Darwin v Norman (No 2)

[2017] NSWSC 1635

Supreme Court

New South Wales

Medium Neutral Citation:	Darwin v Norman (No 2) [2017] NSWSC 1635
Hearing dates:	22 September 2017
Decision date:	03 October 2017
Jurisdiction:	Common Law
Before:	McCallum J
Decision:	Applicant’s application for injunctive relief refused; any proposed further amendment to the pleading to be circulated within 28 days; time within which the defendant is to file her defence to the amended statement of claim extended to 31 October 2017; applicant, Mount Warning Eco Village Pty Ltd, ordered to pay the defendant’s costs of the application
Catchwords:	INJURIOUS FALSEHOOD – application for injunction to restrain publication of blogs discussing proposed development of rural land – whether prima facie case established – inchoate nature of applicant’s interest in the development – applicant having little more than a prospective advantage based on an undeveloped marketing proposal
Cases Cited:	Palmer Bruyn & Parker Pty Ltd v Parsons (2001) 208 CLR 388; [2001] HCA 69
Category:	Procedural and other rulings
Parties:	Mark James Darwin (first plaintiff) Adrian Peter Brennock (second plaintiff) Phillip John Dixon (third plaintiff) Steven Peter McSween (fourth plaintiff) Gillian Linda Norman (defendant) Mount Warning Eco Village Pty Ltd (applicant on the motion)
Representation:	Counsel: D Sibtain (plaintiffs and applicant on motion) K Smark SC (defendant)   Solicitors: Stone Group Lawyers (plaintiffs)
File Number(s):	2017/81825
Publication restriction:	None

Judgment (DELIVERED ORALLY)

1. HER HONOUR: This is an application for an interlocutory injunction to restrain the publication of a number of blogs. It is the second such application brought in the proceedings, the first having been withdrawn during argument. The present application is brought by notice of motion filed 17 August 2017.

2. The hearing of the application proceeded in a somewhat haphazard manner which, to a degree, complicated the Court’s task. The first unusual feature of the application was that it was made by notice of motion filed in existing proceedings for defamation but in circumstances where the applicant is not a party to the proceedings and the cause of action relied upon by it is not defamation.

3. In the defamation proceedings four individuals sue the alleged publisher of the blogs, Ms Gillian Norman. One of several complications or hurdles to the application is that Ms Norman, although accepting that she has the capacity to edit the blogs, maintains that she does not have the authority to take them down. Indeed, at one point during the hearing she openly asserted that if she were ordered to take the blogs down they would arise again in a different form because there are other persons who publish them.

4. The blogs relate to an ongoing dispute arising out of a property development. The development was known as “The Bhula Bhula Community” and commenced in about 2014 when a Mr Andrew Cody sought to establish a community eco-village on land at 3222 Kyogle Road, Mount Burrell in the State of New South Wales.

5. A company named Wollumbin Horizons Pty Ltd acquired the land in the capacity of trustee. The trust was established at a time when there was no development approval in place for dwelling houses to be erected on the land. No development approval was ever granted.

6. The development gave rise to a series of legal proceedings. First, persons who had invested in the undertaking began residing on the land (evidently believing their investment entitled them to do so). In due course, Tweed Shire Council brought proceedings in the Land and Environment Court seeking a declaration that Wollumbin Horizons had breached certain legislation as a result of the land being used for residential use and by the installation of residential structures and movable dwellings on the land.

7. Separately, proceedings were brought by Wollumbin Horizons in the Federal Court seeking to set aside a purported statutory demand issued against it by Ms Norman in respect of a debt claimed by her following Wollumbin’s refusal to repay her investment in the land in the sum of $120,000.

8. Finally, Ms Norman, as private prosecutor, has brought criminal proceedings against the directors behind that first development. To say that there is acrimony between those parties in the circumstances is an understatement. Ms Norman and the unnamed other publishers of the blogs have set about establishing on the blogs a forum for discussion and ventilation of those grievances.

