Palace Films Pty Ltd v Fairfax Media Publications
[2011] NSWSC 1358
•08 September 2011
Supreme Court
New South Wales
Medium Neutral Citation: Palace Films Pty Ltd v Fairfax Media Publications [2011] NSWSC 1358 Hearing dates: 08/09/2011 Decision date: 08 September 2011 Jurisdiction: Civil Before: Garling J Decision: (1) Amended Category 10 subpoena upheld and made returnable on 12 September 2011.
(2) Notice of Motion otherwise upheld and subpoenas set aside.
(3) The costs of this motion will be costs in the cause of the motion to be heard before Justice McCallum on 12 September 2011.
Catchwords: PRACTICE AND PROCEDURE - Defamation - Uniform Civil Procedure Rules - Rule 33.4 - Notice of motion to set aside interlocutory subpoenas - Whether subpoenas an abuse of process - No legitimate forensic issue identifying any non-plaintiff company subject to any defamatory imputation - No legitimate forensic question that plaintiff is not an excluded company without adducing evidence that such an issue exists - Subpoenas set aside except for one amended subpoena containing legitimate purpose - Costs in the cause when motion heard Legislation Cited: Corporations Act 2001 (Cth)
Defamation Act 2005
Uniform Civil Procedure Rules 2005Category: Interlocutory applications Parties: Palace Films Pty Ltd (P1)
Antonio Zeccola (P2)
Benjamin Zeccola (P3)Applicants seeking orders - Balwyn Cinema Holdings Pty Ltd; Palace Enterprises Pty Ltd, Palace Cinema Management Pty Ltd; Palace Cinema Nominees Pty Ltd; Dendy Cinema Brighton (Vic) Pty Ltd
Fairfax Media Publications Pty Ltd (D1)
Brian Rosen (D2)
Michaela Boland (D3)
Screenhub Pty Ltd (D4)
John Paxinos (D5)
Alexander Prior (D6)Representation: Counsel:R Rasmussen (P1 and Applicants)
A Dawson (D1-D3)
Solicitors:
Millens Pty Ltd, Lawyers by their Sydney agents, Patterson Houen & Commins (P1-P3 and for the Applicants seeking orders)
Banki Haddock Fiora (D1-D3)
Kennedys (Australasia) Pty Ltd Lawyers (D4-D6)
File Number(s): 2009/00297851 Publication restriction: NIL
ex tempore Judgment - Notice Of Motion
HIS HONOUR: This is a notice of motion brought by the first plaintiff and five other companies in which the applicants together seek orders of the Court setting aside subpoenas which have been addressed by the defendants to each of the applicants other than the first plaintiff.
Some history of the current proceedings is necessary.
The first plaintiff, Palace Films Pty Limited, together with two other plaintiffs, Antonio and Benjamin Zeccola, bring proceedings against the three defendants, Fairfax Media Publications Pty Limited, Brian Rosen and Michaela Boland, claiming damages for defamation arising out of a publication which is said to have occurred on 15 July 2009 and, as well, by earlier communications between the three defendants.
The allegedly defamatory material that was published on 15 July 2009 is annexed to the Second Further Amended Statement of Claim, and addresses itself to matters concerning the distribution of films and, putting it generally, the lack of timely payment by film distributors to film producers. It also deals with the resultant financial position in which film producers find themselves.
The first plaintiff pleads that it was the subject of the article and that there are a number of defamatory imputations which arise from the article and which refer to it. It also pleads that in accordance with s 9 of the Defamation Act 2005 it is not prohibited from bringing the defamation proceedings because it is an excluded corporation.
The matter is being managed in the Defamation List.
On 18 August 2011, leave having been granted so to do, the defendants filed a notice of motion which is returnable next Monday, 12 September 2011, seeking the following orders:
"1. That the first plaintiff's claim be dismissed pursuant to r 13.4 of the Uniform Civil Procedure Rules 2005 on the basis that it discloses no reasonable cause of action and/or is an abuse of process.
2. Alternatively, the first plaintiff's claim be struck out pursuant to r 14.2.8 of the Uniform Civil Procedure Rules 2005 on the basis that it discloses no reasonable cause of action and/or is an abuse of process."
Other orders which are not directly in point are also sought.
It is appropriate to mention here, that one of the alternative orders which the defendants seek raises a question as to whether the first plaintiff, Palace Films Pty Limited, has been named by mistake for another party, Palace Enterprises Pty Limited. Mr Rasmussen, of counsel who appears today for the first plaintiff and also for Palace Enterprises Pty Limited, informs the Court that there is no mistake in the name of the plaintiff and that the choice of Palace Films Pty Limited as the first plaintiff is an intentional, and not mistaken, choice. Accordingly, as I see it, Order 4 in the Notice of Motion will no longer be relevant when the Motion is heard.
