Papaconstuntinos v Holmes à Court

[2006] NSWSC 945

CITATION:	Papaconstuntinos v Holmes a Court & Anor [2006] NSWSC 945
HEARING DATE(S):	11 September 2006
JUDGMENT DATE :	15 September 2006
JUDGMENT OF:	Simpson J
DECISION:	Amended summons dismissed with costs.
CATCHWORDS:	defamation - preliminary discovery - foreshadowed defamation action - documents that might provide plaintiff with further cause of action - documents that might enable evaluation of potential defences to claim - what plaintiff needs to establish - nature of relief - what constitutes reasonable inquiries - purpose of UCP r 5.3
LEGISLATION CITED:	Federal Court Rules - Order 15A r 6 Uniform Civil Procedure Rules 1995 r 5.3(1), r 5.3(3)
CASES CITED:	Alphapharm Pty Ltd v Eli Lilly Australia Pty Ltd, unreported, FCA, 24 May 1996 CGU Insurance Ltd v Malaysia International Shipping Corporation Berhad [2001] FCA 1223; 187 ALR 279 Panasonic Australia Pty Ltd v Ngage Pty Ltd [2006] NSWSC 399 Riddick v Thames Board Mills Ltd [1977] 1 QB 881
PARTIES:	Tony Papaconstuntinos - Plaintiff Peter Holmes à Court - 1st Defendant Shane Richardson - 2nd Defendant
FILE NUMBER(S):	SC 2006/13261
COUNSEL:	R Weaver - Plaintiff R McHugh - Defendants
SOLICITORS:	Slater & Gordon - Plaintiff Baker & McKenzie - Defendants

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION
DEFAMATION LIST

SIMPSON J

Friday 15 September 2006

2006/13261
Tony Papaconstuntinos v Peter Holmes à Court & Anor

JUDGMENT

1 HER HONOUR: UCPR r 5.3(1) provides:

“5.3 Discovery of documents from prospective defendant

(cf Federal Court Rules, Order 15A, rules 6, 7 and 9)

(1) If it appears to the court that:
(a) the applicant may be entitled to make a claim for relief from the court against a person (the prospective defendant) but, having made reasonable inquiries, is unable to obtain sufficient information to decide whether or not to commence proceedings against the prospective defendant, and
(b) the prospective defendant may have or have had possession of a document or thing that can assist in determining whether or not the applicant is entitled to make such a claim for relief, and
(c) inspection of such a document would assist the applicant to make the decision concerned,
the court may order that the prospective defendant must give discovery to the applicant of all documents that are or have been in the person’s possession and that relate to the question of whether or not the applicant is entitled to make a claim for relief.”

2 By summons, originally filed on 7 June 2006, and amended on 9 August 2006, the plaintiff seeks orders under r 5.3(1) against each of two named defendants, Peter Holmes à Court and Shane Richardson. The orders he seeks are that each defendant give discovery of:

“(a) all documents, memoranda and records whether electronic or hard copy, that are or have been in their possession, custody or power relating the publication and distribution of a letter dated 17 March 2006 a copy of which is annexed hereto and marked ‘A’ and any responses thereto.
(b) all documents, including correspondence, memoranda and telephone records of each of the defendants and the South Sydney District Rugby League Football Club relied upon and/or considered by the first defendant in the conduct of the due diligence referred to in the letter marked ‘A’ hereto that was undertaken by or on behalf of the first defendant and/or White Bull Holdings Pty Limited.
(c) all documents, including correspondence, memoranda and telephone records of each of the defendants and the South Sydney District Rugby League Football Club relating to the employment by that Club of Jamie Papaconstuntinos (Jamie Papa) between January 2005 and 30 March 2006.”

3 By r 5.3(3), unless the court otherwise orders, such an application must be supported by an affidavit stating the facts on which the applicant relies and specifying the kinds of documents in respect of which the order is sought.

