De Kauwe v Cohen [No 3]
[2021] WASC 286
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: DE KAUWE -v- COHEN [No 3] [2021] WASC 286
CORAM: LE MIERE J
HEARD: 27 JULY 2021
DELIVERED : 19 AUGUST 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 - Statement of claim
Legislation:
Rules of the Supreme Court 1971 (WA)
Result:
Partial leave to amend granted
Category: B
Representation:
Counsel:
| Plaintiff | : | Mr M L Bennett & Mr A Tharby |
| First Defendant | : | Mr J D MacLaurin SC & Ms J Moore |
| Second Defendant | : | Mr J D MacLaurin SC & Ms J Moore |
| Third Defendant | : | Mr J D MacLaurin SC & Ms J Moore |
| Fourth Defendant | : | Mr J D MacLaurin SC & Ms J Moore |
| Fifth Defendant | : | Mr J D 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:
Aon Risk Services Australia Limited v Australian National University [2009] HCA 27; (2009) 239 CLR 175
Belmont Finance Corpation Ltd v Williams Furniture Ltd [1979] Ch 250
Dougherty v Chandler (1946) 46 SR (NSW) 370
Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; (2004) 218 CLR 471
Middleton v O'Neill (1943) 43 SR (NSW) 178
Streeter v Western Areas Exploration Pty Ltd (No 2) [2011] WASCA 17; (2011) 278 ALR 291
LE MIERE J:
Summary
The plaintiff has applied to amend his statement of claim in the terms of his minute of proposed fourth amended statement of claim filed 4 August 2021. The minute contains three proposed amendments. The first is to amend [2A] and [4]. The second is to insert a new paragraph, [14.12A], together with the particulars (i) - (xii). The third is to insert new paragraphs - [56.13] and [56.14].
The amendments to [2A] and [4] are not opposed by any of the defendants. Those amendments will be allowed and the statement of claim amended accordingly.
The amendment to insert [14.12A] together with the particulars is opposed by all of the defendants. The application to amend by inserting that paragraph is refused.
The amendment to insert [56.13] and [56.14] is opposed by all of the defendants. Those amendments will be allowed and the statement of claim amended accordingly.
Amendments to [2A] and [4]
These amendments update the dates on which the third and fifth defendants ceased to be directors of eSense. They are not contentious. The amendments will be allowed.
Amendments to [14.12A]
The proposed amendment
The proposed amendment is to insert a new paragraph in these terms:
[14.12A][In] respect of the Performance Rights Resolution, Mr Coen, Mr Gilboa and Mr Saad sought to rely upon revenue said to be contractually paid by IC Access pursuant to and during the term of the IC Access Agreement which was not a genuine agreement; [Ex 0184].
Particulars
The fact the IC Access Agreement was not a genuine agreement is to be inferred from:
(i)…
…
(xii)…
The proposed plea that the IC Access Agreement was not a genuine agreement is a plea that the agreement is a 'sham'. A 'sham' refers to steps which take the form of a legally effective transaction but which the parties intend should not have the apparent, or any, legal consequences.[1]
The discretion to allow an amendment
[1] Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; (2004) 218 CLR 471 [46] (Gleeson CJ, McHugh, Kirby, Hayne and Callinan JJ).
Order 21 r 5(2) of the Rules of the Supreme Court 1971 (WA) (RSC) 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 interest of justice. The court must consider an application to amend a statement of claim in accordance with the objects prescribed in RSC O 1 r 4A and r 4B.
Where an application for leave to amend a pleading is made after the commencement of a trial, the court must have regard to the considerations identified by the High Court in AON Risk Services Australia Limited v Australian National University.[2] The applicant seeking the amendment bears the onus to show why leave should be granted.[3] A just resolution of proceedings between the parties is a critically important consideration, which will necessarily include a proper opportunity being given to the parties to plead and to replead their respective cases, should that need arise and the circumstances are present to warrant the discretion being exercised in favour of the grant of the amendment. Nevertheless, there are limits upon repleading. The High Court referred to a range of other considerations which need to be weighed in the balance in the exercise of the discretion to grant an amendment to a pleading.
[2] Aon Risk Services Australia Limited v Australian National University [2009] HCA 27; (2009) 239 CLR 175.
[3] AonRisk Services Australia Limited v Australian National University (2009) 239 CLR 175 [4] (French CJ).
