Bryan Francis McMahon v John Fairfax Publications Pty Ltd

[2011] NSWSC 485

Supreme Court

New South Wales

Medium Neutral Citation:	Bryan Francis McMahon v John Fairfax Publications Pty Ltd [2011] NSWSC 485
Hearing dates:	10 May 2011
Decision date:	11 May 2011
Before:	McCallum J
Decision:	Leave granted to the defendants to amend their defence
Catchwords:	PROCEDURE - pleadings - defamation - truth defence - distinction between material facts and particulars - whether defendants ought to have amended pleading rather than notifying plaintiff of additional particulars by letter
Cases Cited:	Bruce v Odhams Press Limited [1936] 1 KB 697 Southern Cross Exploration NL v Fire and All Risks Insurance Co Limited (1985) 2 NSWLR 340
Category:	Procedural and other rulings
Parties:	Bryan Francis McMahon (Plaintiff) John Fairfax Publications Pty Ltd (1st Defendant) Marcus Priest (2nd Defendant) Rachel Nickless (3rd Defendant)
Representation:	Bryan Frances McMahon (Plaintiff - self) Ardent Legal PtyLtd (Plaintiff) Banki Haddock Fiora (First, Second & Third Defendants)
File Number(s):	2008/289210

Judgment

1. These are proceedings for defamation brought by Mr Bryan McMahon against John Fairfax Publications Pty Limited and two of its journalists arising out of the publication of two articles in the Australian Financial Review . The defendant has pleaded, among other defences, the defence of truth. The proceedings are listed for hearing early next year.

1. The proceedings were restored to the Defamation List on the application of the defendants in the following circumstances. A defence to the Third Further Amended Statement of Claim was served on 20 January 2011. On 28 January 2011 the plaintiff, taking the view that the defence was defective in a number of respects, served a detailed request for further and better particulars. An exchange of correspondence as to whether he was entitled to all of the particulars sought and the threat of a contested argument on that issue produced agreement between the parties, pursuant to which the defendants consented to an order (without concession as to any entitlement of the plaintiff) to provide the further particulars sought by 24 March 2011.

1. The defendant's letter of that date providing the outstanding responses concluded as follows:

"Additional Particulars of Truth."

As a result of the further investigations that we have made in response to your pressing for further particulars, we advise that we will be relying upon the following additional particulars of truth in relation to first imputation (b), first imputation (d), second imputation (c) and second imputation (e):

(1)   The major financier of MNL, the Commonwealth Bank, was not aware of the transfer of the business to MNL LP until 2 October 2007, the date on which Deloitte was appointed receivers. The plaintiff did not inform the Commonwealth Bank of the change in business structure which occurred on 1 July 2007.

(2)   In or about August 2007 the plaintiff sought to roll over the firm's overdraft with the Commonwealth Bank but the bank refused to do so.

(3)   The plaintiff engaged in an extravagant and expensive lifestyle, funded by his firm's revenue, which led to further financial difficulties for him and his firm and contributed to his personal bankruptcy and the collapse of his firm in early October 2007. We rely on the following matters:

(i)   the purchase in September 2003 and subsequent expensive renovation of the property at 4 Ripon Way, Rosebery, NSW.

(ii)   the plaintiff's lavish wedding and expensive honeymoon in the first half of 2007.

(iii)   the plaintiff's expenditure on his catamaran.

(iv)   the plaintiff's purchase of tickets and planning to attend the Rugby World Cup in France in 207.

1. The plaintiff opposes reliance upon the additional allegations on the following grounds. First, he contends that, pursuant to rule 15.21(1)(c) of the Uniform Civil Procedure Rules, the defendants are required formally to plead all particulars of the facts, matters and circumstances on which they rely to establish the truth or substantial truth of any imputation or contextual imputation unless the Court orders otherwise. Secondly, he contends that the Court should not order otherwise because the additional particulars upon which the defendants now seek to rely would, if pleaded, be liable to be struck out pursuant to rule 14.28 of the UCPR.

1. In support of the first contention the plaintiff relied upon the following passage from the decision of Waddell J in Southern Cross Exploration NL v Fire and All Risks Insurance Co Limited (1985) 2 NSWLR 340 at 351:

In my opinion the authorities cited make it clear that a party is not entitled, in effect, to amend the pleading by giving particulars of further material facts. To permit a party to do so would be to allow amendment contrary to the rules which require, in various circumstances, the filing of an amended pleading, the consent of other parties or the leave of the court.

