Feldman v GNM Australia Ltd

[2016] NSWSC 920

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:	Feldman v GNM Australia Ltd [2016] NSWSC 920
Hearing dates:	16, 24 June 2016
Date of orders:	30 June 2016
Decision date:	01 July 2016
Jurisdiction:	Common Law
Before:	McCallum J
Decision:	Proceedings permanently stayed
Catchwords:	DEFAMATION – where defendants contend proceedings commenced contrary to settlement agreement with plaintiff – whether binding agreement reached – whether solicitor had ostensible authority to bind plaintiff to an agreement – consideration of the provisions under part 3 of the Defamation Act for resolution of civil disputes without litigation   PROCEDURE – application for stay of proceedings allegedly commenced in breach of settlement agreement – power to stay proceedings
Legislation Cited:	Civil Procedure Act 2005 (NSW), ss 67, 73 Defamation Act 2005 (NSW), s 14
Cases Cited:	Lucke v Cleary [2011] SASCFC 118; 111 SASR 134 Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622 GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631 Masters v Cameron (1954) 91 CLR 353 Pavlovic v Universal Music Australia Pty Ltd [2015] NSWCA 313
Category:	Procedural and other rulings
Parties:	Yosef Yitzhak Feldman (Plaintiff) The Guardian News and Media Limited (First Defendant) Melissa Davey (Second Defendant)
Representation:	Counsel: J Cohen (Plaintiff) B R McClintock SC with R Potter (First and Second Defendants)   Solicitors: Cambridge Lawyers (Plaintiff) Baker & McKenzie (Defendants)
File Number(s):	2015/382022

Judgment

1. HER HONOUR: These are proceedings for defamation brought by Rabbi Yosef Yitzhak Feldman against the proprietor of The Guardian Australia online and one of its journalists, Ms Melissa Davey. The claim arises out of the publication of a number of articles in 2015. The defendants contend that they have been released from any liability in respect of the matters complained of by a settlement agreement allegedly reached shortly after the publication of the articles. By Notice of Motion filed 17 March 2016, the defendants seek declaratory relief as to the existence of the agreement and an order staying or dismissing the proceedings. This judgment determines that application.

Circumstances in which the application is brought

2. The current version of the originating process is an amended statement of claim filed 14 March 2016. By that pleading, the plaintiff seeks to sue on three articles published on 6, 11 and 12 February 2015. He had originally sued on an additional article; for clarity of reference, it is convenient to refer to the three remaining causes of action as they appear in the amended pleading, being the first, third and fourth matters complained of respectively.

3. The articles reported on evidence given by the plaintiff before the Royal Commission into Institutional Responses to Child Sexual Abuse. The first matter complained of was headed, “Head of Jewish School did not know he had to report child abuse, inquiry hears”. The third matter complained of was headed “Rabbi Yosef Feldman resigns as director of Yeshiva Centre.” The fourth matter complained of was headed, “Rabbi Yosef Feldman declares himself a sacrificial lamb and will sue.” To indicate the nature of the alleged defamation, it is sufficient to set out the imputations specified in respect of the first matter complained of, as follows:

1. the plaintiff displayed reprehensible ignorance or "didn't have a clue" that a teacher 'massaging' the genitals of his students for sexual gratification was against the law, or might be a criminal matter;

2. the plaintiff was ignorant of the fact that sexually abusing a child was against the law; and

3. the plaintiff was of the view that there was no reason for the Yeshiva Centre to report allegations of child abuse to outside authorities.

4. On 27 March 2015, a solicitor then acting for the plaintiff wrote to The Guardian in respect of the first and third matters complained of. The letter was expressed to be a “concerns notice” under the Defamation Act 2005 (NSW). It made a number of demands in relation to the articles, including seeking their removal from all websites, a published apology to Rabbi Feldman in The Guardian, reasonable costs and a sum of money in lieu of damages. The letter was acknowledged by the defendants’ solicitor the same day with the promise of an early response.

5. On 1 April 2015, the defendants’ solicitor wrote again to say that they were still obtaining instructions but that, in the meantime, “without any admission of fault or liability”, the articles complained of were being removed from the newspaper’s web page.

