Badcock v Channel Seven Adelaide Pty Ltd - [2005] SADC 32

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
BADCOCK v CHANNEL SEVEN ADELAIDE PTY LTD & ORS
Judgment of His Honour Judge Lee
22 April 2005
PROCEDURE - COSTS - SECURITY FOR COSTS
Application for security for costs by respondent to appeal from decision of Master – Master dismissed appellant’s claim for damages after he had made three unsuccessful attempts to plead cause of action in defamation – appellant unrepresented – whether “special circumstances” for an order exist in terms of rule 97.09(b) – whether, and in what circumstances, a claim which discloses a cause of action should be dismissed - difference between dismissal of proceedings under rule 3.01 and striking out of pleadings under rule 46.18 discussed – effect of appellant’s impecuniosity discussed – application dismissed.
Rules 97.09(b), 3.01, 46.18, 46A.02(b), 46A.03(b), referred to.
Farrer v Lacey (1885) 28 Ch D 482; Octocane Pty Ltd v SRJ Property Development Pty Ltd & Anor (1999) 74 SASR 471; Kennedy v McGeechan [1978] 1 NSWLR 314; Archer v Woodhead Australia Pty Ltd (29 March 1995, unreported BC9503154); Citicorp Australia Ltd v Cirillo [2003] SASC 204; Residues Treatment & Trading Co Ltd & Anor v Southern Resources Ltd & Ors (1989) 51 SASR 177; East-West Airlines v Commonwealth (1983) 57 ALJR 783, considered.

BADCOCK v CHANNEL SEVEN ADELAIDE PTY LTD & ORS
[2005] SADC 32

By notice for specific directions filed on 29 September 2004, the respondents seek an order for security for costs with respect to an appeal by the appellant from the decision of a Master on 31 August 2004 to dismiss his claim with costs.
The appellant’s claim was for damages for losses which he and his retail furniture businesses allegedly sustained in consequence of the broadcast by the respondents of segments of ‘Today Tonight’ television programs on 5 and 6 May 1997.
The action was commenced on 5 May 2003. It has had a long interlocutory history, caused in the main by the appellant’s attempts in successive statements of claim to comply with the Rules. After disallowing three statements of claim for that reason, the Master gave to the appellant on 1 July 2004 a further opportunity to present a statement of claim by 6 August 2004. The appellant failed to do so. Hence the order on 31 August 2004. The appellant’s appeal against that order has yet to be listed for hearing.
Rule 97.09(b) provides:
“Without restricting the generality of the jurisdiction powers and authority conferred on the Court by the Act or by any other enactment, a Judge when dealing with proceedings under this Rule:-
…
(b) may if there are special circumstances order that such security as the Judge thinks fit be given for the costs of the appeal;
…”
The respondents’ application is said by their counsel to be based upon three “special circumstances”, namely
(1) the impecuniosity of the appellant
(2) the special nature of the decision appealed from and the reasons given, and
(3) the limited prospects of success of the appeal.
As to (1), the appellant does not dispute that he is an undischarged bankrupt, but contends that his impecuniosity was caused by the conduct of the defendants. He told me that “were it not for the actions of the defendants, the plaintiff would still have a business, a home, a motor vehicle and regular employment”.
The granting of security for costs against an impecunious party is always subject to a general discretion, and the Court may exercise a discretion to refuse security where the impecuniosity of the appellant arises from the wrongful acts of the respondent which are the subject of the litigation: Farrer v Lacey (1885) 28 Ch D 482 at 485, and Octocane Pty Ltd v SRJ Property Development Pty Ltd & Anor (1999) 74 SASR 471 at 479.
Counsel for the respondents contends that the appellant’s business failed because of a warning that was issued to the public by the Commissioner for Consumer Affairs. Doubtless that warning was a significant factor. On the other hand, the warning was associated at least in time with the two television segments which are the subject of the action, and it would be unrealistic to suggest that the segments had nothing to do with the appellant’s financial demise.
