Dow Jones and Company, Inc v Gutnick M99/2001

[2001] HCATrans 573

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Melbourne  No M99 of 2001

B e t w e e n -

DOW JONES & COMPANY, INC

Applicant

and

JOSEPH GUTNICK

Respondent

Application for a stay

McHUGH J

(In Chambers)

TRANSCRIPT OF PROCEEDINGS

FROM MELBOURNE BY VIDEO LINK TO CANBERRA

ON WEDNESDAY, 14 NOVEMBER 2001 AT 1.04 PM

Copyright in the High Court of Australia

MR B.R. McCLINTOCK, SC:   May it please the Court, I appear for the applicant. (instructed by Gilbert & Tobin)

MR M.F. WHEELAHAN:   If the Court pleases, I appear for the respondent.  (instructed by Schetzer, Brott & Appel)

HIS HONOUR:   Mr Wheelahan, is this application opposed?

MR WHEELAHAN:   Yes, it is, your Honour.

HIS HONOUR:   Yes.  Mr McClintock, my practice on these stay applications pending hearing of special leave applications is to give the applicant no longer than what the applicant would get on the special leave, so you have 20 minutes.

MR McCLINTOCK:   Your Honour, I will not require anything approaching 20 minutes.  There are two elements to the application.  One is the former one of an application for extension of time for service of the summons – I do not apprehend it will be opposed.  The second is an application for a stay of the interlocutory orders made in the Victorian Supreme Court on 28 September.  Your Honour, I rely upon the affidavit of ‑ ‑ ‑

HIS HONOUR:   I have read the affidavit.  I have read the submissions.  I have read the special leave papers, or at least copies of documents.

MR McCLINTOCK:   Thank you, your Honour.  In that case could I take your Honour first to exhibit PAR-1, which is the form of orders, of course, annexed to the affidavit of Mr Reidy, and it is the form of orders of which we seek the stay.  Your Honour will see it is the first document after the conclusion of the affidavit or the text of the affidavit.

HIS HONOUR:   Yes.

MR McCLINTOCK:   Your Honour will see that order 2 provides:

The date ordered by the Honourable Justice Hedigan on 28 August 2001 for the delivery of a defence is extended until 14 November 2001.

While I have the orders there, I should also point your Honour to paragraph 4, to which I propose to come back:

The delivery of the defence by the Defendant or the making of the application for a stay or extension of time for delivery of a defence do not constitute a waiver by it of its objection to the jurisdiction of this Court.

HIS HONOUR:   Yes.

MR McCLINTOCK:   I wish to say something about that supposed order, your Honour.

HIS HONOUR:   Well, you can assume for the moment it is of no force or effect, but the problem as I see it from your point of view is this.  Victorian Stevedoring & Meakes v Dignan holds that the appeal to this Court is an appeal in the strict sense and this Court makes the orders that the court below ought to have made.  That being so, what is there to prevent this Court, assuming that you were successful and your appeal was allowed, from ordering that the writ and statement of claim and the conditional appearance be set aside?  Can I just put this to you for your thought as well:  it seems to me that arguably you have already waived jurisdiction.  You have put on a conditional appearance which has become an unconditional appearance under Rule 8.08 until it is set aside.  Now, it has not been set aside, so you have an unconditional appearance on at the moment.

MR McCLINTOCK:   Well, your Honour, that is something that can and would be cured by any orders made by this Court after the hearing of the appeal if special leave were granted.

HIS HONOUR:   But what about the Dignan point?

MR McCLINTOCK:   The difficulty we face is this, your Honour – and I will assume, as your Honour has invited me to, that that order is of no force and effect – it could, of course, be of no force or effect in this Court on any view of the matter, but if we file a defence there is an argument open, we would think, to the respondent on the special leave application that the application is itself now moot because of the filing of the defence and what is there to prevent my learned friend, or Mr Sher who I presume will lead him on the application, standing up and saying, they have filed a defence and ‑ ‑ ‑

HIS HONOUR:   Well, that is a submission that can be made.  It has very little prospect of success in my view.  In fact, as far as I am concerned, it would have no prospect of success.

