Hanson v Hunter

[2015] NSWDC 220

District Court

New South Wales

Medium Neutral Citation:	Hanson v Hunter [2015] NSWDC 220
Hearing dates:	19 and 28 August 2015
Date of orders:	30 September 2015
Decision date:	30 September 2015
Jurisdiction:	Civil
Before:	Gibson DCJ
Decision:	(1) Leave to amend the statement of claim refused. (2) The plaintiff’s claims in injurious falsehood (paragraphs 10 – 18) and under the Fair Trading Act 1987 (NSW) are dismissed, with costs payable in accordance with order 3 below. (3) The plaintiff is to pay the defendant’s costs of the proceedings for injurious falsehood and under the Fair Trading Act 1987 as well as the costs of this application on an indemnity basis, such costs to be assessed and assessable forthwith and to include: (a) the costs of and incidental to the plaintiff’s application to amend in terms of the “First Proposed Amended Statement of Claim” dated 5 May 2015, as defined in paragraph 3 of the Plaintiff’s Supplementary Submissions, which was withdrawn on 10 June 2015; (b) the costs of and incidental to the plaintiff’s application to amend in terms of the “Second Proposed Amended Statement of Claim” dated 10 June 2015, as defined in paragraph 4 of the Plaintiff’s Supplementary Submissions, which was withdrawn on 25 August 2015; (c) the costs of and incidental to the plaintiff’s application to amend in terms of the Third Proposed Amended Statement of Claim dated 25 August 2015, containing the “Proposed Amendments”, as defined in paragraph 5 of the Plaintiff’s Supplementary Submissions, which was unopposed; (d) the costs thrown away by the amendments made to the statement of claim in terms of the “Proposed Amendments”, as defined in paragraph 5 of the Plaintiff’s Supplementary Submissions; (e) the costs of responding to the claims for relief in the statement of claim for injurious falsehood and misleading and deceptive conduct in contravention of s 42 of the Fair Trading Act 1987 (NSW) pursuant to ss 68 and 72 of that Act. (4) The plaintiff file an amended statement of claim in terms of the draft amended statement of claim which is annexure A to the plaintiff’s submissions dated 25 August 2015, such amended statement of claim to be filed and served in 14 days. (5) The defendant file a defence 28 days after service of the statement of claim. (6) These proceedings listed for further directions at 9 am on Thursday 3 December 2015.
Catchwords:	TORT - plaintiff commenced proceedings in 2011 for injurious falsehood, defamation and a claim under the Fair Trading Act 1987 (NSW) - no special damages particularised in the injurious falsehood claim - similar defects in Fair Trading Act claim - statement of claim not served for 18 months - further delay in litigation while validity of service challenged - defendant seeks further and better particulars and foreshadows application to challenge pleadings - plaintiff seeks leave to abandon injurious falsehood and Fair Trading Act claims - plaintiff brings application to plead republication and special damage in the defamation claim which is abandoned after judgment is reserved - whether defendant's application for summary dismissal should still proceed - whether the plaintiff should pay the costs of the abandoned claims and proposed amendments on an indemnity basis, assessable forthwith
Legislation Cited:	Civil Procedure Act 2005 (NSW), ss 56-62 and 64 Fair Trading Act 1987 (NSW), s 42 Uniform Civil Procedure Rules 2005 (NSW), rr 1.2, 6.2(4)(b)(ii), 13.4 and 14.28
Cases Cited:	Aon Risk Services Australia Pty Ltd v Australian National University (2009) 239 CLR 175 Bateman v Fairfax Media Publications Pty Ltd (No 4) [2015] NSWSC 610 Bateman v Fairfax Media Publications Pty Ltd (No 5) [2015] NSWSC 830 Boland v Yates Property Corporation Pty Ltd (1999) 167 ALR 575 Chaina v Alvaro Homes Pty Ltd [2008] NSWCA 353 Energetech Australia Pty Ltd v Sides Engineering Pty Ltd [2005] NSWSC 1143 Equuscorp Pty Ltd and Anor v Glengallan Investments Pty Ltd and Ors [2006] QCA 194 Fiduciary Lt v Morningstar Pty Ltd [2002] NSWSC 432 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 Hanson v Hunter (District Court of New South Wales, Bozic SC DCJ, 10 May 2013) Heugh v Askin [2014] WASC 30 Hunter v Hanson [2014] NSWCA 263 Hunter v Hanson [2015] HCATrans 16 Ianelli v Hancock t/as Hancocks Solicitors [2012] NSWSC 417 Johnson v Department of Community Services (No 2) [1999] NSWSC 1251 Lahoud v Lahoud [2006] NSWSC 126 Lighthouse Forward Planning Pty Ltd v Queensland Newspapers Pty Ltd [2014] QSC 217 Lucire v Parmegiani [2012] NSWCA 86 McGrane v Channel Seven Sydney Pty Ltd [2012] QSC 133 Merman Pty Ltd v Cockburn Cement Ltd (1988) 84 ALR 521 Miller v Associated Newspapers Ltd [2012] EWHC 3721 (QB) Mio Art Pty Ltd v Macequest Pty Ltd [2013] QSC 211 Oliver v Bryant Strata Management Pty Ltd (Supreme Court of New South Wales, Levine J, 16 May 1995) Pisano v Thrum (No 4) [2011] WASC 290 Prebble v Australian Broadcasting Commission (Levine J, 11 July 1997, unreported) Seafolly Pty Ltd v Madden (No 4) (2014) 320 ALR 763 Shelton v NRMA [2004] FCA 1393 Skalkos v T & S Recoveries Pty Ltd [2004] NSWCA 281
Texts Cited:	Ritchie's Uniform Civil Procedure NSW (LexisNexis)
Category:	Procedural and other rulings
Parties:	Plaintiff: Benjamin Alan Hanson Defendant: Scott Hunter
Representation:	Counsel: Plaintiff: Ms R White Defendant: Mr C J Bevan   Solicitors: Plaintiff: Banki Haddock Fiora Defendant: Peter Condon & Associates
File Number(s):	2011/37759
Publication restriction:	None

Judgment

The applications before the court

1. The plaintiff and defendant each bring applications in relation to the three causes of action pleaded by the plaintiff in the Statement of Claim filed on 4 February 2011.