The High Court made reference to the following factors:
(a)whether there will be substantial delay caused by the amendment;[4]
(b)the extent of wasted costs that will be incurred;[5]
(c)whether there is an irreparable element of unfair prejudice caused by the amendment which cannot be adequately compensated for, whatever costs may be ordered;[6]
(d)concerns of case management arising from the stage in the proceeding when the amendment is sought, including the fact that the time of the court is a publicly funded resource, and whether the granted of the amendment will result in inefficiencies arising from the litigation or adjournment of trials;[7]
(e)whether the grant of the amendment will lessen public confidence in the judicial system;[8] and
(f)whether a satisfactory explanation has been given for seeking the amendment at the stage when it is sought.[9]
[4] AonRisk Services Australia Limited v Australian National University (2009) 239 CLR 175 [4] (French CJ), [111] (Gummow, Hayne, Crennan, Kiefel & Bell JJ).
[5] AonRisk Services Australia Limited v Australian National University (2009) 239 CLR 175 [111] (Gummow, Hayne, Crennan, Kiefel & Bell JJ).
[6] AonRisk Services Australia Limited v Australian National University (2009) 239 CLR 175 [5] (French CJ), [100] - [101] (Gummow, Hayne, Crennan, Kiefel & Bell JJ).
[7] AonRisk Services Australia Limited v Australian National University (2009) 239 CLR 175 [5] (French CJ), [111] (Gummow, Hayne, Crennan, Kiefel & Bell JJ).
[8] AonRisk Services Australia Limited v Australian National University (2009) 239 CLR 175 [5] (French CJ).
[9] AonRisk Services Australia Limited v Australian National University (2009) 239 CLR 175 [5] (French CJ), [102] (Gummow, Hayne, Crennan, Kiefel & Bell JJ).
The list of factors is not exhaustive. In the end, all matters arising in any particular case relevant to the exercise of the power to permit an amendment must be weighed.[10]
[10] AonRisk Services Australia Limited v Australian National University (2009) 239 CLR 175 [111] (Gummow, Hayne, Crennan, Kiefel & Bell JJ).
Effect on plaintiff's case of refusing amendment
A critically important consideration is what effect refusing the amendment will have on the opportunity of the plaintiff to present his case. The plaintiff has closed his case. Whether the amendment is allowed or not will not affect the evidence adduced by the plaintiff as part of his case. However, the plaintiff wishes to adduce evidence concerning the IC Access Agreement by cross-examination of the defendants' witnesses. The parties have made conflicting submissions as to the evidence which the plaintiff is entitled to adduce in cross‑examination on the existing pleadings. Further, the parties have made conflicting submissions concerning the issues, if any, concerning the IC Access Agreement between the parties on the existing pleadings. Therefore, it is necessary to consider the issues, if any, concerning the IC Access Agreement between the parties on the existing pleadings and what, if any, evidence the plaintiff may adduce in relation to the IC Access Agreement on the existing pleadings.
The background to the action is conflict between the plaintiff, an Australian resident who was a director and chairman of eSense, and the first to fifth defendants, who are Israeli residents and were directors of eSense. The sixth and seventh defendants are Australian residents who were the company secretary and a media consultant to eSense respectively.
The conflict manifested in Mr Cohen, Mr Gilboa and Mr Saad giving notice convening a meeting of a board of directors to be held on 8 February 2018 to terminate the service of the plaintiff as chairman of the board of directors, a requisition for an EGM for proposed resolutions to remove Mr Cohen, Mr Gilboa and Mr Saad from the board and to appoint the plaintiff, Andreas Gedeon and Faldi Ismail to the board and a contest at the AGM whether the plaintiff, Mr Gilboa, Mr Cohen and Mr Saad should be re-elected as directors.
The plaintiff's existing statement of claim is his third amended statement of claim (3ASOC). The plaintiff pleads about a number of publications alleged to have been published by various defendants which defame him. The defendants variously plead defences of statutory and common law qualified privilege. At the heart of the privilege defences is the defendants' contention that the publications relate to matters relevant to the management of eSense and were published to eSense's directors and officers and others who had an interest in receiving the information. The defendants say that the publications were reasonable in the circumstances. The plaintiff, by his replies, contends that the publications were not reasonable in the circumstances and were actuated by malice.
