De Kauwe v Cohen [No 2]
[2021] WASC 248
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: DE KAUWE -v- COHEN [No 2] [2021] WASC 248
CORAM: LE MIERE J
HEARD: 28 JANUARY - 13 FEBRUARY 2021 (8 DAYS), 12 ‑ 16 JULY 2021
DELIVERED : 27 JULY 2021
FILE NO/S: CIV 1512 of 2018
BETWEEN: BRENDAN JAMES DE KAUWE
Plaintiff
AND
HAIM COHEN
First Defendant
ILAN SAAD
Second Defendant
GALIT ASSAF SHENHAR
Third Defendant
ERAN GILBOA
Fourth Defendant
BENJAMIN KARASIK
Fifth Defendant
IAN CRAIG PAMENSKY
Sixth Defendant
MATTHEW WRIGHT
Seventh Defendant
Catchwords:
Practice and procedure - Pleadings - Leave to amend defence - Whether amendment resolves real issues in dispute - Whether adequate explanation for delay in application to amend - Whether amendment causes adjournment of trial - Whether amendment causes undue prejudice - Rules of the Supreme Court 1971 (WA) O 21 r 5 - Application refused
Legislation:
Defamation Act 2005 (WA)
Rules of the Supreme Court 1971 (WA)
Result:
Application to amend defence refused
Representation:
Counsel:
| Plaintiff | : | Mr M L Bennett & Mr A Tharby |
| First Defendant | : | Mr J MacLaurin SC & Ms J Moore |
| Second Defendant | : | Mr J MacLaurin SC & Ms J Moore |
| Third Defendant | : | Mr J MacLaurin SC & Ms J Moore |
| Fourth Defendant | : | Mr J MacLaurin SC & Ms J Moore |
| Fifth Defendant | : | Mr J MacLaurin SC & Ms J Moore |
| Sixth Defendant | : | Mr S M Davies SC & Mr F Merenda |
| Seventh Defendant | : | Mr C P K Russell |
Solicitors:
| Plaintiff | : | Bennett + Co |
| First Defendant | : | DLA Piper Australia - Perth |
| Second Defendant | : | DLA Piper Australia - Perth |
| Third Defendant | : | DLA Piper Australia - Perth |
| Fourth Defendant | : | DLA Piper Australia - Perth |
| Fifth Defendant | : | DLA Piper Australia - Perth |
| Sixth Defendant | : | Jackson McDonald |
| Seventh Defendant | : | Wotton + Kearney Lawyers (Perth) |
Cases referred to in decision:
ACN002693843 Box Pty Ltd v Australian Corrugated Box Co Pty Ltd [2013] VSCA 223
Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175
Byrne v Deane [1937] 1 KB 818
Cropper v Smith [1884] 26 Ch D 700, CA
Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146
Urbanchich v Drummoyne Municipal Council (1991) Aust Torts Reports 81-127
Webb v Bloch (1928) 41 CLR 331
LE MIERE J:
Summary
The first to fifth defendants applied to amend [45] of their defence in accordance with the minute of proposed first to fifth defendants' sixth amended defence attached to the affidavit of Simon David Hubbard affirmed on 12 July 2021. In its present form, [45] is:
Save to admit that the Defendants authorised and approved publication of the Second ASX Announcement to the ASX and on eSense's website, the Defendants do not admit the allegations pleaded in paragraph 40 of the Claim.
'Defendants' are defined to mean the first to fifth defendants.
The proposed amendment is to substitute 'the First, Second and Fourth Defendants' for 'the Defendants' and to substitute the 'First ASX Announcement' for the 'Second ASX Announcement'.
On 13 July 2021, I refused the application to amend [45] by substituting 'the First, Second and Fourth Defendants' for 'the Defendants'. These are my reasons for doing so.
Brief history of relevant pleadings
The plaintiff filed his statement of claim (SOC) on 6 December 2018. At SOC [35] to [40], the plaintiff pleads the publication and republication of the First ASX Announcement. At the indicated paragraphs of his SOC, the plaintiff pleaded:
1.On or about 13 March 2018, eSense published to the Market Announcements Office ('MAO') of ASX via its electronic lodgement facility, the First ASX Announcement: [35].