The defendants purportedly, in preparation for the hearing of the Motion, have served a subpoena to produce documents on each of the applicants other than the first plaintiff. The subpoena to produce documents is in each case identical. It requires the production of ten categories of documents. They are in the following form:
The documents or things you must produce are as follows:
1 A copy of any annual financial reports for Palace Cinema Management Pty Ltd ("the Company") for the period 1 July 2000 to date;
2 A copy of the Company's annual tax returns for the period 1 July 2000 to date;
3 A copy of the Company's Registers for the period 1 July 2000 to date;
4 A copy of the Company's Constitution and/or Articles;
5 Documents which record or evidence the number of persons employed and/or engaged by the Company as at 15 July 2009;
6 A copy of the Company's letterheads and/or email sign-offs used during the period 1 July 2000 to date;
7 Documents which record or evidence the identity of the Company's parent company, subsidiaries or any other related bodies corporate;
8 Documents which record or evidence the ownership and/or use of the business/trading name "Palace Films";
9 Documents which record or evidence the ownership and/or use of the business/trading name "Palace Cinemas";
10 A copy of each contract for the financing and/or distribution by the Company of Australian feature films during the period 1 July 2000 to date, including but not limited to:
(a) Lantana;
(b) Japanese Story;
(c) Ten Canoes;
(d) Chopper;
(e) Kokoda;
(f) The Caterpillar Wish;
(g) Elise (also known as Closed for Winter);
(h) To Hell and Back (also known as Stone Bros).
The notice of motion brought by the applicants, which was filed on 2 September 2011 and made returnable before me as the Duty Judge, seeks an order pursuant to r 33.4(1) of the Uniform Civil Procedure Rules 2005, setting aside the entirety of each of the subpoenas. It nominates the following as the basis for that motion:
"On the grounds that the subpoenas are an abuse of the processes of the Court in that they:
1. are not issued for a legitimate forensic purpose;
2. constitute inadmissible fishing; and
3. are oppressive."
The applicants filed no evidence in support of that notice of motion which relates in any way to any difficulty that they may have in identifying the documents, finding them, obtaining them and bringing them to court in answer to the subpoena. Rather, the applicants submit to me, through their counsel, that the terms in which each of these categories is phrased, together with the issues which are probably likely to arise on the hearing of the defendants' motion before Justice McCallum on 12 September 2011, combine to demonstrate that the subpoenas are an abuse of process as they do not give rise to any legitimate forensic purpose and are, in effect, a fishing exercise.
The defendants sought to justify the issuing of these subpoenas by pointing to the issues which they contend legitimately arise in the motion which is to be heard before McCallum J. The defendants contend that amongst the issues that are likely to arise on that hearing are these: first, whether the first plaintiff is or is not an excluded corporation, secondly, whether the first plaintiff in fact is engaged in, or has been at any time since 2002 engaged in, the distribution of films and, thirdly, whether there are other companies which carry names including the word "Palace" and which are in concurrent ownership with the first plaintiff, which are, in fact, engaged in distribution of films.
The reason these issues are said to be relevant to the hearing of the motion before McCallum J is because the defendants intend to submit to her Honour that the basis for their motion of summary dismissal is that the material complained of is not capable of identifying the first plaintiff as being the subject of any defamatory imputations and, secondly, that the first plaintiff is not an excluded company.
Part of the factual material tendered to this Court includes a letter from Millans, the legal advisers to the first plaintiff, addressed to the solicitors for the defendants. It is dated 26 August 2011 and includes the following statements:
"Business names extract for Palace Cinemas: Palace Films Pty Limited does not trade under this business name. 'Palace Films' is not a registered business name."
The letter also includes the following statements:
"We also comment as follows:
1. As Palace Films Pty Limited has never traded there are no annual financial reports and tax returns for it for the period from 1 July 2000 to date, nor are there any letterhead or email sign offs.
2. There are no documents which show the number of employees employed or engaged by Palace Films Pty Limited as at 15 July 2009. The only two employees are the two directors, who do not receive a wage from Palace Films Pty Limited.
3. There are no related bodies corporate to Palace Films Pty Limited as all shares are held by Antonio and Karen Zeccola.
4. Palace Films Pty Limited has not entered into any agreements for the financing and/or distribution of Australian feature films during 1 July 2000 to date."
The question of whether Palace Films Pty Limited, the first plaintiff, has engaged in distribution of films is somewhat complicated by an earlier letter sent by the first plaintiff's solicitors on 16 August 2011 to the solicitors for the defendant. In that letter from the solicitors acting for the first plaintiff, the following is recorded:
"We note that the first plaintiff is not directly involved in the Palace Films distribution business."
The reference in that letter to the phrase "Palace Films distribution business" is, so it seems to me, a reference to other companies of which Mr Antonio Zeccola is either a shareholder or director, and which include the applicants on this motion.
On the identification issue, counsel for the defendants submits that the defendants are entitled to adduce evidence on their motion which covers the proposition not just that the first plaintiff is not engaged in film distribution and therefore, is not identified by the allegedly defamatory material, but that there are other associated companies which are engaged in that distribution.