The directors held performance rights to receive a given number of CDIs if a performance milestone was achieved (Performance Rights). The significance of the IC Access Agreement is that at a board meeting Mr Cohen, Mr Gilboa and Mr Saad voted or purported to vote to approve the conversion of the Performance Rights held by the directors to CDIs on the basis that the performance milestone was achieved by eSense entering into the IC Access Agreement. The plaintiff maintains that, as chairman, he deferred voting on the resolution because the directors had not been provided with sufficient documents and information concerning the agreement. The conversion of the Performance Rights into CDIs would substantially increase the number of votes controlled by the first to third defendants at the AGM and EGM.
The pleadings are binding on the parties. The facts in dispute are defined by the pleadings. It is therefore necessary to refer to the pleadings.
Some relevant pleadings
In his 3ASOC, the plaintiff pleads that, at the board meeting on 19 January 2018, the directors considered a resolution approving the conversion of Performance Rights held by the directors to CDIs,[11] Mr Coen, Mr Saad and Mr Gilboa purported to vote in favour of the resolution and the plaintiff deferred voting on the resolution on the basis that the board had not sighted the contracts relied upon for the achievement of the performance milestone.[12] The plaintiff further pleads that he corresponded with the sixth defendant, Mr Pamensky, about the IC Access Agreement and the plaintiff queried the agreement.[13]
[11] Plaintiff's third amended statement of claim filed 23 February 2021 [14.11.2], [14.12.2].
[12] Plaintiff's third amended statement of claim filed 23 February 2021 [14.12.1], [14.12.2].
[13] Plaintiff's third amended statement of claim filed 23 February 2021 [28.3], [28.4].
At 3ASOC [56], the plaintiff pleads that the defendants' publication of the publications complained of and the defendants' conduct was improper, unjustifiable and lacking in bona fides in a manner which has aggravated the hurt, distress and embarrassment he has suffered by reason of the matters in [56.1] - [56.12]. At 3ASOC [56.10], the plaintiff says that the defendants' publication of the ASX releases was for their own purposes and not for the proper purposes of eSense, namely to influence eSense's shareholders and CDI holders to vote at the AGM and EGM against the re-appointment of the plaintiff as a director and for the re-appointment and against the removal of Mr Coen, Mr Gilboa, Mr Saad and Ms Assaf as directors.
The defendants have pleaded defences of statutory or qualified privilege in relation to the publications they are alleged to have been responsible for. The plaintiff has filed replies in which he pleads, in relation to pleas of statutory qualified privilege, that the publications were not reasonable in the circumstances, and in response to the pleas of common law qualified privilege, that the publications complained of were actuated by malice.
In response to the defence of the first to fifth defendants, the plaintiff pleads, amongst other things, that two of the publications complained of[14] were sent as part of a design to concentrate control of eSense with the Israeli based directors.[15] In relation to the ASX releases the plaintiff says that the releases were published for the defendants' own purpose and not for the proper purposes of eSense, namely to influence eSense's shareholders and CDI holders as to how they would vote at the AGM and EGM as pleaded at 3ASOC [56.10].[16] In relation to the first to fifth defendants' pleas of qualified privilege, the plaintiff pleads that the publication of the publications complained of were actuated by malice. The plaintiff's particulars of malice include the totality of the defendants' conduct as pleaded in the 3ASOC, particularly [56] and in the reply, the unreasonable circumstances in which each of the publications was published as pleaded in the reply and, amongst other things, that the defendants published the releases for their own purpose and not for proper purposes of eSense, namely to influence the vote of eSense's shareholders and CDI holders at the AGM and EGM as pleaded in 3ASOC [56.10].
[14] The 5 February letter and 5 February board meeting notice.
[15] Reply to first to fifth defendants' fourth further amended defence filed 11 May 2021 [3.5(x)], [4.4(x)].
[16] Reply to first to fifth defendants' fourth further amended defence filed 11 May 2021 [9.5(xix)], [12.5(xiv)].