2.On 13 March 2018, the MAO released the First ASX Announcement on the ASX Market Announcements Platform (MAP) and the First ASX Announcement became, and at all material times since has been, accessible and capable of being downloaded and read on the ASX website, Data‑Feed Websites and Market Trading Platforms: [36].
3.The republication by the ASX on the MAP was and is the intended, alternatively the natural and probable, consequence of the publication to the ASX of the First ASX Announcement: [37].
4.eSense republished and continues to republish the First ASX Announcement to persons within Australia who downloaded it from eSense's website and read it: [38].
5.The republication by eSense was and is the intended, alternatively the natural and probable, consequence of the publication to the ASX of the First ASX Announcement: [39].
6.Each of the defendants authorised and approved, and therefore intended, the publication of the First ASX Announcement to the ASX and the republication of the First ASX Announcement on the MAP and the eSense website. The plaintiff gives particulars of matters from which the authorisation and approval by the first to fifth defendants may be inferred: [40].
The First ASX Announcement remains available for download from the ASX's MAP and from eSense's website.
The plaintiff has subsequently amended his SOC but none of the pleas to which I have referred have been amended.
On 21 February 2019, the first, second and fourth defendants filed a defence (the First Defence). At that time the third and fifth defendants had not entered an appearance. The first, second and fourth defendants admitted that eSense published the First ASX Announcement to the ASX, that the First ASX Announcement became available to download from the ASX website and that eSense published the First ASX Announcement to the ASX and to eSense's website. At [45] of the defence, those defendants pleaded:
Save to admit that the Defendants authorised and approved publication of the Second ASX Announcement to the ASX and on eSense's website, the Defendants do not admit the allegations pleaded in paragraph 40 of the Claim.
'Defendants' were defined to mean the 'First, Second and Fourth Defendants'.
The first, second and fourth defendants pleaded at [48.4] of their defence that the defendants' conduct in publishing the First ASX Announcement was reasonable in the circumstances.
On 6 March 2019, after the third and fifth defendants had entered an appearance, the first to fifth defendants filed an amended defence (Amended Defence). The only amendment was to define 'Defendants' as the 'First to Fifth Defendants'.
On 26 August 2019, the first to fifth defendants further amended their defence.[1] Paragraph 48.3 was amended as follows:
eSense's shareholders had an interest or, as the defendants honestly believed, an apparent interest in the information contained within the First ASX Announcement, being matters relevant to the management of eSense and thus their shareholders.
[1] First to fifth defendants' second further amended defence, filed 26 August 2019.
The amendment introduced a new [48.4A] as follows:
Further or alternatively, the First ASX Announcement was published pursuant to a duty or interest of the Defendants in providing information to eSense's shareholders who had a corresponding interest in receiving the information.'
The first to fifth defendants further amended their defence on 17 October 2019.[2] The amendment gave particulars to the first to fifth defendants' plea at [48.4] of their defence that their conduct in publishing the First ASX Announcement was reasonable in the circumstances.
[2] First to fifth defendants' third further amended defence, filed 17 October 2019.
The first to fifth defendants further amended their defence on 1 November 2019[3] and on 24 January 2021.[4] The amendments effected by those amended defences are not relevant to the present issues.
[3] First to fifth defendants' fourth further amended defence, filed 1 November 2019.
[4] First to fifth defendants' fifth further amended defence, filed 24 January 2021.
This review of the pleadings discloses that the third and fifth defendants filed a defence on 6 March 2019 and subsequently amended their defence four times. Each iteration of the defence admitted that the third and fifth defendants authorised and approved publication of the First ASX Announcement, although it was incorrectly referred to in [45] as the Second ASX Announcement, and further pleaded that their conduct in publishing the First ASX Announcement was reasonable in the circumstances.
