Edward Brewer Homes Pty Ltd v Home Builders Australia Pty Ltd
[2010] WASC 257
•23 SEPTEMBER 2010
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: EDWARD BREWER HOMES PTY LTD -v- HOME BUILDERS AUSTRALIA PTY LTD [2010] WASC 257
CORAM: LE MIERE J
HEARD: 29 JULY 2010
DELIVERED : 23 SEPTEMBER 2010
FILE NO/S: CIV 1290 of 2010
BETWEEN: EDWARD BREWER HOMES PTY LTD
First Plaintiff
DAVID EDWARD BREWER
Second PlaintiffAND
HOME BUILDERS AUSTRALIA PTY LTD
First DefendantANDREAS DAVID HOLMES
Second DefendantNICOLE MARGARITA HERSTIK
Third Defendant
Catchwords:
Practice and procedure - Application to strike out the statement of claim - Defamation - Defamation Act 2005 (WA) s 9
Legislation:
Defamation Act 2005 (WA), s 9
Result:
First plaintiff to plead facts and matters necessary to establish that it is an excluded corporation
Category: B
Representation:
Counsel:
First Plaintiff : Mr B Goldsmith
Second Plaintiff : Mr B Goldsmith
First Defendant : Ms P Hay
Second Defendant : Ms P Hay
Third Defendant : Ms P Hay
Solicitors:
First Plaintiff : Goldsmiths Lawyers
Second Plaintiff : Goldsmiths Lawyers
First Defendant : Michael Sing Lawyers
Second Defendant : Michael Sing Lawyers
Third Defendant : Michael Sing Lawyers
Case(s) referred to in judgment(s):
Australian Ocean Line Pty Ltd v Western Australian Newspapers Pty Ltd (1983) 66 FLR 453; (1983) 47 ALR 497
Heartcheck Australia Pty Ltd v Channel 7 Sydney Pty Ltd [2007] NSWSC 555
Nimmo v Alexander Cowan & Sons Ltd [1968] AC 107
Re Commercial Bank of Australia Ltd (1893) 19 VLR 333
LE MIERE J: The defendants apply for summary judgment or alternatively that the statement of claim be struck out as it discloses no reasonable cause of action. The defendants submit, amongst other things, that the first plaintiff has failed to plead that it is an excluded corporation under s 9 of the Defamation Act 2005 (WA) (the Act).
The Action
The plaintiffs plead that in or about February 2010 the first and/or second defendant published a defamatory publication on a website, which has been republished on various other websites. The first plaintiff is an incorporated company, whilst the second plaintiff is a director of the first plaintiff. The plaintiffs also plead a claim under the Trade Practices Act 1974 (Cth) s 52 and the Fair Trading Act 1987 (WA) s 10.
In June 2010 the defendants applied for summary judgment pursuant to O 16 r 1 Rules of the Supreme Court 1971 (WA), or alternatively to strike out the statement of claim pursuant to O 20 r 19(1)(a). The matter came on for hearing on 29 July 2010. At the hearing I declined to order summary judgment on the basis that each challenge made to the statement of claim is not a matter which should result in summary judgment.
In the strike out application the defendants submit, amongst other things, that the first plaintiff failed to plead that it is an excluded corporation under s 9 of the Act. The plaintiffs submit that s 9 of the Act is a defence and it is therefore not required to plead that the first plaintiff is an excluded corporation. The plaintiffs submitted that the defendants had failed to provide any authority in support of their submissions. I granted the parties leave to file and serve further submissions specifically on the point of s 9 of the Act.
Section 9 Defamation Act 2005
In 2005 uniform provisions in relation to defamation laws were enacted in the states and territories of Australia. The Act made large amendments to the defamation laws, one being that corporations cannot sue for defamation unless they are 'excluded corporations', that is, a non‑profit corporation that is not a public body or a corporation that employs less than 10 people and is not related to another corporation and is not a public body. Section 9 of the Act reads as follows:
9. Certain corporations do not have cause of action for defamation
(1)A corporation has no cause of action for defamation in relation to the publication of defamatory matter about the corporation unless it was an excluded corporation at the time of the publication.