1. That statement followed a discussion of the often blurred distinction between material facts and particulars. His Honour at page 350 cited with approval the well-known passage from the judgment of Scott LJ in the decision of the Court of Appeal in Bruce v Odhams Press Limited [1936] 1 KB 697 at 712-713. Although the passage referred to is lengthy, it is useful in the context of the present case to bring to mind the content of the whole passage and, accordingly, I set it out in full:

The cardinal provision in r4 is that the statement of claim must state the material facts. The word 'material' means necessary for the purpose of formulating a complete cause of action; and if any one 'material' fact is omitted, the statement of claim is bad; it is 'demurrable' in the old phraseology, and in the new is liable to be 'struck out' under Order XXV, r 4: see Philipps v Philipps 4 QBD 127; or 'a further and better statement of claim' may be ordered under Order XIX, r 7.

The function of 'particulars' under r 6 is quite different. They are not to be used in order to fill material gaps in a demurrable statement of claim - gaps which ought to have been filled by appropriate statements of the various material facts which together constitute the plaintiff's cause of action with information sufficiently detailed to put the defendant on his guard as to the case he has to meet and to enable him to prepare for trial. Consequently in strictness particulars cannot cure a bad statement of claim. But in practice it is often difficult to distinguish between a 'material fact' and a 'particular' piece of information which it is reasonable to give the defendant in order to tell him the case he has to meet; hence in the nature of things there is often overlapping. And the practice of sometimes putting particulars into the statement of claim and sometimes delivering them afterwards either voluntarily, or upon request or order, without any reflection as to the true legal ground upon which they are to be given has become so common that it has tended to obscure the very real distinction between them.

In a case where there is no omission of material facts under r 4, whether particulars should be ordered is very often a matter of pure discretion - because it depends on a view of fairness or convenience which is essentially a matter of degree. But where particulars are asked because the statement of claim is defective in that it omits some essential averment - ie, some 'material fact', the question is not one of discretion, and the adoption by the defendant of the lenient remedy of an application for particulars instead of the more stringent remedy of striking out does not turn an issue of right into an issue of discretion".

1. The premise of the plaintiff's opposition to the defendants' reliance upon the additional allegations set out at the conclusion of their letter of 24 March 2011 was that those allegations are properly viewed as further statements of material facts which should have been the subject of an application to amend, as explained in the passage from Bruce v Odhams Press set out above.

1. One of the ways in which the distinction between material facts which ought to be the subject of a formal amendment and further particulars of material facts can be discerned is by considering whether the pleading, be it of a cause of action or of a defence, would be liable to be struck out without such material. In the case of a defence, a separate question may arise as to whether the additional allegation amounts, in effect, to a wholly new allegation by way of defence or merely further material sought to be relied upon in support of an existing defence.

1. In the case of the defence of truth in defamation proceedings, the distinction may be particularly difficult to draw. An example at one end of the spectrum would be the instance of an imputation that a person is a murderer sought to be sustained on the strength of one particular murder met with an attempt to rely on a wholly separate murder. That, in my view, would plainly be an additional material fact that would need to be the subject of an application to amend the pleading.

1. At the other end of the spectrum there comes to mind an example brought forward by the present case. One of the imputations pleaded by the plaintiff is that he had conducted his firm's affairs dishonourably and so as to permit it to avoid payment of debts which he owed. The particulars of truth in support of the truth defence in response to that imputation include a lengthy list of individual debts allegedly incurred by the plaintiff over a period of time. The list runs to many pages of the defence. Plainly, in my view, the addition of a further debt to that list would be a further particular which could be provided in correspondence rather than a material fact which would need to be the subject of an amendment to the pleading.

1. The additional allegations sought to be relied upon by the defendant in the present case fall between those two extremes. Ultimately, I have concluded that it is not necessary to determine whether they are properly viewed as further statements of material facts which ought to have been the subject of an application to amend the defence or whether they are merely additional particulars of material facts already pleaded.

1. The reason that is ultimately an arid debate in the present case is twofold. First, Mr Dawson, who appeared for the defendants, accepted that whether or not there is any obligation to do so, it would be convenient for the conduct of the hearing if the defendants were to amend the defence so as to incorporate the additional particulars. Secondly, Mr McMahon's opposition to that course, set out in some detail in his careful submissions, has not persuaded me that the additional particulars if pleaded would be liable to be struck out pursuant to rule 14.28.

1. In order to explain why that is so, it is necessary to go briefly to the reasons put forward by Mr McMahon. First, Mr McMahon pointed to the interest of the convenience of the Court, contending that the defence is already of such a nature as to cause considerable confusion and delay in the hearing of the matter. He submitted that it would be an unacceptably onerous burden placed upon the trial judge to require him or her to have to go that additional extraneous material in order to determine the substance of the defendant's defence. I do not agree. In my view, the additional allegations sought to be relied upon are sufficiently contained as to be within the ready comprehension of the trial judge in terms of the conduct of the hearing and a proper presentation of the defence to the jury.

1. Separately, Mr McMahon pointed to the risk of further delay. The defendants have acknowledged that their further allegations would not precipitate any further application on their part for additional discovery. I am not persuaded that there is any other undue delay likely to be precipitated by allowing the additional particulars to be relied upon.

