Macquarie Bank Limited v Berg

[2002] NSWSC 254

CITATION:	Macquarie Bank Limited & Anor v Berg [2002] NSWSC 254
CURRENT JURISDICTION:	Common Law
FILE NUMBER(S):	SC 20247/99; 20393/00
HEARING DATE(S):	13 June 2001; 15 February 2002
JUDGMENT DATE:	3 April 2002
PARTIES :	Macquarie Bank Limited & Andrew John Downe v Charles Joseph Berg
JUDGMENT OF:	Smart AJ at 1

COUNSEL :	(P) Mr B McClintock SC (D) Mr J M Ireland QC & Mr R Dalgleish
SOLICITORS:	(P) Abbott Tout (D) Verekers
CATCHWORDS:	Resolution of procedural difficulties - no matter of principle
LEGISLATION CITED:	Defamation Act 1974
CASES CITED:	Nil
DECISION:	Paras 35-38

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

SMART AJ

Wednesday, 3 April 2002

20247/99) MACQUARIE BANK LIMITED and ANDREW JOHN DOWNE v CHARLES JOSEPH BERG
20393/00)

JUDGMENT

1 SMART AJ : There are three applications, one by the plaintiffs in proceedings 20247/99, one by the plaintiffs in proceedings 20393/00 and one by the defendant in proceedings 20393/00. They relate to proceedings in respect of defamatory material allegedly placed by the defendant on the Internet on or about 25 May 1999 and 1 July 1999 in Illinois, United States of America. It was subsequently able to be accessed by people in Australia who wished to do so. The defendant does not reside or carry on business in Australia and has only been present in the jurisdiction on a limited number of occasions.

2 There are two sets of proceedings because in respect of the first placement on the Internet of about 25 May 1999 by summons the plaintiffs in 20247/99 sought an order restraining the defendant publishing certain material on the Internet. There was no claim for damages in the summons. While the defendant was notified of the application he did not appear at the hearing. On 2 June 1999 Simpson J said "The order I make is that the application for interlocutory injunction is refused." That order has never been passed and entered. It would not matter if it had been as it was only an interlocutory order. It could be varied or rescinded. Upon further application by motion an interlocutory injunction could have been granted. That is usually only done on further evidence or where the judge can be persuaded that the initial refusal was infected by a material error. The refusal of the interlocutory order did not stop the plaintiff pressing for final relief and, in support, if so advised, relying on further evidence.

3 During the hearing before her the plaintiffs tendered a draft statement of claim but no statement of claim was filed. On delivering judgment or shortly thereafter, Simpson J was not asked by the plaintiffs to make the usual order that the action proceed by way of pleadings; that the plaintiffs file and serve their statement of claim within 21 days and that thereafter the action proceed in accordance with the rules: see SCR Part 5, r.11.

4 On 7 August 2000 the plaintiffs issued a statement of claim against the defendant in proceedings 20393/00 seeking damages including aggravated damages arising out of material defamatory of the plaintiffs allegedly placed by the defendant on the Internet on 25 May 1999 and 1 July 1999 in the United States. That material was accessed in New South Wales.

5 The defendant made it plain that he did not submit to the jurisdiction of this Court. He appeared to raise questions of service, delay and procedural irregularity which, if successful, would lead to the dismissal of the action under SCR Part 11, r.8.

6 In the plaintiffs' motion of 14 February 2002 in 20247/99 they sought that they be granted leave to file a statement of claim in the form filed in 20393/00, that further service be dispensed with and consequential relief.

7 In the plaintiffs' motion filed on 30 March 2001 in 20393/00 they sought that:

(a) they be given leave to proceed against the defendant pursuant to SCR Part 10, r.2.


(b) service of the statement of claim upon the defendant be confirmed

(c) compliance with SCR Part 10 r,2A be dispensed with pursuant to Part 1 r.12.

(d) proceedings 20247/99 be consolidated with the proceedings in 20393/00 and that evidence in one be evidence in the other

(e) costs and further or other relief.