For my part, I do not think that this is necessarily correct. An article is always capable, as a matter of theory, of identifying more than one person. It is a question of fact ultimately for a jury to determine whether the article in fact identifies the party who or which has commenced the proceedings. The issue for the Court is, as I have said, whether, as a matter of law, the material published and about which complaint is made, is capable of identifying the first plaintiff.
I do not think it is relevant to that exercise to engage in the exercise of demonstrating that, within a loose association of companies, another organisation is in fact responsible for the distribution. That issue may well be relevant at trial but not, as I see it, on the motion to be heard by this Court next week.
Accordingly, I would not be prepared to uphold the subpoenas on the basis that they go to any legitimate forensic issue relating to that motion which relates to the undertaking or distribution by companies other than the first plaintiff.
On the other hand, I am satisfied in light of the language used by the plaintiffs' solicitors suggesting, contrary to other language used, that the first plaintiff may be indirectly involved in the film distribution business, that it is legitimate for the defendants to have access to the distribution agreements and contracts in relation to the films set out in paragraph 10 of the subpoenas.
The reason for that is that the films identified in paragraph 10 are in fact mentioned in the publication sued upon, and it seems to me to be relevant for the entirety of those documents to be produced.
Other than that, I am not persuaded that these subpoenas are anything other than a fishing expedition and they do not in my mind raise any issue relevant to the determination of the motion to be heard in court next week.
The second issue which remains to be determined, is whether the issue of the first plaintiff being an excluded company can be addressed by the subpoena in advance of the hearing of the motion. It is simply an issue of fact as to whether the company is or is not excluded within the meaning of the statute. There is no question of law, as it seems to me, involved in that discussion or finding.
The questions which relate to whether or not a company is or is not excluded are - the terms of its objects, whether within the meaning of s 9 of the Defamation Act it employs fewer than ten persons, and, whether in accordance with s 9 of the Defamation Act and s 50 of the Corporations Act 2001 (Cth) it, the first plaintiff, is related to another corporation.
If this is a basis to strike out the pleading at this stage, then the defendants will have to prove that the company is not an excluded corporation as a matter of fact and that such a matter of fact, is beyond reasonable dispute. It adduces no evidence on this motion which casts any doubt whatsoever on the status of the company as an excluded corporation. On the contrary, the tender by the defendants of corporate searches of the first plaintiff and other associated companies demonstrates that the evidence persuasively tells against it being a related corporation for the purposes of s 50 of the Corporations Act . It tenders no evidence to show that at any time the first plaintiff employed anyone.
Whilst it is always open to the defendants to argue, when this matter is before the Court, that the first plaintiff is not an excluded corporation, and whilst I do not make any decision one way or the other about that, the fact is on the material presented to me there is not one fact which points to, or even vaguely in the direction of, there being any issue giving rise to a legitimate forensic question as to whether this company is or is not an excluded corporation.
I would not be prepared to uphold the subpoenas insofar as they are addressed to the issues raised by s 9 of the Defamation Act because it does not seem to me to be a legitimate forensic issue. As well, the terms of categories five, six and seven are so vague and broad as to be meaningless and liable to be struck out in any event.
This Court has said on many occasions that subpoenas are not to be used for the purpose of discovery against a third party. The category of subpoena which says, for example, "Documents which record or evidence any facts", have regularly been held to be documents which require a third party to engage in a process of discovery. The categories of documents by which the defendants seek the production of records relating to the excluded corporation status are not, on their face, capable of being upheld.
The result of this, with very truncated reasons having regard to the limited time available, is that I would not be prepared to make the orders sought in the notice of motion in their entirety because those orders seek to set aside the entirety of the subpoenas. I am not satisfied I should set aside the subpoenas insofar as category 10 refers to a copy of each contract for the financing or distribution by the relevant companies to whom the subpoenas are addressed, of Australian feature films during the relevant period 1 July 2000 to date.
However, I would delete the words from that category as they presently appear, "including but not", so that the category would read, "A copy of each contract for the financing and/or distribution by the company of Australian feature films during the period 1 July 2000 to date, limited to", and then the eight named films.
I would, therefore, propose to make an order that a subpoena amended in that way be returnable on Monday and that the documents be produced, but I would otherwise uphold the motion, that the subpoenas ought to be set aside.
The parties are in dispute about the issue of the costs on the motion. The ordinary rule of the Court is that costs follow the event unless the Court makes some other order. The defendants submit that although largely unsuccessful, they should have an order for costs in their favour because of the delinquency of the first plaintiff and applicants in providing to them, in effect, all the grounds upon which they relied to bring this motion.
The applicants and first plaintiff claim an order for costs on the basis that they were substantially successful and that having regard to the course of correspondence, the defendants were on notice of the substance of what would be sought.
In my view neither party has conducted themselves well in this aspect of this litigation.
There has been what seems to me inadequate communication and inadequate attention by both parties to identifying the real issues in dispute on this motion. I think the proper order I should make will depend upon the outcome of the motion which her Honour is to hear.
Accordingly, the costs of this motion will be costs in the cause of the motion to be heard before McCallum J on 12 September.
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Decision last updated: 10 November 2011
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