MR McCLINTOCK:   Your Honour, it would not prevent any other member of the Bench putting it to ‑ ‑ ‑

HIS HONOUR:   That may be.

MR McCLINTOCK:   Your Honour, we are here as a counsel of caution ‑ ‑ ‑

HIS HONOUR:   But in addition, you have to face up to the fact that your prospects of success in this appeal seem to me to be remarkably low.  It is possible that you might get special leave, simply so that this Court can authoritatively settle a point, but that is a far thing from saying that you would succeed in your appeal.  Mr McClintock, I do not see, even if the policy arguments were in your favour, that the Court could make a principle exception in your favour.  What is the difference between CNN or any other cable television provider, the BBC, or even the newspaper publisher who publishes outside the jurisdiction?  They all face the same problems.

MR McCLINTOCK:   There may be arguments, your Honour, by analogy to those types of operations.  One thing that is different, your Honour, is that my client itself physically does not do anything in the jurisdiction.  In the newspaper cases they are presumably mailing the journal so that it arrives in Victoria in this case.  In this case, my client simply operates a computer server in New Jersey.

HIS HONOUR:   Yes, but supposing I ring up somebody in London and the person then defames you here in the ACT.  I have taken the steps, but you are defamed here in the ACT.

MR McCLINTOCK:  Yes, your Honour, but that question raises as many difficult issues that have not been resolved simply by stating it.  For example, what is the law to apply in those circumstances?  It may be that the publication is complete in the ACT in your Honour’s example.  Why necessarily, given the fact that the words are actually spoken in England, would it not be English law that applied?  That is a matter of some considerable importance in this case, your Honour.

One can see, with a decision of Mr Justice Hedigan and the Victorian Court of Appeal against us, that we have an uphill road but, your Honour, I would not wish to - and it is not the right time to be debating these issues, particularly given my limited familiarity with the matter, but we would join issue on what your Honour said in relation to that.  This is new technology.  It is not the same as newspapers.  It is not the same as television either.

HIS HONOUR:   I appreciate that, but it seems to me, having read Justice Hedigan’s judgment very carefully, that the argument for your client just would not face up to the law of defamation and what constitutes a publication.  You wanted to equate publication with delivery.

MR McCLINTOCK:   Your Honour would say it is where it comes to the attention of the living sentient human being, that it is the impact on ‑ ‑ ‑

HIS HONOUR:   Exactly.

MR McCLINTOCK:   That is the ‑ ‑ ‑

HIS HONOUR:   The publication takes place when somebody in Victoria reads it on the screen.

MR McCLINTOCK:   That is the counter argument, your Honour.  But where the situation is, in effect, that the person goes and gets it and brings it back into Victoria, which is what the real analogy is ‑ ‑ ‑

HIS HONOUR:   No.  I do not see that at all.

MR McCLINTOCK:   If I cross the Murray from Wodonga to Albury, picked up some mail from a post office box in Albury, took it back across the bridge and then opened it in Victoria, has publication occurred there or has it ‑ ‑ ‑

HIS HONOUR:   I think the answer is yes.  It may be that for the purpose of time limitations or for the purpose of jurisdiction that there may be some exception to the general rule in that particular case because the matter was delivered and could have been read.  It was delivered in an intelligible form to the person.  I am not saying there is an exception but, assuming there is, it seems to me far removed from this case.  Your client has control over who it gives access to.

MR McCLINTOCK:   No, we do not, your Honour.

HIS HONOUR:   Of course you do.  Anybody who has ever gone onto the web knows that.  These are subscribers.  You know where they are coming from.  If you do not want to deliver material to people from Victoria, you just do not take them on as subscribers.

MR McCLINTOCK:  How do we tell if it is Victoria, your Honour, or New South Wales?  What if the person makes an international phone call, as they can do, to another Internet service provider.  I can tell your Honour that when travelling myself I do that by calling back to Australia.

HIS HONOUR:   Yes.