In response to the defence of the sixth defendant, the plaintiff pleads that Mr Pamensky's conduct in publishing the ASX releases was not reasonable in the circumstances. The plaintiff's particulars of unreasonableness include that the releases were published for the defendants' own purpose, namely to influence eSense's shareholders and CDI holders as to how they would vote at the AGM and EGM as pleaded at 3ASOC [56.10] and not for the purposes of eSense.[17] The plaintiff pleads that the publication of the second ASX release by Mr Pamensky was actuated by malice. The particulars of malice include that the defendants published the second ASX release for the first to fifth defendants' own purpose, namely to influence the vote of eSense's shareholders and CDI holders at the AGM and EGM and not for proper purposes of eSense.[18]
[17] Plaintiff's amended reply to sixth defendant's re-amended defence filed 6 July 2021 [3.7(xvi)], [4.5(xiii)].
[18] Plaintiff's amended reply to the seventh defendant's second further amended defence filed 22 February 2021 [5(v)].
In response to the defence of the seventh defendant, the plaintiff pleads that Mr Wright's conduct in publishing the second ASX release was not reasonable in the circumstances. The particulars of unreasonableness include that the release was published for the defendants' own purpose, namely to influence eSense's shareholders and CDI holders as to how they would vote at the AGM and EGM as pleaded at 3ASOC [56.10] and not for the purposes of eSense.[19] The plaintiff pleads that the publication of the second ASX release by Mr Wright was actuated by malice. The plaintiff's particulars of malice include that the defendants published the second ASX release for the first to fifth defendants' own purpose, namely to influence the vote of eSense's shareholders and CDI holders at the AGM and EGM and not for proper purposes of eSense.[20]
[19] Plaintiff's amended reply to the seventh defendant's second further amended defence filed 22 February 2021 [3.5(xii)].
[20] Plaintiff's amended reply to the seventh defendant's second further amended defence filed 22 February 2021 [5(v)].
This brief reference to the pleadings shows at least the following. First, the plaintiff has pleaded the IC Access Agreement, that Mr Cohen, Mr Gilboa and Mr Saad voted for a resolution to approve the conversion of the Performance Rights to CDIs on the basis that the necessary milestone was achieved by eSense entering into the IC Access Agreement, and that the plaintiff queried the milestone having been achieved by eSense entering into the IC Access Agreement. Secondly, the plaintiff has pleaded that the publications complained of were unreasonable or actuated by malice on the ground, amongst other things, that the defendants designed a plan to concentrate control of the company with the Israeli directors. Thirdly, some of the publications were published not for proper purposes of eSense but to influence the vote of shareholders and CDI holders at the AGM and EGM to reappoint and not to remove the Israeli directors and not to reappoint the plaintiff.
The issues on the pleadings are those issues which if decided in favour of the plaintiff will give a right to relief and if decided in favour of the defendants will be a defence. The pleadings define the issues so that the parties know the real point to be decided at trial. The relevant issues include:
1.whether the defendants' publications and their conduct has been improper, unjustifiable and lacking in bona fides in a manner which has aggravated the hurt, distress and embarrassment suffered by the plaintiff by reason of, amongst other things, the circumstances pleaded in 3ASOC [14];
2.whether the defendants' publications were reasonable in the circumstances or unreasonable by reason of, amongst other things, the publications being part of a design to concentrate control of eSense with the Israeli based directors and were published for the defendants' own purposes and not for the proper purposes of eSense, namely to influence eSense's shareholders and CDI holders as to how they would vote at the AGM and EGM; and
3.whether the defendants' publications were actuated by malice constituted, or inferred from, amongst other things, the defendants' conduct as pleaded in the plaintiff's 3ASOC, particularly [56] and in the replies, the unreasonable circumstances in which each of the publications was published as pleaded in the replies and that the defendants published the ASX releases for their own purpose and not for proper purposes of eSense, namely to influence the vote of eSense's shareholders and CDI holders at the AGM and EGM.
The circumstances in which the IC Access Agreement was entered into, whether it was contrived to achieve the milestone for conversion of the Performance Rights into CDIs so as to increase the first to third defendants' votes at the AGM to re-elect the defendants and remove the plaintiff, and whether the agreement was a sham, are not themselves issues on the pleadings. However, that does not mean that they are not facts in dispute and that evidence is not admissible to prove the facts asserted by the plaintiff in relation to those matters.
Evidence to establish a fact may be admissible notwithstanding that the fact is not pleaded. The RSC distinguish between material facts and evidence. A fact that is relevant only to establishing an ultimate fact is evidence. Those facts do not have to be pleaded. The RSC provide that every pleading must contain, and contain only, a statement in a summary form of the material facts on which the party pleading relies for his claim but not the evidence by which those facts are to be proved.[21] While the distinction between material facts and evidence is easy to state it is often difficult to apply.