9. There is now a proposed further development which is the subject of these proceedings known as “the Mount Warning Eco Village Development”. Put shortly, Ms Norman and those who publish the blogs with her apprehend that this second development is, as they contend the first was, a scam. The blogs seek to warn potential investors of her experience of the Bhula Bhula Community.

10. The notice of motion brought before the Court in the present application is brought by two of the plaintiffs in the defamation proceedings, but also by a company referred to as “an applicant” on the motion, Mount Warning Eco Village Pty Ltd. The application rests, as I have indicated, not on the tort of defamation but on the tort of injurious falsehood. However, at the time the application was brought forward, although the statement of claim was amended after the withdrawal of the first injunction application, there was no amendment to the statement of claim either to plead a cause of action in injurious falsehood or to join Mount Warning Eco Village Pty Ltd as a plaintiff. I raised that issue when the application first came before me. Mr Sibtain, who appears for the applicants, submitted that the application could properly be treated in the manner of an urgent application commenced by summons where it is common for the Court to grant the urgent relief sought on condition that a pleading be filed in due course. I permitted the application to proceed on that basis.

11. The absence of any pleading of the cause of action upon which the injunction application was said to rest meant that the claim was not well articulated. It is an element of the cause of action of injurious falsehood that there be published a false statement of or concerning the plaintiff’s goods or business. The false statements complained of were identified in par 9 of an affidavit sworn by Mr Phillip Dixon in support of the application, as follows:

"The blogs are written by the first defendant and contain amongst other things the following incorrect and defamatory imputations about Mount Warning Eco Village:

(a) The Mount Warning Eco Village is a scam;

(b) No habitation is allowed on the land located at 2924 and 2954 Kyogle Road, Kunghur in the State of New South Wales;

(c) There is no development approval granted for the project by Tweed Shire Council; and

(d) Mount Warning Eco Village’s governance is one and the same as Wollumbin Horizons Pty Ltd”.

12. Argument was able to proceed on the premise that those were the four false statements sought to be relied upon in any future claim in injurious falsehood. The more complex question arising from the fact that the claim was not pleaded at the time the application was brought forward was the elusive identification of the applicant’s business sought to be protected by the application.

13. In his first affidavit sworn in support of the application at pars 10 to 20, Mr Dixon described Mount Warning Eco Village and the alleged present status of the zoning of the land sought to be developed. Those paragraphs of the affidavit raised more questions than they answered about the nature of the applicant’s “business”. The principal foundation for the application was the fact that the applicant company, Mount Warning Eco Village Pty Ltd, had an interest in the land sought to be developed by reason of having exchanged contracts for the purchase of the land. However, upon consideration of the material annexed to the affidavit, it became apparent that the contracts that had been exchanged were conditional and that time for compliance with one of the special conditions had expired.

14. The contract was expressly conditional upon the vendor and the purchaser entering into a shareholders’ agreement within 30 days of the date of the agreement. The application came before me after the expiration of that 30-day period and the shareholders’ agreement had not yet been entered into. That was sought to be rectified on the first day of the hearing by the tender of an agreed variation to the agreement extending the time for compliance with that condition. However, the shareholders’ agreement itself had still not been executed when argument of the application began.

15. The application came before me as duty judge on 25 August 2017. It had been before two other duty judges before me and had evidently been presented as an urgent application, the hearing of which could be concluded within one to two hours. Based on the body of material relied upon in support of the application, that was plainly a gross underestimate. When the hearing of the application commenced on 25 August 2017, it quickly became clear that it would not conclude that day and the matter had to be stood over to 1 September 2017.

16. The hearing of the application was further complicated by the fact that the defendant, Ms Norman, was initially representing herself. Pursuant to a referral I had given at an earlier stage of the proceedings to the pro bono scheme, Mr Smark of Senior Counsel ultimately accepted a referral, for which the Court expresses its gratitude.