MR McCLINTOCK:   Now, there is no way of Dow Jones telling in those circumstances where the call has come from, and the evidence, your Honour, is that we cannot tell and we cannot effectively screen.  We operate a site where people can come and can look.  Your Honour, I would stand by the analogy with picking the mail up in Albury and taking it to Wodonga where there would not be, we would say, publication in Victoria.  There might not even be publication in New South Wales in fact, but there would not be publication in Victoria if only because the publisher, the transmitter, so to speak ‑ ‑ ‑

HIS HONOUR:   It is the question of causation and the question is whether or not you can reasonably expect it to be published in Victoria or read in Victoria.  The same with this.  You are causing something to be done and, as the cases on causation in this area of law show, you can be responsible even though the matter has passed on.

MR McCLINTOCK:   But, your Honour, it may not be simply a question of causation.  It may come down to the test about republication, and so on, which are not necessarily, although this is an area where the issue is open, the same as the common law – well, the test for causation in other areas of tort.  This is, in fact, I have to say, the most interesting area of the debate but the issue is the stay of the order to file the defence and as I was going to say earlier, the application is brought out of caution.

I appreciate what your Honour says to me about the short shrift the argument that I suggested might be put against us on the special leave application would get, but, nevertheless, there is a real concern on the part of my client that if we do this we will end up either now or later in circumstances where we are confronted with a suggestion that where now the respondent says that order 4 is good, when plainly it is not, and they will then turn around later on and say, “Well, it was not any good and you filed your defence and you are stuck with the fact that you have consented to jurisdiction”.

HIS HONOUR:   But quite apart from this Court’s power, there are quite a number of cases in England which say that a question of waiver is a question of fact.  You have to look at all the circumstances.  There is a case in which Lord Denning – I cannot remember the name of it at the moment – back in 1951 said that you have to look at all the circumstances.  You have strenuously maintained there is no jurisdiction and you would be putting on a defence at the direction of a Supreme Court judge.  I would have thought, as a matter of fact, that it would be very difficult to say that you had waived your jurisdiction.

MR McCLINTOCK:   Your Honour, that decision by Lord Denning has been criticised by the English Court of Appeal subsequently and cases appear extraordinarily harsh in this area to defendants who make the mistake of contesting jurisdiction and ‑ ‑ ‑

HIS HONOUR:   There are some and there are others – there is a decision in Victoria, I think, also in the mid 1950s or 1960s where somebody moved to set aside a writ and then when it failed put on a defence and then they were held that they were entitled to take the point on appeal.

MR McCLINTOCK:   Yes, your Honour, that decision, I think, was later criticised by Mr Justice Sholl in a decision in 1971.  In any event, yes, I accept it is a question of fact.  I could not dispute that for a second, but, your Honour, it is a question of fact that we would be concerned that it might be determined against us subsequently by the Supreme Court in Victoria.  On the other hand, if your Honour’s view about the prospects on special leave is correct, it will all be over on 14 December and what is the prejudice to the defendant?

HIS HONOUR:   No, it is not a question of prejudice.  It is a question of fundamental federalism and that is that this Court should not make orders staying proceedings in the courts of a State unless it is absolutely necessary to do so to preserve a matter before this Court, and you have had two hearings before justices of the Supreme Court, each of whom has refused your application for a stay.

MR McCLINTOCK:   Yes, your Honour, and each of whom have relied on the presence of paragraph 4 ‑ ‑ ‑

HIS HONOUR:   I do not think Justice Bongiorno did, did he?  I think at a very quick reading of what he had to say, particularly – it is in the transcript – I have to say in relation to his it was a very quick reading, but my recollection is that he was in disagreement with Justice Gillard on this point.

MR McCLINTOCK:   Your Honour, I have not had time to read the transcript myself.  I am sorry but I cannot assist your Honour on that.

HIS HONOUR:   No.

MR McCLINTOCK:   But Mr Justice Gillard plainly relied upon it, your Honour.

HIS HONOUR:   He certainly did.  He made an order to that effect.

MR McCLINTOCK:   He made an order, yes, your Honour.

HIS HONOUR:   But what about the criminal jurisdiction?  There are any number of cases where a person has raised the point at the commencement of a criminal trial that there is no offence shown in the indictment or on the depositions.  That has been ruled against the person.  The person has then pleaded guilty and it has been held that there is no waiver, that the person is then entitled to raise the question of conviction on appeal.