In his amended motion filed in Court on 13 June 2001 in 20393/00 the defendant sought wide ranging relief but by arrangement between counsel only the following relief was sought at this stage:


(a) the statement of claim be set aside as leave had not been granted under s.9(3)
of the Defamation Act 1974

(b) the purported service of the statement of claim on the defendant in the USA on
about 3 February 2001 be set aside on the basis of failure to comply with SCR Part 10 r.2A.


8 There was evidence that the defendant had been handed a sealed copy of the statement of claim in 20393/00 early on the morning of 3 February 2001, Sydney time, and about 1pm on 2 February 2001, Chicago time. The copy served contained no notice pursuant to SCR Part 10, r.2A. That notice informs a defendant, amongst other things, that he may apply to set aside the service on him of the statement of claim and that if he does not do so the Court may give leave to the plaintiff to proceed against him. Further, there was no statement under SCR Part 10 r.2B that the plaintiffs intended to proceed under the Supreme Court Rules1970.

9 Before proceeding further with the narration of the procedural matters it is necessary to set out the background. In about December 1994 the first plaintiff (MBL) engaged the defendant to work in its overseas business. Whether that engagement created a relationship of employer and employee is in dispute. The relationship gave rise to litigation the NSW Industrial Relations Commission (IRC) and the Federal Court (FC). There appear to have been a large number of interlocutory applications and some appeals. The costs must be very high. Mr Berg was seeking, inter alia, compensation of $A2,830,950 for the termination of his services. (See the proposed Amended Summons For Relief in the IRC). In the judgment of the Full Bench of the IRC delivered on 17 December 1999 it adopted this description "thus far the proceedings have resembled a forensic nightmare."

10 On 22 September 1999 Hodgson CJ in Eq, on the application of MBL held that the IRC and FC proceedings should be cross vested in the Supreme Court, but he stayed the order. He further held that, if Mr Berg elected to discontinue one or other of the sets of proceedings, the position would be otherwise. Subsequently, Mr Berg discontinued his proceedings in the Federal Court. When the matter was before me on 13 June 2001 and could not proceed due to the unavailability of a witness for good reasons, I was told that the substantive proceedings were set down for hearing before the IRC for five weeks commencing on 16 July 2001. I do not know whether the proceedings were in fact heard and whether there has been a result.

11 The solicitor handling this matter for the plaintiffs said that on approximately 20 occasions from mid-May 1999 until March 2000 she observed the matters complained of in 20393/00 as published on the Internet. On each occasion her observation was made in New South Wales. The matters complained of were electronically accessible within New South Wales via the Internet.

12 Nothing appeared to be done on behalf of the plaintiffs in relation to the material appearing on the website from early June 1999 until July 2000. However, from August 1999 to December 1999 there was an abundance of activity in the various proceedings dealing with Mr Berg's claim against MBL and associated companies. That activity seems to have continued into 2000. It was the focus of the parties' attention.

13 About 11 July 2000 the plaintiffs' solicitors received a letter from the Court Registry in these terms:


"Court records indicate that in the above proceedings no step has been taken by any party to the proceedings for over one year.

Pursuant to Part 32A the Court will, of its own motion, dismiss these proceedings upon the expiration of 28 days from the date of this letter unless a party satisfies the Court that special circumstances exist that render desirable that such an order should not be made.

The Court will not make an order dismissing the proceedings pursuant to Part 32A without giving the parties a reasonable opportunity to be heard. Your written application must be lodged with the Court before the expiration of 28 days from the date of this letter."

14 That letter prompted the plaintiffs (and their solicitors) to take action. A fresh statement of claim was prepared which added a second cause of action based on the material appearing on the Internet about 1 July 1999 to that based on the material appearing on he Internet about 25 May 1999. That statement of claim was intended to be filed in 20247/99. However, when an attempt was made to file it about 7 August 2000 the plaintiff's solicitor said she was told by the Registry staff in words to this effect:

"You can't file this Statement of Claim under that proceedings number. There has been no direction by the Court for any Statement of Claim to be filed or any leave to file it granted by Justice Simpson or anyone else. You'll have to file fresh proceedings as we can't let you file the Statement of Claim in the proceedings currently on foot."