Amendment to refer to First ASX Announcement
At a directions hearing on 3 February 2021, senior counsel for the first to fifth defendants confirmed that the reference to the 'Second ASX Announcement' in [45] of the first to fifth defendants' defence was an error and that it was always intended to refer to 'the First ASX Announcement'. The defendants did not amend, or obtain leave to amend, their defence. However, on 5 February 2021, the plaintiff filed Papers for the Judge which changed [45] of the first to fifth defendants' defence by substituting 'First ASX Announcement' for 'Second ASX Announcement'. The trial proceeded on the basis that the pleading had been so amended.
The reference in [45] of the Amended Defence and the first to fifth defendants' subsequent amended defences, was a mistake.[5] It is apparent from the first to fifth defendants' pleading that they intended [45] of their defence to refer to the First ASX Announcement. The trial up to and including the close of the plaintiff's case has been conducted on that basis. I will order that [45] of the first to fifth defendants' fifth amended defence filed 24 January 2021 be amended by substituting 'First ASX Announcement' for 'Second ASX Announcement' in [45].
The witness outlines
[5] See affidavit of Simon David Hubbard affirmed 12 July 2021 [8] and [9].
On 1 May 2020, the third defendant filed a witness outline. It includes:
30.I am aware that eSense issued a release on 13 March 2018 regarding Mr Rosenblum's appointment.
31.I was not involved in preparing this release, or approving its release to the market.
On the same day, the fifth defendant filed a witness outline. It includes:
21.I have seen eSense's release to the ASX for 13 March 2018. I was not involved in preparing that release.
22.I cannot recall whether or not I approved the release. However, I understand that any significant steps that the company takes need to be announced to the market. If I had seen the announcement, I believe that I would have approved it on that basis.
The amendment application
The trial commenced on 28 January 2021. It was adjourned on 13 February 2021 after 8 days of hearing. The trial resumed on Monday 12 July 2021. That afternoon, counsel for the plaintiff informed the Court that on the previous Friday afternoon, 9 July 2021, the plaintiff's solicitor had received notice from the first to fifth defendants' solicitors that they intended to apply to amend their defence by withdrawing the admission that the third and fifth defendants authorised and approved the publication and republication of the First ASX Announcement.
On 12 July 2021, the first to fifth defendants filed an affidavit affirmed by Simon David Hubbard, a legal practitioner with the carriage of this matter on behalf of the first to fifth defendants, subject to the supervision of his supervising partner. Annexed to Mr Hubbard's affidavit is a minute of proposed first to fifth defendants' sixth amended defence which amends [45] of their existing defence in the manner I have set out earlier in these reasons.
On 13 July 2021, on the tenth day of the trial, and after the plaintiff had closed his case, the first to fifth defendants moved to amend their defence in accordance with the minute to which I have referred.
Principles relating to amendments to withdraw admissions
Order 21 r 5(2) of the Rules of the Supreme Court 1971 provides that the court may at any stage of the proceedings allow any party to amend that party's pleading, on any terms as to costs or otherwise, that may be just and in the manner (if any) that the court may direct. Whether an amendment should be permitted is a matter of discretion to be exercised according to the interests of justice.
Where an application for leave to amend the pleading is made after the commencement of a trial, the court must consider the application in the context of the considerations identified in Aon Risk Services Australia Ltd v Australian National University,[6] which will inform the exercising of the discretionary power to allow or refuse an amendment.
[6] Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175.
In the circumstances of this case, three considerations are important. First, the parties must be given a sufficient opportunity to resolve the real issues in dispute between them.[7] Secondly, the exercise of the discretion will require an explanation to be given for the delay in applying for amendment.[8] Thirdly, an amendment will not be permitted where it would cause irremediable prejudice to the other party.[9]
Sufficient opportunity to agitate real issues
[7] Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175.
[8] Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175.
[9] ACN002693843 Box Pty Ltdv Australian Corrugated Box Co Pty Ltd [2013] VSCA 223, [65] ‑ [66].