MR McCLINTOCK:   With respect, your Honour, there is not a true analogy between that situation and this here. 

HIS HONOUR:   I am not sure about that. 

MR McCLINTOCK:   This is sudden death – consents to jurisdiction.  That is how it always is, your Honour.  If there was an analogy to the criminal jurisdiction, we would say it was with Tait, in perhaps, I have to say, less traumatic circumstances. 

HIS HONOUR:   Except, there is another Tait in one of the Courts of Criminal Appeal, when it said if the applicant could not be lawfully prosecuted, he could not be convicted.  Similarly, it might be said in respect of your client, if the court had no jurisdiction to deal with you, then the fact that you put on a defence is by the way. 

MR McCLINTOCK:   Well, that is not how it has been treated in the cases about civil consents to jurisdiction and ‑ ‑ ‑

HIS HONOUR:   Yes, but we are dealing here with the High Court of Australia and it is a bold argument to say that our section 73 jurisdiction becomes futile or becomes ineffective simply because at some stage you have put on a merit when you have put on your objection in this Court.

MR McCLINTOCK:   It is a bold submission, your Honour, but bold submissions have sometimes succeeded in the High Court.  Your Honour, that is all I wish to say. 

HIS HONOUR:   Yes, thank you.  I need not hear you, Mr Wheelahan.

MR WHEELAHAN:   If your Honour pleases.

HIS HONOUR:   The applicant, Dow Jones & Company Inc, has filed a summons in this Court seeking an order that proceedings in the Supreme Court of Victoria be stayed pending the hearing of an application for special leave to appeal to the Court. 

On 21 December 2000, Joseph Gutnick, the respondent to this application, served on Dow Jones a writ and a statement of claim issued out of the Supreme Court of Victoria on 27 November 2000.  The writ and statement of claim claimed damages for defamation.

Dow Jones is a foreign corporation.  It publishes Barrons Magazine, a magazine dealing with financial and business matters.  In an edition of Barrons dated 30 October 2000, Dow Jones is alleged to have published an article entitled “Unholy Gains” concerning Mr Gutnick who a resident of Victoria or I assume is a resident of Victoria.  A small number of copies of the magazine were sold in Victoria.  Importantly for present purposes, however, on Sunday, 29 October 2000 the article, that is to say, the article “Unholy Gains”, was placed on Dow Jones’ website located in New Jersey in the United States.  The website has the name wsj.com.  Access to the website appears to be open only to subscribers.  About 1700 of many thousands of subscribers reside in Australia.  In proceedings in the Supreme Court of Victoria, Dow Jones formally admitted that several hundred subscribers to wsj.com were from Victoria and that they included significant persons from finance, business and stockbroking circles.

In his statement of claim, Mr Gutnick claims that a part of the article to which I have referred was defamatory of him.  Dow Jones filed a notice of conditional appearance in the Supreme Court on 30 January 2001.  On 12 February 2001, it filed a summons seeking orders that either service of the writ and the statement of claim be set aside or that the proceedings in the Supreme Court be permanently stayed.  The principal ground relied on to support the summons was that the Supreme Court had no jurisdiction to hear the matter because the defendant was not resident in the jurisdiction, did not carry on business in the jurisdiction and the defamation, if any, was not published in Victoria.  Dow Jones also relied on a forum non conveniens ground and some other ancillary points.

The summons was heard over several days in June 2001 by Justice Hedigan who dismissed the summons on 28 August 2001.  His Honour then made orders that Dow Jones serve and file a defence to the plaintiff’s statement of claim on or before 30 September 2001.  An application for leave to appeal against the judgment of Justice Hedigan  was heard by the Court of Appeal on 14 September 2001.  On 21 September 2001, the Court of Appeal refused an application for leave to appeal and for a stay of the proceedings.  On 28 September 2001, Justice Gillard heard applications by Dow Jones for an extension of time to file its defence and for a stay of the Supreme Court proceedings pending the determination of an application for special leave to appeal which had been filed in this Court on 26 September 2001.  That application seeks leave to appeal against the judgment of Justice Hedigan and the judgment of the Court of Appeal.