17. After the second day of hearing on 1 September 2017, when the defendant completed her submissions, I reserved my decision, indicating that it would be published on 8 September 2017. However, during the intervening period, I developed a concern as to a matter which seemed to me to be a substantial impediment to the relief sought, namely, whether the applicant had a sufficient interest in the development to attract the protection of the cause of action involved. When the matter came back before the Court on 8 September 2017, I drew the attention of the parties to the remarks of the Chief Justice and also Gummow J in Palmer Bruyn & Parker Pty Ltd v Parsons (2001) 208 CLR 388; [2001] HCA 69. The judgment of the Chief Justice at [1] states:

The appellant claimed damages from the respondent for the tort of injurious falsehood. In order to succeed, it was necessary to establish that the respondent maliciously published a false statement about the appellant, its property or business, and that actual damage resulted from such publication. The present case does not raise for decision the question as to how far the action for injurious falsehood extends beyond concepts of business or property. [Emphasis added].

18. Justice Gummow made similar reference to the undefined parameters of the tort, as follows (at [60]):

Reference already has been made to the four elements in the action. It is unnecessary to determine here whether the tort is broad enough to include any damaging falsehood which interferes with "prospective advantage, even of a non-commercial nature", as Fleming would have it, so that the confinement of the first element to "the goods or business" of the plaintiff is too narrowly expressed. The publication here concerned the conduct of the business or profession of the appellant.

19. The concern I raised was whether the interest that the applicant company sought to protect rose beyond an equitable interest in land owned by a different entity by reason of the exchange of contracts which at that point was entirely conditional upon a future event, namely, entry into the shareholders’ agreement.

20. The proceedings were stood over to allow the parties to address that issue. On 15 September 2017, the Court was informed informally that, by then, the shareholders’ agreement had been entered into. That had occurred on 13 September 2017. I nonetheless took the view that I should be addressed as to the matters raised on 8 September 2017. The proceedings were again adjourned for that purpose. On 22 September 2017, both parties (represented by counsel) addressed the Court and also provided written submissions on the question raised.

21. In a helpful document, Mr Smark submitted on behalf of the defendant that the issue is not whether at any particular time the applicant Mount Warning Eco Village Pty Ltd was conducting "a business", rather it is whether the statements complained of were about the applicant's business. Mr Smark noted that, as a necessary first step, the statements complained of must be identified and given careful consideration. The form of the statements (identified at par 9 of Mr Dixon's affidavit) is set out above. What is emphasised when one looks at the form of the statements is, first, as submitted by Mr Smark, to a degree, that they relate more to the land than the development proposal. More fundamentally, however, a consideration of the representations sought to be restrained emphasises the inchoate nature of the applicant's current undertaking.

22. Mr Sibtain, in submissions made on the last day of the hearing, identified the interest sought to be protected as being, "the business of the development of a parcel of land in which the applicant has an equitable interest (and where the legal owner of the land is a co-venturer)". He submitted that an attack on the promoters of the development of that parcel of land is an attack on the business. The reference to a co-venturer is a reference to Zimmer Land Pty Ltd, which is the registered proprietor of the land sought to be developed. Zimmer Land is also the holder of certain classes of shares in the applicant, Mount Warning Eco Village Pty Ltd, and it is between those two entities that the shareholder agreement has been entered into.

23. The difficulty, however, is that so far as the applicant is concerned, the very nature of the proposed development is inchoate. One of the points made by Mr Smark in his written submissions is that the applicant, although now apparently having an equitable interest in the land under a contract which is no longer conditional, may become the legal owner of the land but will not do so if the contract does not complete. Mr Smark SC noted that, so far as the evidence establishes at this stage, the only conduct that has been undertaken in relation to developing the land is the undertaking of survey work in 2012. The evidence establishes that the surveying was not undertaken by the applicant company but by another entity. A complication that arises in relation to the survey work is that the current proposal to obtain development approval in respect of the land rests on the currency of a prior development approval granted in 2009 which has lapsed unless work has "substantially commenced".