2. The plaintiff’s application is for leave to abandon two of those three claims, namely the causes of action pleaded under the Fair Trading Act 1987 (NSW) and for injurious falsehood. An application to amend to seek special damages and claim damages for republication was also brought, but was abandoned after the hearing of the motion on 19 August 2015.

3. The defendant’s application is for summary dismissal of these two causes of action and the defamation damages claims, as opposed to permitting the plaintiff merely to abandon them, and for special orders as to costs.

4. The defendant’s application is technically first in time, as the plaintiff sought to list his challenge to the statement of claim on 5 May and 7 June 2015 but could not do so because of late amendments by the plaintiff. However, for reasons of convenience, I have dealt with the applications together.

5. In order to explain why the defendant seeks summary dismissal of two of the three causes of action pleaded against him, as opposed to merely consenting to the plaintiff abandoning them, it is necessary to set out the procedural history of this bitterly fought claim.

The plaintiff files, but does not serve, proceedings commenced in the Defamation List

6. The background to these proceedings is as follows. The plaintiff (a medical practitioner) and the defendant (a builder) own adjoining rural properties. They fell out over fencing issues and there were proceedings in the Local Court. The defendant made a complaint about the plaintiff to the NSW Medical Board on 5 February 2010. He then sent a shorter follow-up letter on 28 March 2010 complaining that, after he lodged the complaint, the plaintiff had sought a restraining order from police.

7. The defendant’s complaint to the Medical Board was dismissed on 12 July 2010 (Exhibit 1). Six months later, on 14 December 2010, the plaintiff’s solicitors wrote to the defendant, stating that they had instructions “to bring proceedings for, inter alia, injurious falsehood, as a consequence of various complaints made by you” and indicating a willingness to desist in the instituting of proceedings for damages if an apology and the withdrawal of the complaints occurred. The defendant did not reply to this letter, or to a follow-up letter of 11 January 2011. On 4 February 2011, the last day of the defamation limitation period for the first matter complained of, the plaintiff’s statement of claim, seeking damages for injurious falsehood, defamation and a claim under the Fair Trading Act 1987 (NSW), was filed in this court’s Defamation List.

8. Service must be effected within a month of commencement (r 6.2(4)(b)(ii) Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”)) unless an extension is granted. However, the plaintiff did not effect service of the statement of claim for another one and a half years, as he was waiting for the NSW Court of Appeal to hand down Lucire v Parmegiani [2012] NSWCA 86. After the first return date on 25 February 2011, the plaintiff’s claim (stale by 4 March 2011) was stood over four further times in 2011 and another three times in 2012. It was not until 4 May 2012 that an application for extension of time was made (ex parte) and granted. Even then, the statement of claim was not served within one month of that order, being served on 21 June 2012.

9. The defendant then sought an order setting aside service of the statement of claim. The plaintiff sought an order extending time for service up to and including 21 June 2012. Both applications were set down for hearing on 10 August 2012 and then adjourned to subsequent dates. In Hanson v Hunter (District Court of New South Wales, Bozic SC DCJ, 10 May 2013) Bozic SC DCJ extended time for service to 21 June 2012 and dismissed the defendant’s application.

The defendant appeals unsuccessfully

10. The defendant’s application for leave to appeal from this order was filed and heard concurrently with the leave application on 13 August 2014 (Hunter v Hanson [2014] NSWCA 263). The appeal was dismissed (McColl and Macfarlan JJA; Emmett JA dissenting). An application for leave to appeal to the High Court of Australia was brought. Leave was refused on 13 February 2015 (Hunter v Hanson [2015] HCATrans 16). The proceedings were then relisted in the Defamation List on 26 March 2015 for directions.

The defendant seeks particulars of the plaintiff’s claim

11. At the directions hearing on 26 March 2015, I ordered the defendant to serve a request for further and better particulars and “any objections to the statement of claim” on or before 16 April 2015, with replies to be received by 30 April 2015, with the matter listed “for argument, if necessary, or directions” on 7 May 2015. The plaintiff would have been on notice, from this application, that there were likely to be objections to the pleading of the causes of action heard on 7 May 2015 and that an argument about the statement of claim was likely to take place.

12. On 5 May 2015, two days before the proceedings were listed, the solicitors for the plaintiff provided not only answers to particulars (of the defamation claim only) but a proposed amended statement of claim. This letter was received the day before the proceedings came before the court for directions.

13. The answer to a number of the requests for particulars (which sought to flush out material necessary to attack the pleadings), was that the plaintiff now sought to abandon the claims for injurious falsehood and under the Fair Trading Act, and a draft pleading to that effect was attached. The solicitors for the plaintiff asked the defendant to consent to the filing of this draft amended statement of claim, in which case “there will be no need for argument before the Court on 7 May 2015”. To this effect, Short Minutes of Order were attached so that this order could be made in chambers (Exhibit 1).