6. On 2 April 2015, the defendants’ solicitor made a formal offer to resolve the matter. The letter noted that the articles had been removed from the web page (in fact the evidence is that the removal of those articles was not effected until 4 April 2015). The defendants further offered to undertake not to republish the articles and to publish on its web page the statement given by the plaintiff to the Royal Commission. The offer was made on the basis that the plaintiff agreed to release the defendants from “all liability relating to or arising out of” the matters referred to in the concerns notice “including without limitation the publication of the articles complained of”. The letter said “an agreement reflecting the above would be documented in a deed of release which would also include obligations of confidentiality”. The offer was expressed to be open until 10.00 am on 19 April 2015.

7. Following a conversation between the solicitors, the offer was extended to remain open until 5 pm on 23 April 2015, at which point it would lapse.

8. At exactly 5 pm on 23 April 2015, the plaintiff’s solicitor sent a letter to the defendants’ solicitor stating “we confirm that our client is willing to accept your client’s offer” on the basis that the statement referred to in the offer would be published in full as a new headline article and not removed without the plaintiff’s consent. A form of words was specified for the headline of the article.

9. There was a further discussion between the solicitors following which the defendants’ solicitor sent an email stating:

As discussed, our client is willing to keep the article requested by your client on line for the same period as the original article was on line for”.

10. In addition, amendments were suggested to the wording of the headline of the article proposed by the plaintiff.

11. On 28 April 2015 there was an exchange of emails between the solicitors as to two further articles which remained on the newspaper’s website. The plaintiff’s solicitor requested that those further articles also be taken down. The email also said:

In relation to your client’s suggested amendments to the introduction to our client’s statement we can advise our client accepts the suggestion.

12. After obtaining the URLs for the two additional articles, the defendants removed them from the website. In an email dated 30 April 2015, the defendants’ solicitor wrote:

“those further articles reported by you have been removed. Our client accepts the terms as detailed in our 2 April 2015 letter, your 23 April 2015 letter and the below emails”.

13. The email attached a draft deed of release “that documents the parties’ agreed terms”.

14. The deed was never executed. However, the defendants contend that a binding agreement was reached by their acceptance of the plaintiff’s requests as communicated in the email of 30 April 2015.

15. On 5 May 2015, the solicitor for the plaintiff provided the defendants’ solicitor with comments in respect of the draft deed. The email corrected the spelling of the plaintiff’s name and continued:

The only other issue our client has with the deed is clause 7 relating to confidentiality. Our client does not mind agreeing to not showing anyone the deed except as per clause 7.2 but he wants to be able to tell people the articles have been removed, that a new article has been published and able to show/direct people to view the new article.

16. The defendants’ solicitor called the plaintiff’s solicitor a week later to discuss the concern about confidentiality. They had the following conversation:

Defendants’

Solicitor:   Thanks for calling me back. I just wanted to discuss your last email and find out a bit more about your client’s concerns.

Plaintiff’s

Solicitor:   My client is concerned about the confidentiality in the deed. He wants to be able to tell people that The Guardian has respondent to his complaint.

Defendants’

Solicitor:   Let me just pull up the draft Deed. These provisions don’t stop your client from telling anyone of the fact that The Guardian has taken down the articles and put up his statement. However, he can’t refer to the fact or the terms of the settlement.   

Just want to confirm what you mean by current article and main news. What usually happens for an article, including the articles your client has complained of, is that they are published on the front page. The articles then stay there for a period of time which is usually measured in hours, and then it eventually falls off the front page but is still live on the internet - meaning you can search for the article or if you know the URL, still find the article online. In this case, the statement would be live for six months.

Plaintiff’s

Solicitor:   The publication of the statement sounds fine, but I will see instructions about the confidentiality obligation.

Defendant’s

Solicitor:   Sounds great. Looking forward to hearing from you.

17. There was no further correspondence until 7 July 2015, when the plaintiff’s solicitor wrote to the defendants’ solicitor as follows:

We refer to the above matter and are now instructed to advise that our client withdraws his offer to settle the matter.

18. The defendants’ solicitor responded promptly, asserting that the plaintiff was unable at that point to withdraw his offer since, in the circumstances summarised above, the parties had a concluded settlement on 30 April 2015 on the following terms:

“(a)   our client remove and keep removed the four complained of articles;

(b)   our client publish your client’s statement of 6 February 2015 on its front page with the agreed introductory wording. The article will remain available on the Guardian’s website for six months;

(c)   your client releases our client”.

19. There was no response to that letter. The defendants proceeded at that point to publish Rabbi Feldman’s statement in the manner agreed.