Justice Gillard dismissed the Dow Jones’ summons for a stay of proceedings and ordered that the date for the delivery of the defence be extended to 14 November 2001.  His Honour also ordered that the delivery of a defence by Dow Jones or the application for a stay or extension of time was not to constitute a waiver by Dow Jones of its objection to the jurisdiction of the Court.  However, Dow Jones fears that this order may not prevent a waiver of jurisdiction occurring if it files a defence or takes other action such as seeking to strike out the statement of claim.

On 28 October 2001, Justice Hayne, in chambers, ordered that the special leave application be expedited.  His Honour indicated that it would probably be heard in Sydney on 14 December 2001.

On 29 October 2001, Dow Jones filed another application in the Supreme Court seeking to change the orders made by Justice Gillard or alternatively to extend the time for the filing of its defence until 21 December 2001.  The matter came before Justice Bonjiorno in the Supreme Court on 9 November 2001 when his Honour dismissed the application.

Dow Jones contends that, because it must file its defence by this afternoon, it will be taken to have waived its objection to the jurisdiction of the Supreme Court unless this Court stays the orders made by Justice Gillard.  In my opinion, the application for a stay of proceedings in the Supreme Court of Victoria should be dismissed.  As Justice Dixon pointed out in Victoria Stevedoring & Meakes v Dignan (1931) 46 CLR 73 at 109-111, an appeal to this Court under s 73 of the Constitution is an appeal in the strict sense. The question for this Court in an appeal is whether the judgment complained of was right when it was given. If leave is granted and the appeal of Dow Jones is allowed, this Court will make the orders that ought to have been made by Justice Hedigan or by the Court of Appeal. The orders that the Court would make would not, in my view, be affected by any subsequent order or directions in the Supreme Court or the fact that Dow Jones had filed a defence or, if it came about, even a verdict in the action. If the Court was of the view that the Supreme Court of Victoria had no jurisdiction, it could allow the appeal against the order of the Court of Appeal of Victoria, set aside its order, order that leave to appeal be granted, the appeal be allowed and the judgment and orders of Justice Hedigan be set aside. In lieu of the orders made by Justice Hedigan, the court would, in my view, have the power to order that the writ and statement of claim and the conditional appearance be set aside. Indeed, Justice Bonjiorno expressed a similar view about the jurisdiction of this Court when he heard the application for an extension of time.

Accordingly, I can see no reason why this Court should intervene in these proceedings and grant a stay.  Dow Jones contends that the stay sought would involve only four weeks delay in the proceedings.  The answer to that is that it is of the utmost importance to the administration of justice in this country that this Court does not interfere in the business of the courts of the States by making stay orders unless it is necessary to preserve this Court’s jurisdiction in respect of some matter before the Court.  In the view that I take of the Court’s powers, Dow Jones’ application for special leave to appeal and any consequential appeal proceedings in the Supreme Court of Victoria will not be destroyed if a stay is refused. 

I might also mention that it does not seem to me that Dow Jones’ prospects of succeeding in an appeal are high.      It is possible that Dow Jones may be granted special leave to appeal to enable this Court to authoritatively declare the law on the point of jurisdiction.  Although I have not had the advantage of detailed argument from Dow Jones’ counsel on the various points, the reasons of Justice Hedigan and my own understanding of the law suggests that the prospects of success in an appeal are relatively low.  I think it would require a fundamental departure from orthodox principle for Dow Jones  to succeed in the appeal. 

For the purposes of the law of defamation, publication is looked at from the point of view of the receiver of defamatory material not from the point of view of the author or the originator of that material.  In the law of defamation, publication takes place when matter is read or heard by a third party.  Accordingly, a person is defamed at the place where the defamatory matter is communicated to a third party.  It may be that, where jurisdiction or time limits are in issue, there is an exception in a case where defamatory material is received at one place and time and later read by the recipient at some other place.  In such a case, there may be no causal connection between the act of the originator and the reading of the material at that time or place.  Mr McClintock, who appears for Dow Jones, argues that that is the category into which this case falls.  But even if there is an exception to the general rule that a defamation takes place where the material is read or heard, the evidence in the present case, as it appears from the judgment of Justice Hedigan, strongly suggests that the alleged defamation in this case took place when the subscribers read their computer screens in Victoria.  On that basis, the judgment of Justice Hedigan must be clearly right.  Indeed, the judges of the Court of Appeal thought that the decision was so plainly correct they would not even grant leave to appeal against it.