[21] Rules of the Supreme Court 1971 (WA) O 20 r 8(1).
Admissible evidence concerning the IC Access Agreement
Evidence that the IC Access Agreement was tailored by the defendants, or some of them, to support the conversion of the Performance Rights and that the IC Access Agreement was entered into for the purpose of triggering the conversion of the Performance Rights to CDIs so as to increase the defendants' votes at the AGM in favour of their re-election and the removal of the plaintiff is admissible because it is relevant to the pleaded issues I have referred to. Evidence that the first to third defendants contrived to obtain more votes at the AGM for the purpose of securing their re-election and removing the plaintiff tends to make it more likely in all the pleaded circumstances that the defendants published the publications complained of for that purpose rather than proper purposes of eSense. Indeed, such evidence was led without objection.
Further, such evidence is admissible as it goes to the credit of Mr Cohen and Mr Gilboa. Evidence to the effect that Mr Cohen and Mr Gilboa contrived to cause the company to enter into an agreement for the purpose of triggering the conversion of Performance Rights to CDIs for their own benefit is of such a nature that the truth of the allegations would affect the opinion of the court as to their credibility on matters to which they testified.
If the amendment is not allowed, the plaintiff will be able to advance his case that the IC Access Agreement was tailored to support the conversion of the Performance Rights and that the IC Access Agreement was entered into for the purpose of triggering the conversion of the Performance Rights to CDIs so as to increase the defendants' votes at the AGM in favour of their re-election and the removal of the plaintiff.
Plaintiff may not submit IC Access Agreement is a sham
If the amendment is not allowed the plaintiff will not be permitted to advance the case that the IC Access Agreement was a sham in support of the issues on the pleadings, although he will be permitted to cross‑examine Mr Cohen and Mr Gilboa to that effect because it is a matter going to their credit.
The plaintiff will not be permitted to reply upon the IC Access Agreement being a sham in support of the issues on the pleadings because 3ASOC does not plead that the IC Access Agreement was a sham agreement or facts from which it might be inferred that the agreement was a sham for the following reasons.
RSC O 13 r 1(a) provides that every pleading must contain the necessary particulars of any fraud on which the party pleading relies. Further, a plaintiff must plead in his reply any matter which, if not specifically pleaded, might take the other party by surprise or which raises issues of fact not arising out of the preceding pleadings, ie the defendants' defences.[22]
[22] Rules of the Supreme Court 1971 (WA) O 20 r 9(1)(b), (c).
The plea that the agreement is a sham is relevant by a plea of fraud. An allegation of fraud is serious. Fraud or dishonesty must be distinctly pleaded and pleaded with particularity, and the language used to plead the facts must unequivocally demonstrate that dishonesty is involved; although the word 'fraud' or 'dishonesty' need not necessarily be used.[23] An amendment to add a charge of fraud will generally be allowed, if at all, only early in the proceeding.[24] The claim that the IC Access Agreement is a sham is relevantly a claim of fraud. The plaintiff is not entitled to advance that claim in the absence or an express plea to that effect.
[23] Belmont Finance Corpation Ltd v Williams Furniture Ltd [1979] Ch 250, 268; Streeter v Western Areas Exploration Pty Ltd (No 2) [2011] WASCA 17; (2011) 278 ALR 291 [605].
[24] Middleton v O'Neill (1943) 43 SR (NSW) 178.
Amendment is not critical to plaintiff's case
If the amendment is refused, the plaintiff will not be permitted to rely upon a claim that the IC Access Agreement is a sham in proof of the issues in the action. However, refusing the amendment does not prevent the plaintiff from relying upon evidence that the IC Access Agreement was tailored to support the conversion of the Performance Rights into CDIs and that the IC Access Agreement was entered into for the purpose of triggering the conversion of the Performance Rights to CDIs so as to increase the defendants' votes at the AGM in favour of their re-election and the removal of the plaintiff. Therefore, whilst the amendment is significant, its refusal is not critical to the plaintiff's case in relation to the real issues or questions between the parties.