20. The next time the defendants heard from the plaintiff was upon service of the statement of claim. The statement of claim was filed on 30 December 2015 and named a new solicitor as the solicitor on the record for the plaintiff. The first listing of the proceedings was vacated twice at the request of the plaintiff on the basis that he wished to amend. The proceedings ultimately came before the Court for the first time on 18 March 2016. By that date, the defendants had served their notice of motion.

21. The motion was listed for hearing on 15 June 2016. On that date Mr Cohen, who appears for the plaintiff, said that he was taken by surprise by an argument that the plaintiff’s former solicitor had actual authority to bind him to the alleged settlement agreement. Mr Cohen accepted that it would be enough for the defendants to establish ostensible authority but submitted they could not do so in the present case because a solicitor does not have ostensible authority to bind a client to a contract.

22. The hearing on 15 June did not conclude within the allocated time in any event and was stood over part-heard to 24 June 2016. Shortly before the adjourned hearing, the plaintiff served two affidavits directed to the issue of actual authority. The defendants objected to the admission of those affidavits on the basis that they had not been received in time for the defendants to meet them. The defendants contended that, if the affidavits were admitted, it would be necessary to adjourn the hearing again. In the circumstances, mindful of my obligations under part 6 of the Civil Procedure Act 2005 (NSW), I determined to hear the balance of the submissions directed to the issue of ostensible authority and to consider that issue first. I took that course on the express understanding that I would not determine the application adversely to the defendants without a further hearing on the issue of actual authority, but would not embark upon any further hearing unless I deemed it necessary.

Whether a binding agreement was reached

23. The question of the legal conclusion to be drawn where parties have reached agreement as to the terms of a contract but also agreed to execute a further, formal agreement is always vexed. The defendants submitted that the agreement in the present case falls either within the first category of Masters v Cameron [1] or within the so-called fourth category recognised in Baulkham Hill Private Hospital Pty Ltd v GR Securities Pty Ltd. [2]

    1. Masters v Cameron (1954) 91 CLR 353

    2. Baulkham Hill Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622 at 628; confirmed on appeal in GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631 at 634.

24. The relevant principles were recently considered by the Court of Appeal in Pavlovic v Universal Music Australia Pty Ltd. [3] The leading judgment in that case was written by Beazley P. Her Honour explained that the Masters v Cameron classifications need not be applied as strict categories into which all cases must fall. The critical task is to determine the intention of the parties, objectively ascertained. [4]

    3. Pavlovic v Universal Music Australia Pty Ltd [2015] NSWCA 313

    4. At [64] per Beazley P; Bathurst CJ agreeing “generally” at [1]; see also at [15]; Meagher JA agreeing with Beazley P at [162]

25. Mr Cohen submitted that, objectively construed, the communications between the parties in the present case did not indicate that the parties intended to bind themselves prior to the execution of the deed. He pointed to a number of matters to support that submission.

26. First, Mr Cohen pointed to the language of the communications, particularly the emails exchanged after the plaintiff’s solicitor first responded to the defendants’ letter of offer dated 2 April 2015. He submitted that the use of the words “is willing to” by both parties suggested that they were talking about the future and that “there’s a deed lurking in all of this”. I would respectfully disagree. In my view, the language of the exchanges themselves clearly indicates an intention to be bound immediately once terms were agreed. As noted in the defendants’ written submissions, the original offer from The Guardian stated “an agreement reflecting the above would be documented in a deed of release which would also include obligations of confidentiality”, placing formation of an agreement ahead of the process of formal legal documentation and subsidiary issues such as confidentiality.

27. Further, the defendants’ final email was framed as the acceptance of an offer; the draft deed of release attached to that communication was described as a document which “documents the parties’ agreed terms”. The plaintiff’s solicitor did not cavil with or qualify the immediacy conveyed by those words.

28. Apart from the language of the communications between the parties, it is relevant to consider the subject matter of the negotiations. There was no prior relationship between Rabbi Feldman and the defendants; this was not a commercial dealing. The concerns notice overtly threatened legal proceedings by its references to matters that would be relied upon as the basis for further or aggravated damages “at trial”. All of the correspondence that followed was directed to the steps the defendants were willing to take in order to redress the alleged harm caused by the articles with a view to bringing the dispute to finality and avoiding the threatened litigation. Mr Cohen relied upon that very aspect of the negotiations to support his contention that the plaintiff’s former solicitor could not have had ostensible authority. It is convenient to turn to that issue.

29. In his written submissions, the plaintiff said:

A solicitor does not have ostensible authority to bind a client to a contract. The exception to this rule is where the agreement is in the context of litigation and the agreement compromises the litigation.