(2)A corporation is an excluded corporation if ‑
(a)the objects for which it is formed do not include obtaining financial gain for its members or corporators; or
(b)it employs fewer than 10 persons and is not related to another corporation,
and the corporation is not a public body.
(3)In counting employees for the purposes of subsection (2)(b), part time employees are to be taken into account as an appropriate fraction of a full time equivalent.
(4)In determining whether a corporation is related to another corporation for the purposes of subsection (2)(b), section 50 of the Corporations Act 2001 of the Commonwealth applies as if references to bodies corporate in that section were references to corporations within the meaning of this section.
(5)Subsection (1) does not affect any cause of action for defamation that an individual associated with a corporation has in relation to the publication of defamatory matter about the individual even if the publication of the same matter also defames the corporation.
(6)In this section ‑
corporation includes any body corporate or corporation constituted by or under a law of any country (including by exercise of a prerogative right), whether or not a public body;
public body means a local government body or other governmental or public authority constituted by or under a law of any country.
Submissions
The defendants submit that the Act requires a plaintiff corporation to plead the facts and matters necessary to establish that the plaintiff corporation is an excluded corporation pursuant to s 9(2) of the Act. The plaintiffs submit that there is no such obligation and that s 9(1) of the Act provides a statutory defence. The question is whether it is an element of the cause of action of the first plaintiff that it is an 'excluded corporation', and therefore the first plaintiff is required to plead that it is an excluded corporation. If that is the case, in the absence of such a pleading, the first plaintiff has no reasonable cause of action in defamation.
It is a matter of the intention that ought to be ascribed to the legislature and therefore the manner in which the legislature has expressed its will is important. Section 9 states that 'a corporation has no cause of action'. It is plain from the language that this means a corporation has no cause of action in defamation ‑ it cannot bring a claim. The section goes on to state 'unless it was an excluded corporation at the time of the publication'. The substantial meaning of the provision is to lay down a general rule that a corporation has no cause of action for defamation in relation to the publication of the defamatory matter about the corporation and having adopted it as a principle of general application, the legislature proceeded to introduce by way of exception the case of an excluded corporation.
That conclusion is supported by the structure of the Act. As the Act is divided into parts, it allows the reader to identify certain groups of clauses. As stated in Re Commercial Bank of Australia Ltd (1893) 19 VLR 333:
When an Act is divided and cut into parts or heads, prima facie it is, we think, to be presumed that those heads were intended to indicate certain groups of clauses as relating to a particular object … That object is prima facie to enable everybody who reads to discriminate as to what clauses relate to such and such a particular subject matter (375).
The Act is set out in parts and then divisions. Part 2 div 2 is headed 'Causes of Action for Defamation'. The division contains three sections:
8. Single cause of action for multiple defamatory imputations in same matter
A person has a single cause of action for defamation in relation to the publication of defamatory matter about the person even if more than one defamatory imputation about the person is carried by the matter.
9. Certain corporations do not have cause of action for defamation
(1)A corporation has no cause of action for defamation in relation to the publication of defamatory matter about the corporation unless it was an excluded corporation at the time of the publication …
10. No causes of action for defamation of, or against, deceased persons
A person (including a personal representative of a deceased person) cannot assert, continue or enforce a cause of action for defamation in relation to ‑
(a)the publication of defamatory matter about a deceased person (whether published before or after his or her death); or
(b)the publication of defamatory matter by a person who has died since publishing the matter.
Part 4 div 2 is headed 'Defences' and contains defences to a defamation cause of action such as absolute privilege and justification. Part 2 div 2 contains those clauses which enable a plaintiff to bring a cause of action, that is, the necessary elements, whilst pt 4 div 2 contains defences to a defamation action. As s 9 is within the division of the Act that relates to the ability to bring a cause of action, it is not a defence.
