading that particular of aggravated damage, which has not been put, its generality does not preclude the relevance of the category identified.
Finally, the defendant seeks the costs thrown away by reason of an application for security for costs. In short, the defendant submitted that the need to bring the application could have been obviated if the plaintiff had reacted more promptly to an issue raised reasonably in correspondence. For the reasons put by Mr Jedrzejczyk in his submissions, I do not accept that the plaintiff ought to bear the costs thrown away of that application. The appropriate order in my view is that each party bear its own costs of the application.
ADDENDUM: Mr Jedrzejczyk has reminded me that interrogatories 14 to 24 do not all fall into the same category. My rulings are:
1. Interrogatories 14-19 are not allowed, but the Court will consider any revised form of those interrogatories that may be submitted by the plaintiff;
2. Interrogatories 20 and 21 are allowed; and
3. Interrogatories 22-24 are not allowed.
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Decision last updated: 07 September 2015