14. There are three matters to note in relation to this covering letter. First, the plaintiff was well aware the proceedings were in for argument. Second, although not referred to in the covering letter, a claim for republication, in the same form as that in the most recent version of the proposed statement of claim, was also included. Third, no claim was made for special damages, which is of particular relevance to the hopelessness of the injurious falsehood claim. The following statement was made at paragraph 15 on page 2:

“The plaintiff does not claim special damages.”

15. The triggering event in this decision appears to have been events in other proceedings (Bateman v Fairfax Media Publications Pty Ltd (No 4) [2015] NSWSC 610 at [41]), in which the solicitors for the defendant, who are also the solicitors for the plaintiff in these proceedings, brought an application before McCallum J on 1 May 2015 to strike out a claim for injurious falsehood which suffered the same fatal defect as the claim for injurious falsehood in these proceedings – no particulars of special damage (McCallum J went on to strike out the injurious falsehood claim on 26 June 2015: Bateman v Fairfax Media Publications Pty Ltd (No 5) [2015] NSWSC 830).

16. When Dr Hanson’s proceedings came before the court on 7 May, Mr Bevan, for the defendant, was unable to deal with this sudden acknowledgement that the plaintiff proposed to abandon two of his three causes of action, but was not prepared to abandon his own argument, and the proceedings were stood over by me “for argument if necessary” on 11 June.

17. Once again, the day before this adjourned argument (10 June 2015), a further proposed statement of claim was sent to the solicitors for the defendant. The letter of 10 June 2015 stated that they had “recently been provided with further information in relation to our client’s claim”, but does not say what this information is, or that a claim has been added for special damages for the defamation claim. Not only the “proposed amended pleading” and “proposed short minutes” were attached, but the complaint is made that “despite our requests” the basis for the objection to the amendment of the statement of claim had still not been explained.

18. Ms White, for the plaintiff, has told the court that the information the basis for this claim for special damages only came to the plaintiff’s lawyers’ attention after 5 May 2015, and that this was why they had stated, in the letter of 5 May 2015 enclosing the previous draft statement of claim, that no claim was made for special damages, and had made no such claim in the previous draft.

19. This means that this current claim for special damages could not have formed part of the plaintiff’s 2010 claims for injurious falsehood (or, for that matter, form any part of the claim for misleading or deceptive conduct under s 42 Fair Trading Act, where the puzzling claim is made in paragraph 20 that the representations were made “in the course of business of applying to purchase land”).

20. The late service of this additional claim meant that the hearing of any application could not proceed on 11 June 2015. I accordingly fixed the plaintiff’s application for hearing on Thursday 30 July (later changed to 19 August 2015), with a timetable for submissions. At the request of Mr Bevan, who complained about receiving amended pleadings the day before the two previous dates for argument, I directed that no further amendments to the statement of claim could be made until further order.

21. An outline of submissions from the plaintiff dated 3 July 2015, and a reply on behalf of the defendant dated 20 July 2015, were sent. Following the hearing of the applications on 19 August 2015, I reserved judgment, but gave counsel for the plaintiff leave to deal with some minor matters in written submissions. The submissions I received contained yet another proposed amended statement of claim and extensive submissions, requiring the relisting of the proceedings for further argument on 30 August 2015. The parties have now provided six sets of submissions in support of their oral argument on these two occasions and I have referred to those submissions by date when quoting from them.

The proposed amendments to the statement of claim

22. The plaintiff initially sought leave to amend the statement of claim as follows:

1. To delete paragraphs (2) and (3) from the relief claimed;

2. To delete the claim for injurious falsehood set out at paragraphs 10 to 18 in the statement of claim;

3. To delete the claim under the Fair Trading Act 1987 (NSW) set out at paragraphs 19 to 22 of the statement of claim;

4. To include in paragraphs 2 (at subparagraphs (ii) and (iii)), 3 (at subparagraphs (ii) and (iii)) and in the particulars of aggravated damages (at subparagraphs (ii), (iii) and (iv)) a claim for republication of the matters complained of to “at least the following” bodies, namely the Health Care Complaints Commission and the Australian Health Practitioner Regulation Agency, on dates and in circumstances which are unspecified;

5. To include a new claim for an unspecified sum for special damages, the text of which is set out in the paragraph below.

23. The proposed amendment claiming special damages for defamation was as follows:

“Particulars of Special Damages

(a) Prior to the publication of the matters complained of, the Plaintiff was engaged in negotiations with a potential purchaser to sell his medical practice and commence employment with the potential purchaser in or about May 2010.

(b) The Plaintiff expected and anticipated that the negotiations referred to in paragraph (a) above would result in a concluded contract with the potential purchaser, following a formal offer received by the potential purchaser on or about 15 March 2010, as contained in a confidential draft Sale and Purchase of Business Deed.

(c) As a result of the matters complained of the Plaintiff was unable to proceed with the sale of his medical practice.”

24. The defendant seeks the following orders:

1. The summary dismissal of the plaintiff’s claim for injurious falsehood and misleading and deceptive conduct, on the basis that the causes of action pleaded disclose no claim maintainable in law;

2. The plaintiff’s application to amend the statement of claim to bring a claim for special damages and to rely upon republications (whether as going to damages only, or liability) be dismissed.

Should the plaintiff be permitted to abandon the defective pleadings, or should they be summarily dismissed?