15 The solicitor said that although she discussed this issue with the Registry staff they remained adamant that new proceedings should be commenced. It was on this basis that new proceedings were commenced, namely 20393/00 by the filing of the statement of claim. The plaintiffs' solicitor was not aware that leave had to be obtained under s.9(3) of the Defamation Act 1974. Had it not been for the view of the Registry staff the statement of claim would have been filed in 20247/99. I am not suggesting that the view of the Registry staff was incorrect. The plaintiffs either had to obtain an order from the Court permitting the statement of claim to be filed in 20247/99 or institute fresh proceedings after having first obtained leave under s.9(3) of the Defamation Act 1974 .

16 However, if it was desired to proceed in 20247/99 there would have to be both an application for the usual order for pleadings and an application under SCR Part 20 r.1(1) and (3A) which read:

"(1)(1) The court may at any stage of any proceedings, on application by any party or of its own motion, order that any document in the proceedings be amended, or that any party have leave to amend any document in the proceedings, in either case in such manner as the Court thinks fit.
(3A) An order may be made, or leave may be granted under subrule (1) notwithstanding that the effect of the amendment is, or would be, to add or substitute a cause of action arising after the commencement of the proceedings, but in such a case the date of commencement of the proceedings, so far as concerns that cause of action, shall ... be the date on which the amendment is made."

17 Subrule (2) provides that all necessary amendments shall be made for the purpose of determining the real questions raised by or otherwise depending on the proceedings or of avoiding multiplicity of proceedings.

18 The Court's Record of Proceedings compiled by the Registry staff states that it is not to be relied upon as the official record of the Court file. There is an entry of 7 August 2000 summarising the history of the matter. In part it is a little jumbled. However, it correctly records that by the second day of the hearing before Simpson J a statement of claim had been prepared but not filed. The notation continues:

"The initiating docs of this matter is only the summons (only way of counter clerk to list it into the Defo List by filing s/claim as doc filed instead of summons). Matter should be closed. NB Pltf's solrs ... has filed a fresh S/claim today in the Registry. File closed."

There is no other record of what happened.

19 Part 32A, r 2 provides:

"2 (1) If no party to proceedings has, for over one year, taken any step in the proceedings that appears from records maintained by the Court, the Court may or its own motion dismiss the proceedings, or part of the proceedings, unless a party satisfies the Court that special circumstances exist that render it desirable that such an order should not be made.

(2) The Court may not make an order under subrule (1) without giving the parties a reasonable opportunity to be heard."


20 There is no evidence in the file of the Court having made an order for dismissal under Part 32A, r.2. All that has happened is that a member of the Registry staff has closed the file and placed it amongst the Court's inactive files. I reject the defendant's submission that there had been administrative action that amounted to a dismissal of the proceedings. In these circumstances it would be otiose for the Court to deal with the defendant's further submission that there was nothing that could be done to reverse the dismissal as no mechanism was provided for such a course to be taken. Counsel for the defendant relied upon Part 32A, r.3 which provides that a dismissal under r.2 does not prevent a party from bringing fresh proceedings or claiming in fresh proceedings relief that has been claimed in the dismissed proceedings. That tends to beg the question whether there has been a dismissal.

21 While it is clear from the file that no order dismissing proceedings has been made and that the administrative steps taken do not amount to a dismissal, I will add the following. Part 32A, r 2 contemplates an order dismissing the proceedings. Under Schedule E to the Court's Rules the Registrar may make an order for dismissal where that is unopposed. It could not be said in the present case where the solicitor attended to file a statement of claim in 20247/99 that the dismissal of the proceedings was unopposed. There is no evidence of an order being made by a Registrar, a Master or a judge. Orders should also be passed and entered. There is nothing in the file to suggest entry of any order of the Court.

22 As to the first count in the statement of claim in 20393/00 one hurdle that the plaintiffs face is s.9(3) of the Defamation Act 1974 which provides :

"(3) Where a person has brought proceedings (whether in New South Wales or elsewhere) for defamation against any person in respect of the publication of any matter, that person shall not bring further proceedings for defamation against the same defendant in respect of the same or any other publication of the same or like matter, except with the leave of the court in which the further proceedings are to be brought."