For a long time, Australian courts exercised their discretion in accordance with the perceived general rule in Cropper v Smith[10] that a party should be entitled to an amendment, even at a late stage in a trial, to permit the real issues in dispute between the parties to be finally resolved. That principle was addressed by the High Court in Queensland v JL Holdings Pty Ltd.[11] However, those decisions and the principles to be applied in exercising the discretion to allow an amendment were explained by the High Court in Aon Risk Services Australia v Australian National University:[12]
An important aspect of the approach taken by the plurality in J L Holdings was that it proceeded upon an assumption that a party should be permitted to amend to raise an arguable issue subject to the payment of costs occasioned by the amendment. So stated it suggests that a party has something approaching a right to an amendment. That is not the case. The 'right' spoken of in Cropper v Smith needs to be understood in the context of that case and the Rule, which required amendment to permit the determination of a matter already in issue. It is more accurate to say that parties have the right to invoke the jurisdiction and the powers of the court in order to seek a resolution of their dispute. Subject to any rights to amend without leave given to the parties by the rules of court, the question of further amendment of a party's claim is dependent upon the exercise of the court's discretionary power [96].
[10] Cropper v Smith [1884] 26 Ch D 700, CA, 710.
[11] Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146, 154.
[12] Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 (Gummow, Hayne, Crennan, Kiefel and Bell JJ).
The plurality further explained:
Parties have choices as to what claims are to be made and how they are to be framed. But limits will be placed upon their ability to effect changes to their pleadings, particularly if litigation is advanced. That is why, in seeking the just resolution of the dispute, reference is made to parties having a sufficient opportunity to identify the issues they seek to agitate (emphasis in original) [112].
It is also relevant that defamation actions by their nature should be resolved speedily, which is recognised by s 3(d) of the Defamation Act 2005 (WA).
To allow the amendment would necessitate an adjournment of the trial to enable the plaintiff to investigate what further evidence may be available to prove that the third and fifth defendants authorised, and are legally responsible for, the publication and republication of the First ASX Announcement and to consider reopening his case to adduce further evidence on that matter. That would not only delay the resolution of the trial but raise real issues whether it could be completed before I retire in February 2022 with the resulting disruption that would cause.
Nevertheless, allowing a party to agitate the real issues in dispute is a relevant and important consideration. The first to fifth defendants' contention that the amendment should be allowed to permit the resolution of a real matter in dispute between the parties is undermined to some extent by the consideration that [45] of the defence is not necessarily inconsistent with the witness outlines.
Any person who participates in, or authorises, the publication of defamatory material may be liable for its publication. A person may authorise the publication of material without participating in its preparation or approving or even being aware of it prior to its publication. In Webb v Bloch,[13] the defendants had instructed a solicitor to prepare the circular which was ultimately sued on. Some of the defendants ultimately held liable for the publication of the circular had not even seen it in its final form. The relevant facts are set out in the judgment of Chief Justice Knox:
The draft circular was sent by Norman to the defendant Bloch, and, so far as appears from the evidence, he was the only person who saw it. On 16 February 1926 the defendant Bloch telegraphed to Norman: 'Issue circulars best way you think advisable forward us some copies.' At a meeting of the Victorian Committee held on 22nd February Bloch reported what he had done with regard to the circular, and it was resolved that his action in instructing Norman to issue circulars be confirmed. At this time none of the defendants except Bloch had seen the circular or knew what it contained, but the defendant Crocker was supplied with a copy on the following day, and the defendant Pratt saw a copy on 23rd or 24th February 1926. It does not appear from the evidence that the defendant Murphy ever saw the circular (335).
[13] Webb v Bloch (1928) 41 CLR 331.
Each of the defendants was a member of a committee that had condoned or joined in the instruction to the solicitor to issue the circular. What was ultimately published was either a correct account of what was requested to be published or was authorised without the defendants having or exercising the opportunity to confirm that it was correct.
A person may be liable for the publication of a statement if they ratified it or permitted the continued presence of the publication of the statement so that persons other than the plaintiff may continue to read it, notwithstanding that they were not involved in the preparation of the statement or did not perform any positive act to cause it to be published.[14]
[14] Byrne v Deane [1937] 1 KB 818; Urbanchich v Drummoyne Municipal Council (1991) Aust Torts Reports 81-127.