30. The burden of Mr Cohen’s submission was that there is a bright-line test for determining whether a solicitor has ostensible authority; prior to the commencement of proceedings, there is no authority whereas upon the commencement of proceedings, there is.

31. Care must always be taken in describing the application of a legal test in a particular factual circumstance as a “rule”. In Lucke & Cleary, [5] the Full Court of the Supreme Court of South Australia described the notion that a solicitor does not have ostensible authority to bind his or her client to a contract as “a general proposition”. [6] None of the authorities cited for that proposition is akin to the present case; each was concerned with dealings relating to interests in property. The authorities cited in Lucke include the decision of the High Court in Pianta v National Finance and Trustees Ltd. [7] That was a case involving the question of the authority of a solicitor to bind his clients to sell a parcel of land.

    5. Lucke & Cleary [2011] SASCFC 118; 111 SASR 134

    6. Per Stanley J at [60]; Grey and David JJ agreeing at [1] and [2] respectively

    7. Pianta v National Finance and Trustees Ltd (1964) 180 CLR 146

32. It is recognised that there is a qualification to the “general proposition” in the context of litigation, where a solicitor has ostensible authority to bind his or her client to a contract which relates to and, in particular, compromises the litigation: Lucke v Cleary at [61], citing CIC Insurance Ltd v Bankstown Football Club Ltd. [8]

    8. [1994] NSWCA 359

33. It must be remembered, however, that in each of those cases, the ultimate issue was whether, objectively construed, the solicitors’ communications gave the impression of authority to settle the dispute; the “general proposition” must be understood as a description of the usual outcome of that inquiry in non- litigious matters. Ultimately, the question is whether the parties intended to be bound immediately having regard to the “outward manifestations” of their intentions. [9]

    9. Pavlovic at [64] to [64] per Beazley P; Meagher JA agreeing at [162]

34. It may be accepted that, in Pavlovic, the Court of Appeal rejected the proposition that the trial judge’s finding of ostensible authority in a non-litigious context involved only “incremental development in principle” [10] . Beazley P said at [154] in that case:

Further, to accept that a “potentially litigious” dispute engages the ostensible authority of a solicitor to enter into an agreement is also not supported by authority. CIC Insurance v Bankstown Football Club does not extend the exception in Lucke v Cleary to such disputes. Rather, in CIC Insurance v Bankstown Football Club the solicitor was retained in relation to an insurance claim, and therefore had ostensible authority to deal with “issues which reasonably and foreseeably arose in the pursuit of that claim” (Kirby P, at 75,555). The case turned on its own facts and does not give rise to the principle for which Universal contended.

10. At [152]

35. Mr Cohen also relied on the remarks of the Chief Justice in Pavlovic at [21], as follows:

I agree with what was said by the President in relation to the question of ostensible authority. A solicitor’s ostensible authority to bind his or her client to an agreement, in the context of litigation conducted on the client’s behalf, does not extend to agreements resulting from negotiations, which if unsuccessful, may or may not end up in litigation.

36. Mr Cohen submitted that those remarks make it clear beyond dispute that there is a distinction fatal to the defendants’ application between cases in which proceedings have already been commenced (where a finding of ostensible authority will more readily be made) and all other cases (where, according to Mr Cohen, there can be no ostensible authority to bind the client to a contract).

36. In my view, it does not follow from the Court of Appeal’s decision in Pavlovic that there can never be a finding of ostensible authority of a solicitor in the absence of legal proceedings. The articulation of a rule in such rigid terms invites disregard for the proper application of the true test, which calls for an assessment of the objective intention of the parties (including by consideration of what is represented by the conduct of their agents). That assessment must be undertaken on an individualised, case-by-case basis.

37. Neither party cited any authority in which the question of the ostensible authority of a solicitor to bind his or her client to a settlement agreement has arisen in the context of the resolution of a civil dispute notified by means of a concerns notice under part 3 of the Defamation Act. As already noted, the plaintiff’s letter dated 27 March 2015 was expressly described as a concerns notice and so invited attention to the provisions of the Defamation Act. The objects of the Act include the promotion of “speedy and non-litigious methods of resolving disputes about the publication of defamatory matter”.