The construction and effect of s 9 of the Act that I have set out above is supported by the Explanatory Memorandum to the Act which stated that the clause that became s 9 'provides that generally a corporation does not have a cause of action for defamation of the corporation'. That is, the general rule is that a corporation does not have a cause of action and it is an exception to the general rule that an excluded corporation may bring a claim.
The plaintiffs in their further written submissions refer to r 15.20 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR):
The particulars required by rule 15.1 in relation to a statement of claim seeking relief in relation to the publication of defamatory matter about a corporation must include particulars of the facts, matters and circumstances on which the plaintiff relies to establish that the corporation is not precluded from asserting a cause of action for defamation.
The plaintiffs submit that it can be inferred that the drafters of orders or rules in a state or territory have regard to the orders and rules of other states and territories. Therefore the fact that there is no similar rule in Western Australia leads to the conclusion it is not desired.
I do not agree with the plaintiffs' submission. In Heartcheck Australia Pty Ltd v Channel 7 Sydney Pty Ltd [2007] NSWSC 555 Grove J referred to s 9 of the Defamation Act 2005 (NSW), which is in the same terms as s 9 of the Act, and said:
The proviso in subsection (1) legislates an exception to a general rule and in accord with the ordinary canons of the statutory interpretation, the onus of demonstrating that exclusion applied would be on the party asserting it, in this case [the plaintiff] [6].
UCPR r 15.20 reflects the law as it has been applied in New South Wales. An objective of the introduction of the uniform Defamation Acts was to provide uniform legislation across Australia in regards to defamation claims. As stated in Pearce and Geddes Statutory Interpretation in Australia (6th ed) 'the federal system in Australia has given rise to a strong desire on part of the courts for uniform legislation to be interpreted uniformly in the various jurisdictions' ([1.12] and cases cited). Further, s 2 of the Act states that an objective is to 'to enact provisions to promote uniform laws of defamation in Australia …'. Therefore, this court should interpret s 9 in the same way as it is interpreted in New South Wales with regard to the same provision, that is, it is an element of the cause of action by a corporation that it is an excluded corporation.
The defendants submit that it could not be the intention of the legislature to require defendants to raise these matters by way of defence as they are not matters that will always be within the knowledge of a defendant. In cases where the form or structure of the legislation does not give definite guidance on the question of burden of proof, the courts will have regard to considerations of policy and convenience. The fact that a matter is 'peculiarly within the knowledge of one party', or that it will be easier for that party to prove the matter than her or his opponent, may be significant: see Nimmo v Alexander Cowan & Sons Ltd [1968] AC 107. The objects for which a corporation was formed and the number of employees of a corporation and whether the corporation was related to another corporation are matters within the knowledge of the plaintiff corporation and easier for the plaintiff corporation to prove than for a defendant to disprove. Those considerations support the conclusion that it is for the plaintiff corporation to plead and prove those matters.
It is therefore incumbent on the plaintiff to plead the facts and matters necessary to show that it has a cause of action, that is, that it is an 'excluded corporation' under the Act.
Extension of time in which the bring the application
The plaintiffs in their further written submissions state that O 20 r 19(3) requires an application to strike out a statement of claim under O 20 r 19(1)(a) must be made within 21 days of the service of any pleading. The statement of claim was filed on 6 May 2010. The defendants' summons was filed on 28 June 2010. I assume that the statement of claim and summons were each served on the date they were filed. If that is so, the application to strike out the statement of claim has been made out of time. The plaintiffs submit that the defendants have not requested an extension of time in which to bring the application. Order 1 of the defendants' summons requests that 'the defendants have leave to file this summons'. I will take that as an application to extend the time in which to issue the summons. In the circumstances of this application, it is appropriate to grant leave to the defendants to bring the application.