There is evidence that, at a meeting of the Board of Directors of eSense on 5 March 2018, the third and fifth defendants voted in favour of a resolution that only the Chairman and CEO were required to approve an ASX Announcement. Furthermore, they may have authorised the continued publication by ratifying it after it had initially been published or by failing to take steps to have it removed from the relevant websites after they became aware of it. The evidence does not establish those matters. Nevertheless, it can be seen that the third and fifth defendants may have authorised the publication of the First ASX Announcement notwithstanding that they were not involved in its preparation, did not approve it or were not even aware of its contents before its publication. Thus, the statement by the third defendant that she was not involved in preparing the release or approving its release to the market is not inconsistent with her having authorised its publication. Even more so, the statement by the fifth defendant that he cannot recall whether or not he approved the release but if he had seen the announcement, he believes he would have approved it, is not inconsistent with the fifth defendant having authorised the publication.
Explanation for delay
The first to fifth defendants have not given an adequate explanation for the delay in applying to amend their defence. Their amendment application is supported by the affidavit affirmed by Mr Hubbard on 12 July 2021. Mr Hubbard refers to the pleaded defences and the witness outlines of the third and fifth defendants. Mr Hubbard affirms that, in preparation for the resumption of the trial on 12 July 2021, he attended a number of conferences with his clients and counsel and he and senior counsel identified that the amendments that had been made to [45] of the first to fifth defendants' defence did not accord with the third and fifth defendants' anticipated evidence.
Mr Hubbard affirms that he cannot be certain, but he believes that 'the error' arose from a transposition of the pleading in [59] of the First Defence, wherein it was pleaded in response to SOC [52] (which pleaded publication of the Second ASX Announcement), the words which were and remain in [45] of the First Defence. However, 'the error' referred to is the error in [45] of incorrectly referring to the Second ASX Announcement rather than the First ASX Announcement. No explanation is offered for the error by the third and fifth defendants in the Amended Defence admitting that they approved and authorised the First ASX Announcement, if it was an error.
In the absence of any evidence to the contrary, [45] of the Amended Defence, and the subsequent amended defences, must be taken to have been in accordance with the instructions given by the third and fifth defendants. There is no explanation for any change of position by the third and fifth defendants.
Prejudice to the plaintiff
An amendment to withdraw an admission will not be permitted where it would cause irremediable prejudice to the other party. The party applying for the amendment bears the burden of persuasion that the amendment will not cause such prejudice, while the party opposing the amendment bears an evidential onus of adducing evidence on the question of prejudice.
The plaintiff has closed his case. In the absence of the admission by the third and fifth defendants that they authorised the publication of the First ASX Announcement, there is no, or no sufficient, evidence that they did so. The third and fifth defendants may elect not to give evidence and the plaintiff's claim against the third and fifth defendants in relation to the First ASX Announcement would fail.
If the third and fifth defendants had not admitted that they authorised the publication of the First ASX Announcement, the plaintiff could have conducted further investigations and taken interlocutory steps to obtain further discovery or to administer interrogatories relating to the third and fifth defendants authorising, ratifying or failing to take steps to have the First ASX Announcement removed from the websites on which it was posted. Those steps could now only be undertaken by adjourning the trial and allowing the plaintiff to reopen his case and present further evidence at the resumed trial. It is not in the public interest that the trial be adjourned after 13 days of hearing. Furthermore, as I have said, if the trial were to be adjourned it may not be completed before I retire and may have to start again. Such an outcome would be contrary to the interests of justice and the public interest.
The consequence of allowing the amendment is that the plaintiff would have lost his opportunity to obtain and present evidence that the third and fifth defendants authorised the publications and the plaintiff's claim in relation to the First ASX Announcement would fail. That is irremediable prejudice.
Conclusion
The application of the third and fifth defendants to amend [45] of their defence to withdraw their admission that they authorised and approved publication of the First ASX Announcement to the ASX and on eSense's website is refused.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
BR
Associate to the Honourable Justice Le Miere
27 JULY 2021
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