As I indicated during argument, even if for policy reasons there ought to be a change in the law – and there are arguments both ways, one of the purposes of an award of damages in defamation being to vindicate the plaintiff in the place where his or her reputation is injured – it is not easy to see how a common law court could make a principled change in the law.  To succeed, the case has to  be brought into the exceptional category that Mr McClintock says already exists in the law. 

The law as expounded by the decision of Justice Hedigan creates no greater problems for Internet providers than the law has already created for cable television providers, radio stations and the print media where a matter is published beyond the boundaries of the jurisdiction of the originator of the material.  Dow Jones seeks to distinguish long‑established authority in defamation law concerning such persons on the basis that the process of extracting an article from a web server such as that controlled or owned by Dow Jones involves requests for actions by persons over whom it is alleged Dow Jones has no control.  Justice Hedigan found that Dow Jones did, in fact, have control over who had access to its site.  But even if his Honour’s finding on that point is wrong, it does not seem to me at the moment to matter for the purpose of law of defamation.  No defamation occurs until the defamatory matter is communicated to a third party.  The fact that the third party does not see the material until after the third party asks his or her web browser to locate the website and download the defamatory material is, I tend to think, irrelevant.  In the case of a Victorian subscriber, the communication is not received for the purpose of defamation law until the material appears on the screen of the computer situated in Victoria.  It is not until that moment that the publication takes place.  And there is arguably a direct causal connection between the act of Dow Jones and the receiving of that material in Victoria.

It cannot be said that the prospects of success in an appeal are hopeless, but I do think that they are low and that is a factor that would have to be taken into account independently of the view that I take in respect of the powers of this Court.

The other points in the special leave application are basically concerned with questions of forum non conveniens.  Nothing about them suggests that special leave is certain to be granted.  Indeed, I am not sure it could even be argued that special leave would be likely to be granted on this point.

Finally, I would mention that two judges of the Supreme Court of Victoria have refused to order stays.  Ordinarily, that should be conclusive of the matter.  Justices of this Court should not, in effect, be sitting on appeal from the refusal of judges in the Supreme Court to order stays pending the hearing of an appeal or an application for special leave in this Court.  This Court, of course, has power to order a stay notwithstanding the refusal of a stay by a judge of the Supreme Court, a federal court or other court.  But ordinarily once the stay application has been argued and decided in the Supreme Court, I think a single Justice of this Court should be loath to intervene and reverse the decision of a lower court judge who has heard the matter and is likely to be more familiar with the history of the proceedings.

Accordingly, I would dismiss the summons.  I do so for the reason that I think the Court has ample power to set aside the original process  should the appeal succeed.  Independently of the that point, I would be inclined to refuse leave in any event on the ground that the prospects of success of the special leave application or ultimately on appeal are not sufficiently high to warrant intervention in the proceedings of the Supreme Court of Victoria after two judges of that court have considered the matter and have required the proceedings to continue.

Mr McClintock, there is no reason why there should not be an order for costs against you?

MR McCLINTOCK:   None, your Honour.

HIS HONOUR:   The application shall be dismissed with costs.  I certify for counsel.  Mr Wheelahan, is there any other order that you require?

MR WHEELAHAN:   May I seek costs on an indemnity basis, your Honour?

MR McCLINTOCK:   That is opposed.

HIS HONOUR:   Mr McClintock opposes that.  Justices of this Court have been very reluctant to make orders for indemnity costs.  I do not think I will depart from the general rule, although I have to say I think the case is fairly close to the border of one which calls for an order in the nature of indemnity costs.  

MR WHEELAHAN:   If your Honour pleases.

HIS HONOUR:   Anything further?

MR McCLINTOCK:   Nothing, your Honour.

HIS HONOUR:   Very well.

AT 1.40 PM THE MATTER WAS CONCLUDED