The statement of claim
The statement of claim pleads at [1] 'The first plaintiff is a duly incorporated company and is entitled to sue in and by its corporate name and style'. Paragraph 2 of the statement of claim pleads 'At all material times, the second plaintiff was the sole director, a major shareholder of and controlled the first plaintiff.' The first plaintiff fails to plead the matters and circumstances which enable it to bring a cause of action for defamation pursuant to s 9 of the Act. As the first plaintiff has not pleaded that it is an excluded corporation the statement of claim discloses no reasonable cause of action with regard to the defamation claim. The statement of claim, insofar as it relates to the first plaintiff's claim for defamation should be struck out pursuant to O 20 r 19(1)(a) as it discloses no reasonable cause of action.
The first plaintiff has also brought a claim for misleading and deceptive conduct. Defamatory conduct can amount to misleading or deceptive conduct: see Australian Ocean Line Pty Ltd v Western Australian Newspapers Pty Ltd (1983) 66 FLR 453; (1983) 47 ALR 497. I will therefore not strike out the entire statement of claim.
The second plaintiff is not without a cause of action simply because the first plaintiff corporation has pleaded no reasonable cause of action in defamation. A statement that is defamatory of a corporation may also convey a defamatory meaning against its officers. Section 9(5) of the Act allows an individual associated with a corporation, such as a member, officer or employee to still bring proceedings for defamation where the defamatory matter is published about the individual even if the publication of the same matter also defames the corporation. I will not strike out the statement of claim insofar as it relates to the second plaintiff's claim for defamation.
During the course of hearing counsel for the plaintiffs requested that if I was to find that the fact the corporation is an excluded corporation is an essential element of the statement of claim, then they be given leave to file and serve an amended statement of claim. I will grant that leave pursuant to O 21 r 5(1). The first plaintiff should be given an opportunity to plead a cause of action in defamation. If the first plaintiff wishes to pursue a cause of action in defamation it must plead those matters which enable it to bring a cause of action, which include the matters and circumstances under s 9 of the Act.
At the hearing I also indicated my view as to other issues raised in the defendants' summons. I stated that a plea in [19E] for damages was embarrassing as it failed to inform the defendants in its terms whether it is damages for defamation alone or damages for contravention of the Trade Practices Act and the Fair Trading Act, and if it is the latter then the plaintiffs have failed to plead what that loss and damage was and, if necessary, the nexus between the loss and damage and the conduct complained of.
I stated I would not make any orders on the defendants' summons and would await the delivery of reasons on the point concerning s 9 of the Act. I will hear the parties as to the orders that should be made on the defendants' summons.
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: EDWARD BREWER HOMES PTY LTD -v- HOME BUILDERS AUSTRALIA PTY LTD [2010] WASC 257 (S)
CORAM: LE MIERE J
HEARD: 29 JULY 2010, ON THE PAPERS
DELIVERED : 23 SEPTEMBER 2010
SUPPLEMENTARY
DECISION :16 NOVEMBER 2010
FILE NO/S: CIV 1290 of 2010
BETWEEN: EDWARD BREWER HOMES PTY LTD
First Plaintiff
DAVID EDWARD BREWER
Second PlaintiffAND
HOME BUILDERS AUSTRALIA PTY LTD
First DefendantANDREAS DAVID HOLMES
Second DefendantNICOLE MARGARITA HERSTIK
Third Defendant
Catchwords:
Practice and procedure - Costs - Turns on own facts
Legislation:
Nil
Result:
Defendants to pay plaintiffs' costs of the plaintiffs' application
Costs of the defendants' application be costs in the cause
Category: B
Representation:
Counsel:
First Plaintiff : Mr B Goldsmith
Second Plaintiff : Mr B Goldsmith
First Defendant : Ms P Hay
Second Defendant : Ms P Hay
Third Defendant : Ms P Hay
Solicitors:
First Plaintiff : Goldsmiths Lawyers
Second Plaintiff : Goldsmiths Lawyers
First Defendant : Michael Sing Lawyers
Second Defendant : Michael Sing Lawyers
Third Defendant : Michael Sing Lawyers
Case(s) referred to in judgment(s):
Re Pomeroy & Tanner [1897] Ch D 284
Santos Ltd v Delhi Petroleum Pty Ltd [2005] SASC 242
LE MIERE J: On 28 July 2010 the plaintiffs filed a chamber summons for an order for further and better particulars of the defence. The application came on for hearing on 29 July 2010. I ordered that the defendant serve further and better particulars of the defence pursuant to the plaintiff's request dated 7 June 2010. I further ordered that each party have leave to make written submissions on the issue of costs.