I make a further point about the impecuniosity of the appellant as a ground for an order for security for costs of his appeal. In Kennedy v McGeechan [1978] 1 NSWLR 314, the Court of Appeal of New South Wales said:
“While there are reported decisions which are helpful as a guide, each case must be judged on its own merits as to whether special circumstances exist, leading the Court in its discretion to order security for costs of the appeal. The impecuniosity of an appellant may constitute a “special circumstance” leading the Court to order security, in that it is a circumstance which may deprive or delay a respondent receiving his costs of the appeal, if the appeal fails, which costs a successful respondent can usually expect he will actually receive. In an appellate situation, a respondent seeking security is in a stronger position than a defendant at first instance, to the extent that he has a decision in his favour, which is presumably right until displaced.
However, impecuniosity may not conclude the matter. Considerations of possible frustration of an apparently genuine appeal or concerning the subject matter of the appeal, such as appeals involving matters of great moment or the liberty of the subject, may provide reasons to refuse an order. The foregoing observations are made not to circumscribe the discretion, but in order to indicate its width.”
That passage has been adopted as the law in this State by Lander J in Archer v Woodhead Australia Pty Ltd (29 March 1995, unreported BC9503154) and Sulan J in Citicorp Australia Ltd v Cirillo [2003] SASC 204 (at paras 20 and 23). As will shortly appear, I consider that there do exist in the case before me, to use the words of the Court of Appeal, considerations of possible frustration of an apparently genuine appeal.
As to “special circumstances” (2) and (3), counsel for the respondents submits that, since the dismissal of the claim on 31 August 2004 arose in part from the Master’s concern that the respondents had already incurred costs of approximately $20,000 in orders against the appellant to that time, the appeal will unfairly add to those costs, given that the appeal is without merit, and nullify the protection that the dismissal was designed to achieve. The appellant contends that he was and remains confused about what he should do to make his statement of claim comply with the Rules.
In light of the opposing contentions in relation to (2) and (3), I have looked at the statements of claim against the requirements of rules 3.01 and 46.18. Before dealing with each of the versions in turn, I make the general point that, notwithstanding rule 46A.02(b) requiring that all pleadings “plead only the material facts relied upon and not the evidence or arguments by which they are to be proved”, the versions, and the first and second in particular, are what one might expect from an unrepresented litigant who is intent upon inserting every fact and circumstance that he perceives to be of relevance to his claim. Perhaps, although I do not stay to consider the point, some of those facts and circumstances fall into the category in rule 46A.03(b) of “such further material facts as are necessary to give other parties fair notice of the case which they will have to answer”.
Rules 3.01 and 46.18 provide:
“3.01 The Court may at any time dismiss proceedings which disclose no cause of action known to the law or can not by amendment be made to disclose such a cause of action, or which are frivolous, vexatious or an abuse of the process of the Court and may at any time grant a stay of proceedings where the justice of the case so requires.
….
46.18 Where a pleading:
(a)discloses no reasonable cause of action or defence;
(b)does not comply with the Rules as to pleadings;
(c)has a tendency to cause prejudice, embarrassment or delay in the proceedings;
(d)is scandalous, frivolous, or vexatious or contains scandalous matter; or
(e)is otherwise an abuse of the process of the Court,
the Court may at any stage of the proceedings, order that the whole or any part of the pleadings be struck out, on such terms as it thinks just or may direct that the scandalous matter be expunged.”
The first statement of claim was filed on 5 May 2003. It asserts that the defendants were negligent in not checking the facts, in not giving the appellant the opportunity to give his version of the facts, and in other respects. No duty of care was alleged.
Although it would seem from his use of the expression “the defendants knew” that the appellant was unaware that one may be liable although innocent of any intention to defame, his first statement of claim also pleads facts that are indicative of a cause of action in defamation.
Paragraph 35 asserts that the introduction by Leigh McLusky, as the defendants knew, created an impression of many more customer problems than the five shown in the program.
Paragraph 36 asserts that the defendants knew that the publication of that material would lower the public reputation and viability of the plaintiff’s businesses.
Paragraph 39 asserts that the defendants knew that statements by customers on the program of 5 May 1997 would lower the professional reputation of the plaintiff and lower public perception of the businesses compared to other businesses.
Paragraph 40 asserts that the defendants knew that a statement by a customer on the program of 5 May 1997, namely “You just feel like you’ve been conned”, would lower the professional reputation of the plaintiff or would imply that he was a conman.