25. As is noted above, the plaintiff abandoned both the proposed amendments after the 19 August 2015 hearing, but maintains a position that he should be permitted to abandon both these claims and the abandoned Fair Trading Act and injurious falsehood claims without any examination as to their merit (or lack thereof) in the form of a summary dismissal application, or (in the case of the defamation claim) a strike-out without leave to amend.

26. Rules 13.4 and 14.28 UCPR both provide for the dismissal of proceedings where there is no cause of action, and the principles set out in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129 – 130 are generally invoked. However, the list of circumstances in which such orders do not include a situation such as the present, where the party whose pleading is the subject of challenge abandons the proceedings in the face of such an application but effectively asks the court not to inquire further.

27. The injurious falsehood and Fair Trading Act claims are currently “on the record” and the plaintiff requires leave to amend in order to abandon them. The question in relation to these two claims is whether the plaintiff (whose counsel has effectively conceded that the injurious falsehood claim, at least, is hopeless) should be entitled to drop these claims, or whether the defendant’s application for summary dismissal (which is technically first in time) should be granted. The proposed amendments to plead republication and special damages are the subject of an application for leave to amend which has now been abandoned and the question is whether any determination of their lack of merits (to determine if leave to replead should be granted) should proceed.

28. The defendant submits that he needs a summary dismissal as the limitation period still has some time to run, and his client should have the certainty of the claims being concluded in his favour. The plaintiff submits that undertakings can be given to the court not to commence fresh proceedings (plaintiff’s submissions number 5, paragraph 53).

25. The concept of a plaintiff giving a defendant an indemnity against his own claim may seem ‘at first slightly absurd” (Equuscorp Pty Ltd and Anor v Glengallan Investments Pty Ltd and Ors [2006] QCA 194 at [12]), but it does have a place, albeit a limited one, in commercial contracts. However, the difficulties that it could give rise to in this litigation are considerable, and may create difficulties at the trial if it is asserted that the undertaking extends to particular kinds of evidence or submissions.

26. The plaintiff has effectively conceded that at least one, and probably both, of his two proposed abandoned claims are hopeless, and has complicated the situation by bringing, and then abandoning, significant amendments to the defamation claim.

27. Taking into account the confusion caused by the plaintiff’s chopping and changing of position, the undesirability of further delays and complications in these proceedings, and the obvious antagonism between the parties, I consider that the only sensible course to take is to permit the defendant to continue with his application to strike out these claims summarily. These proceedings need to progress towards a hearing untrammelled with complicated arguments about the nature and extent of the undertaking offered (the terms of which were not set out), and with a degree of finality sufficient to encourage the parties to focus on the claim for defamation.

28. The most practical order to make, however, is not the judgment sought by the defendant, but an order for the summary dismissal of the plaintiff’s claims for injurious falsehood and under the Fair Trading Act, of the same kind as that made by McCallum J in Bateman v Fairfax Media Publications Pty Ltd. McCallum J’s orders refusing leave to amend and dismissing the claim are a simple and straightforward way of terminating these claims so that the parties can get on with the rest of the litigation in a more satisfactory manner than has heretofore been the case.

29. The now-abandoned claims for special damages and republication claims require consideration on a separate basis, namely whether these should be abandoned or struck out without leave to replead. While the plaintiff does not seek leave to replead, no undertaking is offered in relation to these issues and they could be repleaded at any time.

The defendant’s submissions

34. Why would the defendant be so troubled by the plaintiff dropping two of the three claims against him, assuming appropriate costs orders were made?

35. The defendant’s first submission, when these applications came before me on 19 August 2015, is that, when the plaintiff first sought to excuse his 18-month delay in serving the statement of claim. But for the “timely threat” (defendant’s written submissions, 20 July 2015, paragraph 11) of an action for injurious falsehood in the letters before action, the plaintiff would never have obtained the extension of time he needed under UCPR r 1.2 to serve the statement of claim almost two and a half years after the cause of action accrued and one and a half years after time for service (under UCPR r 6.2(4)(b)(ii)) had expired.

36. But for his letters before suit (which referred only to injurious falsehood) and the commencement of proceedings for injurious falsehood and under the Fair Trading Act (both of which had 6-year limitation periods, unlike defamation actions) the plaintiff’s claim for extension of time for service would have been dismissed (defendant’s written submissions, 20 July 2015, paragraph 12). He could still have commenced fresh proceedings for the injurious falsehood and Fair Trading Act claims, but no application for an extension of time to sue for defamation could have survived the strict limitation test (defendant’s written submissions, 20 July 2015, paragraphs 13 – 14).

37. In other words, the defendant submits that the injurious falsehood and Fair Trading Act claims were an abuse of process designed to help the plaintiff get time to serve his claim extended and, once he had that, they were to be dropped because he knew, as did his legal advisers, that he had suffered no special damage, and the complaint letters were not sent in relation to the purchase of land as claimed in paragraph 20 of the statement of claim.

38. The defendant’s second submission was that these claims were hopeless on their face, and that the plaintiff should not be let off easily by abandoning them when confronted with an application for them to be struck out. Instead, as had been the plan when seeking a timetable to argue these matters, the defendant should remain entitled to summary dismissal both of these claims as well as to bring an application to strike out the proposed pleas of special damages and republication claims, which were simply further abuses of process, as well as costs orders appropriate to the hopelessness of the pleadings allowed to remain in the claim for the past four and a half years.