38. The remarks of Beazley P in Pavlovic at [154] set out above recognise that the mere fact that a commercial dispute is “potentially litigious” will not, considered objectively, import the whole range of expectations as to the degree of authority conferred upon a solicitor by his or her client that arise in the case of proceedings on foot. However, the negotiation of a non-litigious resolution of a dispute notified in a concerns notice under the Defamation Act is very different from the kind of negotiations considered by the Court in Pavlovic. In my view, the service of a concerns notice would readily be understood as the common first step towards the commencement of proceedings for defamation, reflecting a responsible approach to the resolution of the aggrieved person’s concerns in accordance with the objects of the Act. In my view, there would be every expectation on the part of solicitors negotiating in response to a concerns notice that each had authority to settle the dispute without resort to legal proceedings.

39. Returning to the question of intention to be bound immediately, two further submissions put by Mr Cohen should be considered. First, he submitted that the agreement allegedly reached in the present case had to be dealt with in a deed because the decision to publish or not publish a news article cannot amount to consideration for the purpose of formation of a binding contract. He submitted that the decision by The Guardian to publish Rabbi Feldman’s statement is not capable of being consideration, since it is a news item and the business of newspapers is to publish news. I do not accept that submission. In my view, the defendants’ publication of the plaintiff’s response to the matters reported in the articles is plainly capable of amounting to consideration for the purpose of the law of contract.

40. Separately, Mr Cohen relied upon the terms of the draft deed as revealing that, as at 30 April 2015, the parties had not reached agreement as to the terms of the alleged agreement. He noted, for example, that the defendants sought the inclusion of a provision in the deed by which the plaintiff would acknowledge that he had received legal advice. He also relied on the fact that the terms as to confidentiality contained in the deed had not been agreed before the draft deed was provided to the plaintiff. Mr Cohen submitted that the inclusion of such terms was inconsistent with agreement having been reached at an earlier juncture. He also noted that the agreement allegedly reached as at 30 April 2015 was silent as to the time within which the defendant would have to publish Rabbi Feldman’s statement.

41. I do not think it follows from those considerations that the parties did not intend to be bound immediately upon the agreement of the primary terms negotiated in the correspondence up to 30 April 2015. Viewed objectively, it is plain in my view that both parties were treating the matter as one which should be dealt with promptly if litigation was to be avoided. It should be noted in that context that the draft deed sent on 30 April 2015 contemplated publication of Rabbi Feldman’s statement within three days. Had the plaintiff not remained silent after 13 May 2015 (until the alleged withdrawal of the offer on 7 July 2015), publication of the statement would have occurred within that timeframe. The proper conclusion, in my view, is that the parties were content to put such matters of aside.

42. In all the circumstances, I am satisfied that the parties intended to be bound immediately upon the defendants’ solicitor’s acceptance of the matters negotiated in the correspondence referred to in their email dated 30 April 2015.

The fourth matter complained of

44. It is necessary to give separate consideration to the fourth matter complained of in the amended statement of claim, which was not referred to in the concerns notice or the subsequent notification of the two further articles of concern to Rabbi Feldman. The first awareness the defendants had of the plaintiff’s complaint about that article came when the statement of claim was served.

45. Mr Potter, who argued the application for the defendants on the adjournment date, submitted that the fourth matter complained of should be taken to be included within the scope of the release agreed as a term of the settlement agreement. He relied in particular on the wording of the defendants’ letter dated 2 April 2015 (the first substantive response to the concerns notice) which contemplated agreement by the plaintiff to release the defendants from “all liability relating to or arising out of the matters referred to” in the concerns notice “including without limitation the publication of the articles complained of”.

46. The concerns notice raised a broad concern as to the reporting of Rabbi Feldman’s evidence to the Royal Commission. The fourth matter complained of rehearses the same issues as were addressed in the other matters complained of. The imputations specified in respect of the fourth matter complained of are different from those specified in respect of the other articles but only by way of nuance. I am satisfied that the release extends to a release in respect of the fourth matter complained of.

Orders

47. The defendants acknowledged that there is an unresolved legal question as to the extent of the Court’s authority under s 73 of the Civil Procedure Act where proceedings are not yet commenced. Accordingly, although the notice of motion specifically sought an order staying the proceedings pursuant that section, the relief sought was alternatively submitted to be within the Court’s authority under s 67 or else the Court’s inherent power. In my view, the proper analysis in the circumstances of this case is that, the proceedings having been commenced in circumstances where the plaintiff has released the defendants from liability in respect of the causes of action sued upon, the proceedings are an abuse of process and should be permanently stayed pursuant to s 67 of the Civil Procedure Act.

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Endnotes

Amendments

03 May 2017 - Formatting correction to subheadings

Decision last updated: 03 May 2017