1. A third contention put forward by Mr McMahon is that there is no explanation as to why the additional particulars are now being raised. In that context Mr McMahon said that the allegation that the new material had come to light "as a result of the further investigations [the defendants] have made in response to your pressing for further particulars" should be disregarded in circumstances in which the defendants have had more than a year to consider their defence. Whether or not the material might have been discovered earlier, however, I do not see any reason to reject the contention now that it has been uncovered and now that it is sought to be relied upon.

1. Finally, Mr McMahon relied, as I have already noted, on the contention that the additional particulars would be liable to be struck out under rule 14.28. As to the first additional particular set out above, that contention was based on the proposition that documents contained among bank statements available to the parties disclose that, from 1 July 2007, a branch of the CBA held accounts in the name of the new legal entity and that, accordingly, it could be seen at a glance that the contention that the plaintiff did not inform the Commonwealth Bank of the changes in his business structure which occurred on that date was unsustainable.

1. I do not know whether or not there is any force in that contention, since the relevant bank statements are not before me on the present application. In that circumstance, it is simply not possible for me to determine it. In the absence of any evidence on the issue, I do not see any prejudice in allowing the particular to be brought forward.

1. As to new allegation number 2, the only complaint made by Mr McMahon is that the term "roll over" is ambiguous, being a slang term, and that on that account it has a tendency to cause embarrassment. I must say when I read the allegation I did not have any difficulty, as I thought, understanding the sense in which the term was used. However, during argument Mr McMahon identified a possible alternative interpretation of the allegation and Mr Dawson agreed that it was appropriate to clarify the sense in which that term was used. That can occur in the amendment to the pleading.

1. The third series of additional allegations all relate to a contention that Mr McMahon engaged in an extravagant and expensive lifestyle funded by his firm's revenue, which led to further financial difficulties for him. Mr McMahon submitted that those allegations have a tendency to cause embarrassment in that they are not relevant to any of the stated imputations or contextual imputations.

1. After giving careful consideration to the imputations pleaded by Mr McMahon and the contextual imputations and the detailed particulars of the truth already provided in the Amended Defence to the Third Further Amended Statement of Claim, I am not satisfied that the additional allegations are so irrelevant to the truth of those imputations as to be liable to be struck out.

1. The gist of the defendants' truth defence, if I may put the matter in a summary way, is that the plaintiff's financial difficulties were brought about by various aspects of his own conduct of the business of his law firm. I do accept, as submitted on Mr McMahon's behalf, that to add the dimension to that case of reference to his personal lifestyle and the allegation that it was extravagant and expensive probably does represent a new material fact in support of the truth defence which ought properly to have been the subject of an application to amend.

1. That said, for the reasons I have given, I am not satisfied that the defendant should be precluded from relying on that additional material fact. The individual particulars provided are capable of sustaining it, albeit that there could be, as Mr Dawson I think conceded during argument, some better elaboration of the particular facts in question.

1. For example, one of the particulars is "the plaintiff's lavish wedding and expensive honeymoon in the first half of 2007". In his written submissions Mr McMahon asserted that it is a matter of public record that the described event did not take place. It does not follow that funds were not expended on that event, but the present particular does not even make that allegation and, plainly, further information will need to be provided if it is to be included in the pleading.

1. The fourth additional allegation under paragraph 3 is "The plaintiff's purchase of tickets and planning to attend the Rugby World Cup in France in 2007". Mr McMahon submitted, not unreasonably, that planning to attend an event could hardly be said to amount to actually engaging in an extravagant and expensive lifestyle.

1. I accept, however, as submitted on behalf of the defendants, that the removal of that part of the allegation would not have any effect and would not remove the fact that the plaintiff will within the scope of those allegations properly be cross-examined as to whether, at a time when it is alleged the firm was in financial difficulty, he was planning a trip which must necessarily have involved some expense, including at least return travel to and accommodation in France.

1. For those reasons, I am satisfied that the defendants should have leave to amend the defence to include the additional allegations contained in their letter dated 24 March 2011.

1. The ordinary costs order would at least entail the defendants bearing the costs thrown away by reason of the amendment.

1. Further, although it was not necessary in the way in which the application unfolded to decide whether the application should have been made in the first instance to have leave to amend the defence, I am satisfied that at least as to the new allegations concerning the plaintiff's alleged extravagant lifestyle it would have been more appropriate to bring forward those allegations in the form of an amended defence. Conversely, as noted in Southern Cross by Waddell J, it is common for parties to tolerate a blurring of the distinction between particulars and statements of material facts for practical reasons and to some extent the present argument could have been obviated by Mr McMahon's taking a more practical and conciliatory approach to the issue.

1. In those circumstances, I have determined that there should be no costs order as to the costs of the application, but, as I have indicated, the defendants should pay the costs thrown away by reason of the amendment.

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Decision last updated: 20 June 2011