The explanation for delay in applying to amend
Generally speaking, where a discretion is sought to be exercised in favour of one party, and to the disadvantage of another, an explanation for the delay in applying for the amendment will be called for. The importance attached by RSC O 1 r 4A to the elimination of delay will require that, in most cases where it is present, a party should explain the delay and the circumstances giving rise to the amendment so that they may be weighed against the affects of any delay and the objectives of the RSC.
The plaintiff's explanation for the delay and the circumstances giving rise to the amendment is that counsel for the plaintiff, Mr Bennett and Mr Tharby, who have each been involved in the conduct of the proceedings since the commencement and in preparing each iteration of the statement of claim and reply, considered based on the pleadings the issue as to whether the IC Access Agreement was genuine always to have been in issue until the court expressed a contrary view on 3 August 2021.[25]
[25] Affidavit of Tracy Elizabeth Cole sworn 6 August 2021 [9].
The view of counsel for the plaintiff is wrong but not unreasonable.
Prejudice to the defendants
The critical factor is the irreparable unfair prejudice to the defendants which would be caused by the amendment.
Senior counsel for the first to fifth defendants, Mr MacLaurin SC, submitted that if the amendment had been pleaded before the commencement of the trial, the first to fifth defendants could have investigated the allegation that the IC Access Agreement is a sham and obtained testimonial and documentary evidence to support the case that it is not. The defendants could have approached Mr Schneider, the employee of eSense who negotiated the agreement, could have approached a representative of IC Access and BIB and could have sought documents in relation to the agreement.
Counsel for the plaintiff, Mr Bennett, submitted that the defendants have adduced no evidence that they have attempted to approach Mr Schneider or obtain evidence from him, representatives of IC Access or BIB in relation to whether the IC Access Agreement is a sham.
I find that the amendment would cause irreparable unfair prejudice to the defendants. It would place an unfair burden on the defendants and their legal representatives to require them to carry out the relevant investigations and evidence gathering in the middle of a long and complex trial. The first to fifth defendants have opened their case and adduced evidence from the first and second defendants on the basis of the existing pleadings. It would unfairly prejudice them to introduce a significant new pleading at this stage of the trial.
Delay
If the amendment were allowed, the defendants would have to be given an opportunity to investigate and gather evidence in relation to the claim that the IC Access Agreement is a sham. That would almost inevitably disrupt and delay a trial which has already been disrupted and extended far beyond the time for which it was originally set down for hearing. That would not only cause delay and costs to the parties but further use up the resources of the court to the detriment of other litigants.
Amendment will be refused
Having regard to all of the circumstances the amendment to insert [14.12A] into the statement of claim will be refused.
Amendment to insert [56.13] and [56.14]
The application to amend
At 3ASOC [56], the plaintiff pleads that the defendants' publication of the publications complained of and the defendants' conduct has been improper, unjustifiable and lacking in bona fides in a manner which has aggravated the hurt, distress and embarrassment he has suffered by reason of the matters set out in [56.1] - [56.12]. The plaintiff now applies to insert into his 3ASOC new paragraphs as follows:
56.13Mr Gilboa forwarding the 5 February Letter to Mr Antony Sormann by email sent on or about 5 February 2018 despite Mr Sormann having no formal relationship with eSense; [EX‑0895]
56.14Mr Gilboa sending an email to Mr Saad, Mr Pamensky and others on or about 14 February 2018 with the subject line, 'Please your attention - Brenan (sic) use Esense's money' which: [EX-0898]
56.14.1attached a bank statement for Dr de Kauwe's corporate debit card;
56.14.2stated, 'It is crazy … He steals money from the company …' I think that enough is enough …'; and
56.14.3Mr Gilboa forwarded to Mr Sormann by email sent on or about 15 February 2018. (emphases omitted)
Paragraph [56] and hence proposed [56.13] and [56.14] are incorporated by reference in the plaintiff's pleas that the publications by the defendants were unreasonable and actuated by malice.
The explanation for delay
The plaintiff became aware of the emails which are the subject of the proposed amendment on 13 July 2021 when the plaintiff's solicitors uplifted and inspected the documents produced by Henslow Pty Ltd in answer to a subpoena caused to be issued by the plaintiff. Prior to that time the plaintiff was unaware of the emails.