On 30 June 2010 the defendants applied by chamber summons for summary judgment against the plaintiffs or alternatively that the plaintiffs' statement of claim be struck out. That application came on for hearing on 29 July 2010. At the hearing I declined to order summary judgment. In their application to strike out the statement of claim the defendants submitted, amongst other things, that the first plaintiff had failed to plead that it is an excluded corporation under s 9 of the Defamation Act 2005 (WA) and therefore the statement of claim disclosed no reasonable cause of action of the first plaintiff. The plaintiffs submitted that s 9 of the Act is a defence and it is therefore not required to plead that the first plaintiff is an excluded corporation. I granted the parties leave to file and serve further written submissions in relation to that point. Having considered the parties' written submissions I delivered written reasons for judgment on 23 September 2010. I found that the statement of claim failed to disclose a reasonable cause of action of the first plaintiff because the first plaintiff had failed to plead that it was an excluded corporation. I also found that [19E] of the statement of claim was embarrassing because it failed to inform the defendants in its terms whether the plaintiffs claimed damages for defamation alone or damages for contravention of the Trade Practices Act 1974 (Cth) and the Fair Trading Act 1987 (WA) and if it is the latter, then the facts and matters constituting the nexus between the loss and damage and the conduct complained of. I otherwise did not uphold the grounds relied upon by the defendants in seeking summary judgment or that the statement of claim be struck out. I subsequently granted the plaintiffs leave to amend the statement of claim and granted each party leave to make written submissions on the issue of costs.
These are my reasons for decision in relation to the costs of the plaintiffs' application for further and better particulars of the defence and the defendants' application for summary judgment or to strike out the statement of claim.
Plaintiffs' application for further and better particulars
The general rule is that costs follow the event. The plaintiffs were successful. There is no reason why they should not have the costs of their application.
The plaintiffs seek an order that I fix the costs and order the costs to be paid forthwith. The plaintiffs have provided a schedule of time spent in relation to the plaintiffs' summons and claim 'professional costs' of $8,235.70 and disbursements of $270 for the court fee on filing of the chamber summons, $169.25, being half of the fees paid for the video link for the hearing on 29 July 2010 and $2,327.16, being half of the costs of the defendants' Perth agents in respect of the plaintiffs' application for further and better particulars and the defendants' application for summary judgment or to strike out the statement of claim. The defendants' Perth agents are the legal firm of Talbot Olivier Lawyers. No further detail is provided of their fees.
Practice direction 4.7.1 provides that, as a general rule, where an order for costs is to be made against a party in interlocutory proceedings, the costs will be fixed and ordered to be paid forthwith or by a particular date. The practice direction further provides that judges can be expected, in the usual run of routine matters, to fix the costs payable by reference to the schedule attached to the practice direction. The schedule has been prepared by reference to the applicable determination of the Legal Costs Committee. The figures in the schedule are calculated by reference to the time required in a typical, or median, instance. The practice direction provides that the court will fix costs at a lower sum in a simple matter, or adjust the amount paid (or order costs to be taxed) for unusually heavy matters. The practice direction further provides that the judge fixing the costs will not be engaging in a taxation and in most cases it will be necessary for counsel to make no more than the briefest submissions as to whether there should or should not be an order for fixed costs and the amount of the costs. The practice direction does not, and does not purport, to fetter in any way the discretion to be exercised in awarding costs.
Schedule item 2.1 specifies an amount of $375 for the chamber summons and O 59 r 9 memorandum. Item 2.4 applies to a special appointment before a judge in chambers. That item specifies an amount of $1,650 for preparing and lodging submissions and authorities, preparation, attending on the hearing and reporting. A further amount of $500 is allowed for each extra hour of hearing time.