24. Mr Dixon stated in his first affidavit that he had received email correspondence from a Mr Hassall of Cardno Limited in which Mr Hassall expresses the view that “the development approval remains legal and valid". A close consideration of the email in question (at p 210 of Mr Dixon's affidavit) scarcely sustains that description. Certainly, Mr Hassall expresses the view that it "can be argued" that if the land surveying was relating to the approved project works and is evidenced to have been carried out between the date of granting of development consent and prior to the expiration date, then the consent remains valid. I think Mr Hassall falls short of expressing a concluded view beyond saying that it is arguable. He also refers to a potential complication which is that there might be an argument that the commencement of work could not properly be established if it was undertaken before the "prior to commencement of work" conditions of the development approval were fulfilled. Further, he concludes his email with the following words, "Again, we would strongly recommend that our position be supported by a planning and environment lawyer."

25. In the circumstances, it would appear then that the current development approval in respect of part of the land proposed to be developed, as Mr Smark put it, hangs by a thread. More accurately, Mr Smark submitted that the allegation of the falsity of representation (c) hangs by a thread that. That is, it is said there is currently development approval in respect of part of the land because development approval granted in 2009 did not lapse in 2014 on the strength of the argument that the placement of surveying pegs in the ground amounts to "substantial commencement" for the purposes of a subdivision approval, a requirement of which is that there have been building, engineering or construction work relating to the building, subdivision or work physically commenced on the land to which the consent relates before the date on which the consent would otherwise lapse.

26. Turning to the individual representations sought to be restrained, the first is that "the Mount Warning Eco Village is a scam". Mr Smark submitted that that is not a statement about the applicant's business. He submitted there may never be a "village", and if there is, it may not be built or developed by the applicant but by some other person who ultimately acquires the land.

27. In my view, there is force in that submission. The difficulty is, when one tries sifting through the many affidavits read by the applicant in support of the present application to work out exactly what it is that the applicant has done at this stage, it is difficult to see that there has been more than the entering into the agreement for sale of the land to which I have referred, together with some marketing and promotion. There do not appear to be investors in the business at this stage. The company appears to be seeking to obtain funds by way of loans from persons who might ultimately be interested in acquiring lots on the land if it is ultimately successfully developed. The precise content of any promotion is difficult to discern. It was the subject of a further affidavit of Mr Dixon read in reply to the defendant's case, but he spoke only in vague or conclusory terms as to the kind of representations made in the promotion of the business at this stage. The application in that respect had to it the flavour of the cart being put before the horse.

28. Particular statements made by Ms Norman in the blogs were fastened upon in argument, but it was difficult to identify the representations or promotion made by Mount Warning Eco Village Pty Ltd by reference to which the truth or falsity of her statements could be measured. All of that is not to say that there was evidence to establish that the development proposal is a scam, but rather that, with all of the detailed evidence before me, I was unable to be satisfied as to a prima facie case because the project itself is at such a preliminary stage that it has no real content as a business. That is the kind of issue to which I understood the Chief Justice and Gummow J to be referring in the passages from Palmer Bruyn set out above. The applicant at this stage really has little more than a prospective advantage in an undeveloped marketing proposal for the development.

29. The second representation (as to no habitation being allowed on the land) again raises the difficulty that it is a representation concerning not the business evidently conducted by the applicant but the land itself. The same may be said of representation (c), which relates to the development approval granted for the project. Certainly, it seems to be common ground on the evidence that there is presently no development approval granted for the whole of the project.

30. Finally, the representation as to the governance of the applicant raises a different issue. Mr Smark submitted that the representation is poorly formulated in that, on its face, it is not damaging to the applicant. He submitted that, even making allowances for the poor formulation of the representation, it is still not clear in what respect it may be about a business presently conducted by the applicant. In my view there is force in those submissions as well.

19. For those reasons, I am not persuaded that the Court's power to grant an interlocutory injunction should be exercised at this stage. If the applicant wishes to pursue a cause of action for injurious falsehood, the pleading should be amended and that should occur within a relatively short period of time, having regard to the haphazard manner in which this issue has been brought forward to date.

Orders

1. The applicant’s application for injunctive relief is refused.

2. Any proposed further amendment to the pleading should be circulated within 28 days.

3. I extend the time for the defendant to file her defence to the amended statement of claim to 31 October 2017.

4. I order the applicant, Mount Warning Eco Village Pty Ltd, to pay the defendant’s costs of the application.

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Decision last updated: 07 December 2017