23 That section was construed by Hunt J in Spautz v Kirby (1989) 21 NSWLR 27. He held that the plaintiff may not bring the proceedings without leave and then subsequently obtain leave to do so and thereby validate the proceedings. He further held that "a failure to obtain the leave of the court in advance invalidates the action and renders it incapable of being revived by leave retrospectively given." That is probably obiter dicta. The principal point decided by Hunt J was that s.9(3) referred to civil proceedings but not to criminal proceedings. Hunt J further held that civil proceedings for defamation commenced after a prosecution for criminal defamation by a plaintiff (in respect of the publication of the same matter) had been stayed as an abuse of process, did not require a grant of leave under s.9(3). The decision of Hunt J was affirmed on appeal in Kirby v Spautz (1990) 21 NSWLR 34. The comments of the Court of Appeal were directed to the second and third points.

24 Counsel referred to s.9 of the report of the Law Reform Commission as to the law of defamation and especially paragraphs 41, 51 and 52. Paragraph 52 reads in part:

"... a person defamed should not have an uncontrolled liberty to sue a defendant whom he has already sued in respect of the same report, article, speech or other matter ... We do not, however, think that the second action should be automatically barred ...We propose that a second action should not be brought except by leave of the court."

25 Counsel's point was that s.9(3) of the Act was not intended to apply in circumstances such as the present. Counsel accepted that the court was controlled by the terms of the sub-section.

26 Counsel for the plaintiffs stated that he did not challenge the decision of Hunt J as it had been affirmed by the Court of Appeal in general terms. Counsel reserved the right to challenge the decision of Hunt J on whether leave could be granted retrospectively in an appellate court. I have some reservations as to the correctness of the decision of Hunt J when regard is had to other classes of important litigation where leave is granted nunc pro tunc. This would involve a consideration of a body of case law. A grant of leave nunc pro tunc would not defeat the object of s.9(3) as the Court would only grant leave in a proper case, for example, where the material appeared to be defamatory and there was an explanation such as ignorance of s.9(3) for not seeking leave. In the present case there is the further factor that leave was not required in respect of the July 1999 placement on the Internet. As the matter of leave nunc pro tunc was not argued it would be incorrect for me to pursue the matter. I have not overlooked that the plaintiffs sought leave to proceed.

27 As counsel for the plaintiffs did not wish to challenge the decision of Hunt J on the point of granting leave nunc pro tunc, the hurdle created by s.9(3) has not been surmounted by the plaintiffs. It is therefore not possible for this Court to grant the plaintiffs leave to proceed in proceedings 20393/00 in respect of the first count and the other relief sought in their motion in these proceedings. The most that could be done is to grant the plaintiffs leave pursuant to s.9(3) of the Defamation Act 1974 to bring proceedings against the defendant in terms of the statement of claim filed in 20393/00. Those proceedings would be fresh proceedings which the plaintiffs could institute, if so advised.

28 The defendant submitted that if, contrary to his submissions, life could be breathed into proceedings 20247/99 the Court should not do so for these reasons:


(a) nothing was done by the plaintiffs from 2 June 1999 to July/August 2000

(b) there was no explanation for such inactivity and delay and certainly no adequate explanation

(c) it was the deliberate choice of the plaintiffs to start a new action; they could have and did
not approach the Court for the requisite orders

(d) a cause of action was being added in respect of the July1999 placement on the Internet.


29 It is true that nothing appears to have been done from 2 June 1999 to July 2000 when steps were presumably taken to have a fresh statement of claim prepared. However, the other litigation would have tended to absorb much of the plaintiffs' attention. The plaintiffs preferred to continue in proceedings 20247/99 and started the new action because of the insistence of the Registry staff that a new action should be commenced. The basic problem in this case was the solicitor's lack of knowledge of the Court's rules and the correct procedure to be followed and her lack of knowledge of s.9(3) of the Defamation Act 1974 . Many practitioners would not be aware of that sub-section.