39. Mr Bevan also submitted that the hopeless nature of the proposed additional pleadings of republication and special damages should be seen in the prism of the equally hopeless nature of the injurious falsehood and Fair Trading Act claims, on the basis that prior inadequate pleadings would be relevant to the exercise of discretion to amend.

40. The defendant’s final submission was that unless these causes of action were summarily dismissed, the plaintiff would be at liberty to seek leave afresh to add them in.

41. As to lack of merit, Mr Bevan did not spend long on the injurious falsehood claim, as counsel for the plaintiff acknowledged that it was a hopeless pleading. He did, however, make a series of attacks on the Fair Trading Act claim:

1. Paragraph 20 of the statement of claim identifies these publications as having been made “in the course of purchase of land”, which Mr Bevan submitted was “arrant nonsense”. These were two letters of complaint to the Medical Board. No purchase of land was involved. This whole paragraph would have to be repleaded in order to identify the trade or commerce in which the representations occurred. The claim could be struck out on this basis alone.

2. If the basis of the claim is that the representations were those made in the two letters sent to the Medical Board, it now appears to be accepted law that a complaint made to (or as part of) a tribunal process may not amount to conduct in trade or commerce. While there was sufficient doubt in the past about the issue for the court to refuse summary dismissal in Merman Pty Ltd v Cockburn Cement Ltd (1988) 84 ALR 521, Campbell J held, in Energetech Australia Pty Ltd v Sides Engineering Pty Ltd [2005] NSWSC 1143 at [52] - [57], that the submission of a payment claim to an adjudicator was not made in trade and commerce. This is a logical conclusion to draw from representations in the form of a complaint being made to a body with an obligation to investigate them, as opposed to rely upon them.

3. The pleading fails to set out the material facts beyond publication, and consists of “general uninformative language” (Shelton v NRMA [2004] FCA 1393 at [35]) in the form of imputations. The question of what actual representations were made, as opposed to what imputations of a defamatory nature were conveyed, is not addressed.

4. The essential elements for the claim for damages are all missing. The claim has not been pleaded or particularised as a Fair Trading Act claim at all; it is simply pleaded as another form of defamation claim, complete with aggravated damages, which may not be claimed for such actions: Seafolly Pty Ltd v Madden (No 4) (2014) 320 ALR 763 at [55].

5. There is also a specific claim for punitive damages pleaded for the Fair Trading Act claim. In Boland v Yates Property Corporation Pty Ltd (1999) 167 ALR 575, Gaudron J warns generally about the conflation of different heads of damages for different causes of action and specifically notes the unavailability of punitive damages for claims of misleading and deceptive conduct (at [106]):

“Moreover, the damages recoverable for breach of s 52 of the Act are not necessarily co-extensive with those recoverable in negligence. In particular, damages are confined to actual loss and, thus, do not include punitive damages. Further, it is possible that they are not limited either by the foreseeability of consequential damage or remoteness. And significantly for present purposes, if s 52 had applied in this case, there would be no occasion to consider whether the appellants were “immune from suit“. That question could only arise if it were found that the appellants were negligent but that s 52 did not apply to their conduct.”

42. Mr Bevan also addressed me as to the inadequacy of the claim for special damages, a topic which I have considered separately below.

The plaintiff’s submissions

43. Ms White states that her client’s explanation for dropping two of the three causes of action was “to narrow the issues in dispute, thereby reducing the costs for both parties” (plaintiff’s written submission, 3 July 2015, paragraph 14), “to determine the real issues in the proceedings” (plaintiff’s written submission, 3 July 2015, paragraph 25) and to “focus the attention of the parties to the defamation cause of action (plaintiff’s written submission, 3 July 2015, paragraph 26), placing reliance upon ss 56, 57 and 64 Civil Procedure Act 2005 (NSW) and to Aon Risk Services Australia Pty Ltd v Australian National University (2009) 239 CLR 175. An amendment “will be allowed if sought at an early stage of the proceedings” (plaintiff’s written submission, 3 July 2015, paragraph 22) and as the proceedings had not yet proceeded beyond the statement of claim, the proceedings were still in their early stages, notwithstanding the effluxion of time for reasons for which the defendant should be held responsible by reason of his failed appeal.

44. Ms White added that there could be no prejudice to the defendant from this rearranging of the case by the bringing of the special damages claim in such circumstances, and the republication plea would only go to the issue of damages.

45. Ms White complained that the defendant has “taken every point” and “taken an argument about late service” (which I infer is submitted to be a complaint of a trivial nature) all the way to the High Court and that the proceedings before me are effectively the second return date. In those circumstances, there has been no delay by her client and there was thus no need for any explanation of the lateness with which the application to amend is brought: Aon Risk Services Australia Ltd v Australian National University at [99]-[102]. Her client abandoned these claims not because they were hopeless but with the obligations of ss 56 – 62 Civil Procedure Act 2005 (NSW) in mind.

46. However, the real reason the injurious falsehood claim was dropped, as Ms White acknowledged, was that the defendant’s legal representatives had been alerted to the problem of failure to plead special damages by Bateman v Fairfax Media Publications Pty Ltd (No 4) and Bateman v Fairfax Media Publications Pty Ltd (No 5). Although there is a reference to “actual and special damages” in Dr Hanson’s statement of claim, the only particulars ever provided was the statement “particulars to be supplied” at paragraph 18. Her instructing solicitors had advised the plaintiff, in their answers to particulars dated 3 May 2015, that there was no claim for special damages. Although a claim for special damages was now proposed for the defamation claim, there was no intention to revive the injurious falsehood claim by adding this essential element – a claim for special damages – now that new information about special damages had come to hand. She acknowledged that, without special damages being pleaded, any claim for injurious falsehood would be hopeless, for the reasons outlines by McCallum J in Bateman v Fairfax Media Publications Pty Ltd (No 5).