The plaintiff's unawareness of the emails is not a result of any failure to take reasonable steps to investigate the matter. The emails were sent by Mr Gilboa. Mr Gilboa must have, or have had, the emails, or copies of them, in his possession, custody or power. The emails are discoverable. They are documents which relate to the matters in question in the action. They are documents which, at least, it is reasonable to suppose contain information which may either directly or indirectly enable the plaintiff either to advance his own case or damage the case of the first defendant, Mr Gilboa. The documents contain information which may enable the plaintiff either to advance his own case or to damage the case of Mr Gilboa if it is a document which may fairly lead him to a chain of inquiry which may have either of those two consequences. The plaintiff was entitled to rely upon Mr Gilboa to discover such documents. Mr Gilboa failed to do so. The plaintiff has adequately explained the delay.
Prejudice to defendants
The defendants have not adduced any evidence of prejudice or submitted what prejudice they might suffer by reason of the delay in the amendment.
In any event, I find that, notwithstanding Mr MacLaurin's submission to the contrary, Mr Gilboa should have, but failed to discover the emails. In that circumstance I would give little weight to any prejudice which might be suffered by the first to fifth defendants.
The sixth defendant did not submit that he would be prejudiced by the late amendment.
Counsel for the seventh defendant, Mr Russell, opposed the amendment on the ground that there is no proper basis for the claim against Mr Wright arising from the proposed amendment. I will now turn to that matter.
Claim against seventh defendant
The defamation case against the seventh defendant, Mr Wright, is that he published the ASX releases. Mr Wright pleads the defences of statutory and qualified privilege in relation to each publication. In his reply the plaintiff pleads that the circumstances of publication by Mr Wright were not reasonable and Mr Wright was actuated by malice. In [5] of his reply, the plaintiff pleads that the publication of the second ASX release was actuated by malice.
Neither proposed [56.13] nor [56.14] refer to, or appear to relate directly to, the ASX releases. Mr Wright did not send or receive a copy of either email. Mr Russell submits that in the absence of a plea that Mr Wright knew of the sending of the emails or their contents, the pleas in [56.13] and [56.14] do not disclose any reasonable claim against Mr Wright. Mr Russell submits that the malice of each defendant has to be assessed individually and there is no proper basis to plead [56.13] or [56.14] as particulars of malice against Mr Wright.
Mr Bennett submitted that Mr Wright was a party to the publication by the other defendants for an improper or collateral purpose. Mr Bennett submitted:
Wright signs up to that, is our case. He signs up to that, holus-bolus, knowing full well that he is never going to speak to de Kauwe or Megson, doesn't ever seek to represent their view or their position. And as a consequence of signing up to that purpose, he is liable for that purpose, and the question of whether he has knowledge of something - that may or may not be relevant. On one stage, if you say 'I'm going to agree that - as a group - to cooperate and assist you to achieve an improper purpose', you are responsible, we would say, for the actions of the group.
In general, to defeat a plea of qualified privilege by several defendants sued jointly, it is necessary for the plaintiff to prove malice against each defendant individually and 'he must fail as against any defendant to whom he is unable to sheet home express malice'.[26] However, the circumstances in which the defence of qualified privilege by one defendant sued jointly with others may be defeated by the malice of another defendant have not been authoritatively resolved in Australia.[27]
[26] Dougherty v Chandler (1946) 46 SR (NSW) 370, 375-6 (Jordan CJ).
[27] Australian Defamation Law and Practice (online publication download 12 August 2021) [18,060] - [18,065].
I do not uphold Mr Russell's objection. First, whilst the preponderance of authorities supports his contention that malice must be established against each defendant individually, the circumstances in which the defence of qualified privilege of one defendant may be defeated by proof of malice of another defendant have not been authoritatively resolved. Secondly, Mr Russell's objection may well apply to other circumstances pleaded by the plaintiff as particulars of malice of Mr Wright, which have not been objected to and form part of the existing pleadings. As a matter of case management, it is inefficient and likely to be productive of delay to attempt to untangle the relevant pleas and change the architecture of the plaintiff's pleading at this time. There is no real prejudice to Mr Wright in allowing the amendment against him which is to be allowed against the other defendants. Mr Russell's opening submissions cover the point and may most conveniently be dealt with in his closing submissions.
Amendment will be allowed
The amendment will be allowed and [56.13] and [56.14] will be inserted into the statement of claim.
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
19 AUGUST 2021
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