Paragraph 90 asserts that the second and third defendants knew that the cumulative effect of information about the plaintiff and the businesses shown on Today Tonight would lower the professional reputation of the plaintiff and of the businesses.
Paragraph 91 asserts that the ordinary viewer would conclude that the plaintiff or the businesses had little or no regard for customers, that the plaintiff was a conman or shonk, and that there was no reason for the problems that the businesses had previously experienced.
In his reasons of 19 December 2003, the Master said, amongst other things:
“42. Having considered these pleadings, I have come to the conclusion that the pleading of negligence is both defective and incapable of being cured. There is no duty of care alleged to be owed by any of the defendants to the plaintiff, nor could the claim be amended to identify this. I refer to Sattin v Nationwide News (1996) 39 NSLWR 32 at 43; Bowes v Fehlberg (1997) Aust Torts Rep 64,203 at 64,221; and Gould v TCN Channel Nine Pty Ltd [2000] NSWSC 707.
43. In relation to his allegations of negligence, it is in this regard appropriate to refuse leave to the plaintiff to plead this cause of action in any amended re-pleading.
44. I turn to the causes of action insofar as the plaintiff pleads defamation. As presently pleaded, I agree with the defendants that currently a reasonable cause of action in defamation is not pleaded. There are no words or statements pleaded which the plaintiff asserts are defamatory of him; nor has he pleaded any defamatory imputations arising from such words or statements. In these circumstances, the words or statements not being identified, or imputations pleaded, it is impossible for the defendants to identify or plead defences which might be available to them, so the pleadings are thereby embarrassing.”
The Master then explained the approach that he proposed to take in consequence:
“51. As I have indicated earlier in these Reasons, where there are a substantial number of defects in a pleading the Court has a discretion to strike out the entire pleading – Residues Treatment Ltd (supra).
52. I have come to the conclusion that the Statement of Claim should be struck out. The question remains whether the plaintiff should be given an opportunity to replead his case. I have given him one opportunity and he has failed to comply with this deadline.
53. The question arises whether the plaintiff should be given a further opportunity to replead his case. This involves issues of whether the defendants are thereby prejudiced, and secondly, whether a cause of action can be made out which will survive a strike out application.”
The Master concluded his reasons by giving the appellant leave to file a further statement of claim by 30 January 2004. The Master also said:
“67. For the plaintiff to make out a cause of action in defamation it will be necessary for him to plead any words or statements which he contends are defamatory of him, and any defamatory imputations which he says arise from such words or statements.”
The second statement of claim was filed on 8 March 2004. The plaintiff took 110 paragraphs to particularise statements and to assert imputations allegedly made by the defendants on the Today Tonight programs. Many of the paragraphs are close to a pleading in proper form. I give examples with respect to each of the programs in question:
“48. The plaintiff alleges the statement in the broadcast on 5^th May ’97, “You just feel like you’re being conned” was an unsubstantiated feeling, was defamatory by it’s true meaning and misled ordinary viewers, including existing and potential customers, to form the view, Decorator Warehouse, and the staff of Decorator Warehouse were dishonest.
….
83.The plaintiff alleges the statement in the broadcast on 6^th May ’97 “Well today, we were inundated with more complaints about Decorator Warehouse and now the Office of Consumer and Business Affairs has issued a public warning against dealing with the company” was defamatory of the entities and misled ordinary viewers, including existing and potential customers, to form the view the first defendant and/or Today Tonight had numerous complaints about Decorator Warehouse.”
In his reasons of 13 April 2004, the Master said, amongst other things:
“35. Paragraphs 44-114 are headed “Particulars of Defamation – by True Meaning”. I agree also that these pleadings are inappropriate. The matters fail to comply with the rules as to pleadings, there are references to “The Entities” and “Staff of the Entities” which are not parties to the action, many matters are repetitive and there are pleadings that the defendants “misled the public” or “misled ordinary viewers, including existing and potential customers” which is a meaningless plea and is unsupported by viable statutory or common law causes of action which would entitle the plaintiff to relief. Further, many of the paragraphs repeat words that are alleged to have been used in the broadcast and assert a defamatory meaning without pleading any relative imputation. To the extent that any relevant imputations are pleaded, they fail to disclose a viable cause of action in defamation against the plaintiff.