47. Ms White submitted that the Fair Trading Act claim was a strong claim and was only being dropped to narrow the issues at trial. However, in reply to Mr Bevan’s list of complaints, she conceded that there was not a lot she could say to defend the pleading.

Conclusions – The pleadings are hopeless and should be struck out

48. Both the Fair Trading Act and injurious falsehood claims are hopelessly pleaded, disclose no cause of action and fail to identify the loss or damage. They should be struck out.

49. I do not, however, propose to make any findings as to whether the lack of merits of these claims amounts to an abuse of process. Issues of abuse of process are matters for the trial.

The proposed special damages claim in the defamation proceedings

50. Courts are increasingly concerned about the need for precision when claims for special damages are brought in defamation proceedings. As is discussed in more detail below, in Heugh v Askin [2014] WASC 30 and Pisano v Thrum (No 4) [2011] WASC 290, the plaintiff was not granted leave to replead the struck out special damages claim. Although the plaintiff does not ask now for leave to replead, the defendant fears, given the “track record” of these proceedings, that such an application may be made, and asks me to strike out this claim in clear terms, without any leave to replead being possible.

51. The bringing of fanciful or unparticularised claims for special damages in defamation proceedings has been commented upon in a series of judgments in Australia (see, for example Lighthouse Forward Planning Pty Ltd v Queensland Newspapers Pty Ltd [2014] QSC 217 at [42]-[49]) and the United Kingdom (Miller v Associated Newspapers Ltd [2012] EWHC 3721 (QB)) . Prolonged failure to provide adequate particulars may result in the whole claim being dismissed, as was the case with in McGrane v Channel Seven Sydney Pty Ltd [2012] QSC 133. Dr McGrane brought a claim for $95 million despite being unable to work as he had been sentenced to a lengthy term of imprisonment for murder.

52. An example of a claim for special damages of a similar kind to the present may be found in Pisano v Thrum(No 4), where an orthopaedic specialist brought a claim for special damages following publication of a letter to hospital authorities. Dr Pisano, like the plaintiff in these proceedings, initially brought a claim for misleading and deceptive conduct and abandoned it, and then sought special damages in relation to the sole remaining claim for defamation.

53. Le Miere J identified the requirement to link the publication and the financial loss, as opposed to making bald assertions, at [10] – [12]:

“[10] Where a plaintiff has suffered financial loss as a result of a publication he is entitled to claim for the loss as special damages. The plaintiff must prove that the defamatory publication is the cause of the financial loss. The defendant submits, in effect, that the plaintiff has not pleaded or established any causative link between the letter and the plaintiff working fewer hours per week.

[11] In Southern Cross Mine Management Pty Ltd v Ensham Resources Pty Ltd [2004] QSC 457 Chesterman J in the Supreme Court of Queensland said:

In any cause of action in respect of which causation is an essential element it is necessary to plead the material facts which are said to give rise to the causal connection. In particular it is necessary to plead the facts which lead to a reasonable inference that the acts complained of … and the alleged later event … stand to each other in the relation of cause and effect [15].

[12] The degree of certainty and particularity with which the special damage must be pleaded will vary from case to case and will depend on the circumstances. In Ratcliffe v Evans [1892] 2 QB 524 Bowen LJ said:

“In all actions accordingly on the case where the damage actually done is the gist of the action, the character of the acts themselves will produce the damage, and the circumstances under which these acts are done, must regulate the degree of certainty and particularity with which the damage ought to be stated and proved. As much certainty and particularity must be insisted on, both in pleading and proof of damage, as is reasonable, having regard to the circumstances and to the nature of the acts themselves by which the damage is done. To insist upon less would be to relax old and intelligible principles. To insist upon more would be manifest pedantry (532–533).”

[13] Working fewer hours is not an obvious or logical consequence of the publication of the letter complained of. Paragraph 19 does not plead the facts which lead to a reasonable inference that the publications complained of and the plaintiff working fewer hours stand to each other in the relation of cause and effect. The current plea is nothing more than a bald assertion than the publications caused the plaintiff to work fewer hours. The question for the court is whether [19] is a sufficient plea of special damage in all the circumstances. The court should require as much certainty and particularity as is reasonable having regard to the circumstances and to the nature of the acts by which the damage is alleged to have been done.

54. Dr Pisano sought special damages on two bases: he was being offered less hours of work, and received fewer referrals. Le Miere J considered the particulars of fewer referrals was inadequately pleaded, as:

“No particulars are given that would enable the defendant to know how those special damages are calculated and, if he wishes, to make an appropriate payment into court. The plaintiff’s particulars in relation to “lost referrals” fail to state the nature of the loss and the circumstances in which the loss was suffered.”

55. Le Miere J was, however, satisfied that the plaintiff had provided sufficient particulars of the fewer hours worked. Nevertheless, his Honour struck out the whole of the claim for economic loss, for the following reasons:

“[16] If (d) and (e) of the particulars of loss and damage could be severed from the remaining particulars I would have struck out only those paragraphs of the particulars. However, it is not clear whether the plaintiff’s case that he suffered loss as a result of working 2.4 hours less per week after the defendant wrote the letter is confined to the period from 2 July 2002 to 11 December 2002 or continued until 2 July 2004. In those circumstances all of the particulars should be struck out. If the particulars are struck out then the whole of [19] should be struck out because without the particulars [19] fails to state any material facts giving rise to a claim for special damage.”