30 The plaintiffs wish to pursue their claims for damages arising out of the two placements on the Internet of arguably defamatory material. They are not statute barred. There is no point in requiring the plaintiffs to obtain leave under s.9(3) and commence a third action. That would add unnecessarily to costs and result in further delay.

31 The defendant has not adduced any evidence of incurable prejudice such as the death of a witness or material being lost. The defamatory material has been captured in a permanent form. The defendant has been aware since at least February 2001 that the plaintiffs intended to sue for damages in New South Wales in respect of the placements on the Internet in May 1999 and July 1999. The delay which has occurred, while regrettable, has occasioned no prejudice of any consequence to the defendant. The defendant can be compensated for the costs which have been wasted.

32 Counsel for the defendant contended that it was a moot question whether the placement on the Internet in the United States of America of arguably defamatory material accessible in New South Wales amounted to publication of the material in New South Wales. Counsel reserved the right to argue this point in an appellate court or at a later stage in the present proceedings. It was not a point to be argued at this stage.

33 As the defendant has exercised his right to apply to set aside the statement of claim on the grounds of the plaintiffs not obtaining leave under s.9(3) of the Defamation Act 1974 and the statement of claim not containing the endorsement under SCR Part 10, r.2A advising that he has such a right, it would be pointless to require re-service of the statement of claim with a notice advising him of the right which he has exercised. In these circumstances and having regard to the fact that a copy of the statement of claim was served on the defendant in February 2001 it would be a waste of time and money and serve no useful purpose to require further service of the statement of claim.

34 The plaintiffs' cases and the whole proceedings need to be put on a sound footing procedurally so that the substantive merits of the plaintiff's claims, including whether there has been publication in New South Wales can be litigated and resolved fairly, justly, expeditiously and with the minimum of expense to all parties. In view of s.9(3) of the Defamation Act 1974 it would be imprudent to consolidate the proceedings as suggested by the plaintiffs.

35 I make the following orders in proceedings 20247/99:

(1) Order, pursuant to SCR Part 5, r.11 that this action continue on pleadings.
(2) Order, pursuant to SCR Part 20, r.1 and all other powers thereunto enabling that the statement of claim deemed to be filed herein may include the second count arising out of the alleged publication by the defendant about July 1999 on the Internet of the material the subject of that count notwithstanding that such cause of action arose after the issue of the summons herein.


(3) Order that the statement of claim filed in proceedings 20393/00 be deemed to be the plaintiffs' statement of claim in these proceedings.

(4) Dispense with further service of the statement of claim deemed to be filed in these proceedings.

(5) Pursuant to SCR Part 10, r.2B and SCR Part 20, r.1 and all other powers thereunto enabling order that the statement of claim deemed to be filed herein be amended to include a statement that the plaintiffs intend to proceed under the Supreme Court Rules 1970.

(6) List the matter before me for further directions on Friday, 12 April 2002 at 9.30 am or at such other time as may be arranged.

36 I make the following order in proceedings 20393/00:
(1) The proceedings be stayed pending further order.
37 Costs

Many of the difficulties have arisen because the rules as to procedure were not followed by the plaintiffs and the solicitor was not aware of s.9(3) of the Defamation Act 1974 . The defendant sought to take advantage of these mistakes. The course he proposed would have involved a third set of proceedings being instituted with leave being obtained under s.9(3) of the Defamation Act . The defendant sought an outcome and advanced submissions which I have rejected. I order that the costs of these applications be the defendant's costs in the cause.

38 The Future I have not made the usual consequential orders for the filing of a defence as counsel for the defendant may wish to proceed with some of the other applications which have been foreshadowed. On 12 April 2002 I expect the defendant to be able to tell the Court which further applications, if any, he desires to pursue and whether the evidence as to them is complete so that a further hearing date may be set. Similarly, I expect the plaintiffs to be able to advise what they wish to do and whether their evidence is complete. I would be prepared to deem the motions filed by the parties in 20393/00 as being filed in 20247/99.

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Last Modified: 04/08/2002