The plaintiffs' application for further and better particulars was a simple matter. It was not an unusually heavy matter. If I was fixing the costs I would fix them, in accordance with items 2.1 and 2.4 of the schedule attached to practice direction 4.7.1, in the amount of no more than $2,025. The plaintiffs seek more than four times that amount for 'professional costs' and a further $2,327.16 for 'Perth agents fees'. The plaintiffs may have incurred greater costs than might be expected to be incurred in an application of this sort because the plaintiffs have retained New South Wales solicitors to represent them in proceedings they have commenced in Western Australia and on the hearing of the application their counsel appeared by video link. So far as I am aware the only evidence before me concerning the location of the parties is that the first plaintiff is a Perth house builder. There is no evidence concerning the reasonableness of the plaintiffs retaining New South Wales solicitors. In the circumstances, I will order that the defendants pay the plaintiffs' costs of the plaintiffs' application for further and better particulars of the defence. The plaintiffs will be entitled to have their costs taxed and paid at once.
There is a further reason for not fixing the costs to be paid by the defendants to the plaintiffs. As I have said, the costs claimed include the professional costs of the plaintiffs New South Wales solicitors and disbursements in the form of 'Perth agent fees'. The plaintiff is entitled to recover costs in respect of the costs of its New South Wales solicitors provided that those solicitors are admitted to practice in Western Australia and therefore entitled to claim their professional costs for work done in relation to these proceedings.
However, there may be an issue whether the costs of the plaintiffs' Perth agents may be recovered as a disbursement; see Re Pomeroy & Tanner [1897] Ch D 284 referred to by Bleby J in Santos Ltd v Delhi Petroleum Pty Ltd [2005] SASC 242. Whether the costs of the plaintiffs' Perth agents may be recovered as disbursements was not a matter argued before me and accordingly I will say nothing more about it. That is a matter which might arise for determination on a taxation of costs.
Defendants' application for summary judgment or to strike out the statement of claim
The defendants failed to obtain summary judgment. They effectively succeeded in striking out the statement of claim against the first plaintiff but not the second plaintiff.
The plaintiffs submit that the defendants succeeded, in substance, in one respect only, in relation to the excluded corporation issue and that it is possible that had the defendants not made their application for summary judgment or for an order that the entire statement of claim be struck out, and merely raised that issue, then that issue may have been attended to, as sought by the defendants, without necessity for a summons in a contested hearing. The plaintiffs further submitted that clarification of the damages sought in [19E] of the statement of claim could have been provided by letter and that that opportunity was lost as a result of the summons filed by the defendants. The plaintiffs submit that the defendants should pay 90% of the plaintiffs' costs of the defendants' summons.
The defendants submit that whilst they did not succeed in obtaining summary judgment, or in striking out the whole of the plaintiffs' statement of claim, the court concluded that the statement of claim failed to disclose a reasonable cause of action by the first plaintiff.
In substance the defendants succeeded in striking out the statement of claim of the first plaintiff. The defendants failed on a number of issues raised in support of their application for summary judgment and to strike out the statement of claim of the second plaintiff. On the other hand, the principal issue argued, and that which occupied most time, was the issue whether the first plaintiff was required to plead that it was an excluded corporation and hence whether, in the absence of such a plea, the statement of claim failed to disclose a reasonable cause of action of the first plaintiff. The defendant succeeded in relation to that issue. Having regard to all matters the appropriate order is that each parties' costs be costs in the cause.
It is not appropriate that I fix the costs of the plaintiffs' application. Determining the quantum of the plaintiffs' costs raises questions concerning the necessity, or reasonableness, of retaining New South Wales solicitors and whether the costs of the Perth agents may be recovered as a disbursement.
Costs of the written submissions on costs
Neither party succeeded in obtaining the orders they sought in relation to the costs of each application. I will not make any order in relation to the costs of the submissions in relation to costs of the two applications.
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