56. In Heugh v Askin Kenneth Martin J similarly struck out claims for loss of earning capacity and loss of a chance because they were, in addition to being too broad, claimed without the pleading of the intermediate steps to establish why there would be such a loss following the publication:

“[30] Paragraph 19.3 reads that Mr Heugh suffered a loss of earning capacity. That is untenable; little more needs to be said about it because the plaintiff, I think, properly accepted it was simply too broad. There presents no arguable linkage to the passing of resolution 6 in terms of Mr Heugh’s removal of a director as to his loss of earning capacity generally in circumstances where earning capacity is not confined to the lost capacity as a director or, indeed, in any capacity at all. This is way too wide.

[31] Paragraph 19.4 contends for a loss of a chance for future employment as a managing director of Central Petroleum. That also cannot stand. Resolution 6, as carried, was for Mr Heugh’s removal as a director, not as managing director. He had already been removed at an earlier time as Central Petroleum’s managing director. If the argument was in terms of a loss of a chance, clearly various things must have fallen into place for Mr Heugh to be reappointed as a managing director, and the foundation stones to get one to that point are missing. Their absence exposes a conceptual deficiency in its own right. Hence, 19.4 should also be struck out.

[32] Paragraph 19.5 seeks loss of expected salary as a director and managing director of a comparable public company as the fourth defendant. Again, the intermediate steps to arguably reach that conclusion are simply not there. If it is meant that there is loss of salary for a non-executive director in other public companies then there is some material missing in terms of why there would be that loss, and the deficiency is even more obvious as regards the managing director scenario. That seems to me to be a totally different category to that of resolution 6 as regards the removal of a bare director of Central Petroleum. Hence, 19.5 cannot survive either.”

57. The imposition of such a requirement is not limited to very restricted publications of the kind seen here. The matter complained of in Heugh v Askin was a circular to shareholders, where a degree of latitude might be expected, and indeed paragraph 19.1 of the special damages claim did survive, for this reason.

58. Not only are there temporal problems (in that the special damages loss appears to have occurred before publication of the second matter complained of) but the vagueness of the pleadings, the uncertainties of the “confidential document” and the lack of causative link between the plaintiff’s failure to sell his Sydney practice and a complaint by his neighbour to the Medical Board must be fatal. No attempt has been made by the plaintiff to reformulate this plea; it is simply abandoned.

59. Accordingly the proposed claim for special damages is struck out without any leave to replead being granted.

The republication claim

60. This claim, which was to go to damages only, was abandoned in submissions sent after the first day of argument, apparently in acknowledgement of the unavailability of that course, for the reasons explained by McCallum J in Bateman v Fairfax Media Publications Pty Ltd (No 4) at [17] – [27].

61. The confidentiality of the proceedings and the fact that one of the bodies to whom the matter complained of was republished did not come into existence until after the matters complained of were published are only some of the difficulties touched upon in argument. I propose to strike out the proposed republication claim without any leave to replead being granted.

62. The defendant has been successful in his application for summary dismissal of the claims under the Fair Trading Act and the injurious falsehood claim, and in having the claims for special damage and republication in the defamation claim dismissed. What should the costs consequences be?

Costs

63. This was really the defendant’s application for summary dismissal, rather than the plaintiff’s application for leave to amend. However, the plaintiff has not only abandoned two out of three of the claims brought, but also the amendments to the defamation claim that he sought leave to make.

64. Mr Bevan seeks an intricate series of costs orders, the pattern for which changed as the plaintiff’s amendments successively fell away. This has included stays and an application for me to reconsider earlier costs orders, including orders made by Bozic SC DCJ, which I decline to do. I appreciate Mr Bevan’s concerns for his client, but I propose to consider the issue of costs of this application in accordance with the usual principles, namely whether the costs should follow the event, be assessable now or at the end of the proceedings, and be assessed on the ordinary or the indemnity basis. In particular, I do not intend to revisit the orders of Bozic SC DCJ, who took into account considerations of an entirely different nature to those before me in this application.

65. The general principles applicable where a party abandons a claim or seeks leave to amend to that effect are that the amending party must pay the costs thrown away. While counsel for the defendant submitted that this would be little more than the costs of answering the particulars, having regard to the circumstances in which the plaintiff further amended his claim after the hearing of the argument (in the face of an order I had made for no further amendments, and without the leave of the court), resulting in the proceedings being listed for argument on a second occasion, I consider that any such costs order should relate to the whole of the application, given the unsatisfactory way in which it was conducted.

66. Where a party abandons a claim, or it is struck out as hopeless, as part of defamation proceedings, costs orders have been made on the basis that these be assessable forthwith, as those issues are now no longer a part of the proceedings: Oliver v Bryant Strata Management Pty Ltd (Supreme Court of New South Wales, Levine J, 16 May 1995); Prebble v Australian Broadcasting Commission (Levine J, 11 July 1997, unreported). The same principles have been considered in other areas of litigation where the claim struck out is futile (see for example Johnson v Department of Community Services (No 2) [1999] NSWSC 1251 at [17]–[19], which refers to Prebble v Australian Broadcasting Commission, and Shelton v NRMA at [58]), or where interlocutory proceedings are separate and completed (Fiduciary Lt v Morningstar Pty Ltd [2002] NSWSC 432), or where a party’s conduct of the application has caused delay or been unsatisfactory. It is a power sparingly used, because of the possibility of stultification of litigation on the merits of the claim by the making of such an order.