36. Although paragraphs 114-155 are arguably capable of forming material facts in a proper pleading, paragraphs 45-114 as a whole are so riddled with defects that the pleading should not be allowed to stand in its present form.
….
43. As I have indicated, the plaintiff’s claim as a whole is defective and should be struck out.”
The Master concluded his reasons by giving the appellant leave to lodge but not file a further statement of claim by 14 May 2004.
The third statement of claim was ‘tabled’ before the Master on 26 May 2004. It is very much shorter than the previous two. Unfortunately it omits entirely the statements from the Today Tonight programs that were quoted in the second statement of claim. In his reasons of 1 July 2004, after observing in paragraph 30 that “the plaintiff still fails to identify the images, words and music allegedly broadcast by or on behalf of the defendants and the alleged defamatory imputations of such alleged publications”, the Master said:
“33. It is conceivable that the plaintiff, if he does so properly, might make out a cause of action in defamation against the defendants, so I am prepared to offer him a further opportunity to do so. I will also consider his application to join Seven Network Limited as a defendant – although the existing defendants have criticised a purported joinder of this party by the plaintiff, he has issued an application for such joinder – (FDN 225) 8 March 2004 – and if he can articulate a proper claim against that party such application for joinder will be considered.
34. The plaintiff must now appreciate that the indulgences which have been offered to him by the Court are nearing an end, and he should take particular care in drafting his further pleading to ensure that it complies with the rules and case law.”
The Master then directed the plaintiff to file a fourth statement of claim by 6 August 2004.
As has already been said, the plaintiff did not file a fourth statement of claim, either by the due date or at all. The parties next appeared before the Master on 17 August 2004. In his reasons of 31 August 2004 the Master said, amongst other things:
“16. The plaintiff told me that he was unable to totally complete a further amended statement of claim, but he said that the most recent draft was based on a similar case of Gilbert. He said that he was endeavouring to obtain legal advice, but he was unable to give me any information as to if or when he was to put before the Court a further statement of claim for consideration.
….
33. On the last occasion, I made it clear to the plaintiff that he could not be given unlimited opportunities to cure defects in his pleadings. I noted the prejudice asserted by the defendants, namely that their costs were in excess of $20,000 and might not be recovered from the plaintiff no matter what the result.
34. I have, therefore, reluctantly come to the conclusion that the plaintiff should not be permitted any further indulgence and that his claim should be struck out upon the basis that he has been unable to articulate a cause of action against the defendants and no further opportunity should be give to him. It is clear from Rogers v Legal Services Commission of South Australia (supra) that such an order does not prohibit the plaintiff from issuing fresh proceedings against the defendants because res judicata is not applicable when earlier proceedings are dismissed for failing to show a cause of action.”
In his submissions to me, the appellant said the following about his state of mind at the hearing before the Master on 17 August 2004:
“HIS HONOUR:     Didn’t the master make it clear on 31August?
MR BADCOCK:    No.
HIS HONOUR:      What your obligation was?
MR BADCOCK:    No. What happened, we appeared before his Honour and it was put to me, why had it not complied with the most recent offer being an offer to file a further claim as at 6 August. At that point I suggested that I was having great difficulty in that the prior statement of claim was one that mirrored a successful case being Robert Gilbert v SA Telecasters, it was the very same defendants in fact, of which Master Norman in facts was the plaintiff’s solicitor. He would have been aware of the specifics of that case.
As such, I very intentionally mirrored my third statement of claim upon the statement of claim in those proceedings, because those proceedings were very much similar to those that I was articulating myself.
Having put that forward in that it was my submission that if that was a statement of claim which had succeeded, and where the facts were not dissimilar, how could the defendants possibly argue that the plaintiff’s statement of claim was in any way failing to show cause of action?
In fact I would suggest that my third statement of claim was over and above, included everything that was included in that similar case, and exceeded it.
….
HIS HONOUR:      You appeared before the master prior to his ruling on the third statement of claim which was 1 July, and you understood did you not, that the master’s focus would be whether that document, namely the third statement of claim disclosed a cause of action.