67. In the present case, the defendant is already liable for very substantial costs as a result of his failed appeals to the Court of Appeal and the High Court. He is in an unusual position for that reason. It is clear, from Mr Bevan’s submissions, that the defendant considers it unjust that, having gone all the way to the High Court on a separate issue resulting in costs orders against him, the very pleadings that were relied upon then are now being abandoned. Mr Bevan submits that the defendant should not labour under the disadvantage of further costs in successfully opposing an unmeritorious claim. He also points out that the costs orders made against his client did not result from any wrongdoing or improper conduct, but from unsuccessfully complaining about a two and a half year delay by the plaintiff in commencing proceedings and serving the defendant.

68. These factors are capable of being a special or unusual feature of the application before me, capable of warranting a departure from the usual rule. However, would the making of such an order be disproportionate? Ms White relies upon the discussion of proportionality in costs by Ipp JA in Skalkos v T & S Recoveries Pty Ltd [2004] NSWCA 281 and the provisions of s 60, arguing that the plaintiff already has costs orders in his favour, and that costs should await the determination of the merits of the proceedings (plaintiff’s written submissions, 28 August 2015, paragraphs 21 – 22).

69. Concepts of proportionality must, in my view, take into account not only these issues, but other issues, including the manner of conduct of the application, the merit of the application, and the conduct of the proceedings generally. First, the claims under the Fair Trading Act and for injurious falsehood are hopeless and should be summarily struck out, and as a result those parts of the case are completed, in the sense of a finding on the merits. Second, concepts of proportionality should not outweigh the purpose of making such orders where the conduct of the application has been particularly unsatisfactory, as I am satisfied is the case here. The plaintiff’s conduct of this application has consisted of a series of last-minute amendments which resulted in the adjournment of this argument and the reopening of the argument after submissions were completed. The circumstances in which the most recent amendments were provided at “the heel of the hunt” and without leave are regrettable, and have considerably delayed the prompt resolution of the application.

70. Taking into account the special circumstances of this case, I am of the view that this is an appropriate case for the costs in question to be assessable and assessed forthwith.

71. Should such costs, if assessed now, be payable on an indemnity basis? Issues noted in Ritchie's Uniform Civil Procedure NSW (LexisNexis) at [42.5.7] as being capable of warranting such an order to include the abandoning of a claim: Ianelli v Hancock t/as Hancocks Solicitors [2012] NSWSC 417. However, the abandonment of a claim for the purpose of narrowing the issues in dispute would not warrant such an order: Lahoud v Lahoud [2006] NSWSC 126.

72. Despite the language of the plaintiff’s written submissions, which framed this application in terms of narrowing the issues and focussing on the defamation. I am satisfied that the plaintiff and his legal advisers have known for some time that there was no evidence of special damage for the injurious falsehood claim and that there were real difficulties framing a Fair Trading Act claim as arising out of a complaint to the Medical Tribunal (Chaina v Alvaro Homes Pty Ltd [2008] NSWCA 353), but that alone would not be sufficient grounds for the awarding of costs on an indemnity basis. Whether viable or not, these claims and proposed amendments are hopelessly pleaded, and the plaintiff should, in the words of Jackson J (making indemnity costs orders for a similarly poorly pleaded claim) pay the costs of this “battle royal” on an indemnity basis: Mio Art Pty Ltd v Macequest Pty Ltd [2013] QSC 211 at [11].

Orders

1. Leave to amend the statement of claim refused.

2. The plaintiff’s claims in injurious falsehood (paragraphs 10 – 18) and under the Fair Trading Act 1987 (NSW) are dismissed, with costs payable in accordance with order 3 below.

3. The plaintiff is to pay the defendant’s costs of the proceedings for injurious falsehood and under the Fair Trading Act 1987 as well as the costs of this application on an indemnity basis, such costs to be assessed and assessable forthwith and to include:

1. the costs of and incidental to the plaintiff’s application to amend in terms of the “First Proposed Amended Statement of Claim” dated 5 May 2015, as defined in paragraph 3 of the Plaintiff’s Supplementary Submissions, which was withdrawn on 10 June 2015;

2. the costs of and incidental to the plaintiff’s application to amend in terms of the “Second Proposed Amended Statement of Claim” dated 10 June 2015, as defined in paragraph 4 of the Plaintiff’s Supplementary Submissions, which was withdrawn on 25 August 2015;

3. the costs of and incidental to the plaintiff’s application to amend in terms of the Third Proposed Amended Statement of Claim dated 25 August 2015, containing the “Proposed Amendments”, as defined in paragraph 5 of the Plaintiff’s Supplementary Submissions, which was unopposed;

4. the costs thrown away by the amendments made to the statement of claim in terms of the “Proposed Amendments”, as defined in paragraph 5 of the Plaintiff’s Supplementary Submissions;

5. the costs of responding to the claims for relief in the statement of claim for injurious falsehood and misleading and deceptive conduct in contravention of s 42 of the Fair Trading Act 1987 (NSW) pursuant to ss 68 and 72 of that Act.

4. The plaintiff file an amended statement of claim in terms of the draft amended statement of claim which is annexure A to the plaintiff’s submissions dated 25 August 2015, such amended statement of claim to be filed and served in 14 days.

5. The defendant file a defence 28 days after service of the statement of claim.

6. These proceedings listed for further directions at 9 am on Thursday 3 December 2015.

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Decision last updated: 30 September 2015