MR BADCOCK:        My expectation was that prior to receiving the reasons of 1 July I would have expected some form of objection that I could answer in terms of, that either ‘These various paragraphs in the statement of claim should be struck out, these require amendment’ but to strike out the total claim three times, particularly when I had in my view done my level best in comparing it to a very similar case, that is why I was perplexed at that point.
With that I have then gone before his Honour and suggested that my last claim did exactly that, and I was having great difficulty in actually determining what objections were being taken to what parts of the statement of claim. In other words I can say the totality of that is wrong, without being specific and confuse another party.”

It will be apparent from what I have said that this is not a case of proceedings which disclose no cause of action known to the law, or of proceedings which cannot by amendment be made to disclose such a cause of action, in terms of the first part of rule 3.01. Presumably the Master concluded that the appellant’s unsuccessful efforts at making his pleadings comply with the Rules were, in the end, vexatious or an abuse of process, in terms of the second part of rule 3.01. Yet to strike out a statement of claim in its entirety and to require an unrepresented litigant to file a statement of claim that complies with the Rules may, in some cases, lead inevitably to the eventual dismissal of his claim, even though he has demonstrated that he has a cause of action known to the law. It is at least arguable that the appellant’s case is a case of that kind. He is impecunious, and does not have access to legal aid. If, as he asserts, he has made a genuine effort to comply with the Rules, then it would seem that his lack of pleading skills has brought him undone.
It is instructive to go back to the authority that the Master cited as showing that, where there are a substantial number of defects in a pleading, a Court has a discretion to strike out the entire pleading. Residues Treatment and Trading Co Ltd & Anor v Southern Resources Ltd & Ors (1989) 51 SASR 177 was concerned with transactions that the defendants as directors entered into allegedly to gain control of the company for the purpose of fending off a threatened takeover. The plaintiffs were minority shareholders. Two of the defendants sought to have the statement of claim struck out for not disclosing a cause of action and for tending to cause embarrassment. Although Perry J made the order sought, he also observed that the plaintiffs may have a cause of action under provisions of the Takeovers Code. His Honour then went on to say:
“Rather than attempt to sieve through the Statement of Claim to see what elements of it survive the findings upon which I have found adversely to the plaintiffs, in view of the breadth of those findings it is better that the Statement of Claim be struck out as a whole with liberty to the plaintiffs to bring in a fresh Statement of Claim within a time to be fixed: see East-West Airlines v Commonwealth (1983) 57 ALJR 783 per Dawson J at 785.”
There was no suggestion in that case that the plaintiffs might lack the skills to plead a cause of action under the Takeovers Code, and that their claim might fail altogether as a result. Rather, the striking out of the statement of claim as a whole was adopted by Perry J as the most convenient way of reflecting such of his findings as were adverse to the plaintiffs.
In the authority of East-West Airlines cited by Perry J, Dawson J did not think “that it would be desirable to attempt to sift out what may be said to be necessary in the pleading and what is unnecessary or embarrassing”. He gave the plaintiff “leave to amend the statement of claim to plead those matters which ought to have been pleaded”, and again there was no suggestion that the plaintiff might lack the skills to do so.
In the case before me, it is at least arguable that the more appropriate and just approach to the second statement of claim would have been to sieve (to use Perry J’s word) through the document for the purpose of leaving intact such of the paragraphs as disclosed a cause of action in defamation. Indeed, in his reasons with respect to the first and second statements of claim, the Master identified numerous paragraphs that he said should be struck out. It is important to emphasise that the dismissal of proceedings under rule 3.01, in contrast to the striking out of pleadings under rule 46.18, can only be founded upon, either the absence in proceedings of a cause of action that is disclosed or could by amendment be disclosed, or proceedings which are frivolous, vexatious or an abuse of the process of the court.
An order for security for costs, as it seems to me, will probably bring the plaintiff’s claim to an end. He will have lost on the battleground of procedure, without ever having had the chance to litigate his claim in defamation on its merits at the trial. I do not consider that “special circumstances” for the order sought have been shown to exist. The application must therefore be dismissed.
Before concluding, I need to emphasise to the appellant that the appeal will be for another judge on another occasion to decide. My observations with respect to the Master’s approach to the appellant’s pleadings have only been made for the purpose of determining the respondents’ application for security for costs.