4 Two affidavits, each sworn by the solicitor for the plaintiff, Mr Steven Lewis, have been filed. In the first Mr Lewis deposed, inter alia, that “on the grounds appearing herein” the plaintiff and the first and second defendants were likely to be parties to an action for defamation in this court. Mr Lewis went on to depose that the plaintiff was at all material times an officer of the Construction, Forestry, Mining and Energy Union (“the CFMEU”) and a member of the board of the South Sydney District Rugby League Football Club (“the Souths Football Club”); that the first defendant was at all material times a Director of White Bull Holdings Pty Limited, a company which had acquired a controlling interest in the Souths Football Club; and the second defendant was at all material times the Chief Executive Officer of the Souths Football Club. Mr Lewis recounted a history of a campaign for control of the Souths Football Club.

5 Annexed to the affidavit was a letter, dated 17 March 2006, over the hand of the first defendant, addressed to Mr Andrew Ferguson, who is identified as the Secretary of the CFMEU. The letter opened with this paragraph:

“Pursuant to our conversations recently, I would like to formally complain about the behaviour of an official of the CFMEU, Mr Tony Papa.

(There was no issue that the reference to “Mr Papa” was a reference to the plaintiff.) The first defendant then went on to write:

“I have spoken to you previously about my concerns about Mr Papa’s use of the South Sydney District Rugby League Football Club for his own advancement and I am afraid I am under the impression that it has continued.
As recently as last weekend, half an hour before the kick off of the Rabbitohs-Roosters match, Mr Papa called at least one voting SSDRLFC Member to repeat misleading information about the proposal which is being put to Members.
I am, frankly, at a loss to understand why Mr Papa has worked so hard to spread misinformation about our proposal.
…
Perhaps most seriously, I am concerned that Mr Papa has personally benefited from funds meant for the Football Club through the employment of his son Jamie in an assistant coaching staff position. Jamie Papa was employed by the club by Mr George Piggins in an assistant coaching position and his employment was terminated by Shane Richardson when Mr Richardson became aware of the overpayments.
Having reviewed the accounts of the club, reconciled Mr Papa’s CV and job description with other coaching staff, and having personally interviewed senior members of the management of the Club, there is no doubt in my mind that Mr Jamie Papa was paid a salary many times the going salary for a person of his experience and for the position that he was performing. Specifically, Mr Jamie Papa was paid a salary of approximately $60,000 when the going rate for the role he was performing was closer to $4,000. I do not know whether these funds that were paid to Mr Papa at a premium were a reward for other activities, or a method of channelling funds to the CFMEU, or indeed to Mr Tony Papa.
…”

6 The first defendant sought the assistance of the addressee in checking the asserted facts, which, he said, were based on:

“… our very extensive due diligence of the Football Club’s records …”

7 It is the content of this letter that is the basis for the foreshadowed defamation action. It was not disputed that there was material in this letter which could give rise to a claim in defamation by the plaintiff against the first defendant.

8 To the second affidavit Mr Lewis annexed correspondence between his firm of solicitors and the solicitors acting for the defendants. The correspondence began with a letter from the defendants’ solicitors pointing out that the summons as initially filed claimed relief under r 5.2, which relates to discovery to ascertain the identity or whereabouts of a prospective defendant. This drew a response, the solicitor for the plaintiff acknowledging the error and signifying his intention to seek leave to amend the summons to bring the claim under r 5.3. He followed that with this (to me rather puzzling) statement:

“However we will treat your letter as an invitation for your clients to give verified discovery.”

9 In his first affidavit Mr Lewis deposed:

“10 The documents [i.e. those which he inferred from the first defendant’s letter were in the possession of one or other or both of the defendants] bear potential relevance to the nature and extent of the publication of the defamatory material contained in the letter and the likely existence of further material defamatory of the plaintiff ”
“11 Without preliminary discovery of the relevant documents, the plaintiff stands to be seriously prejudiced in the preparation and presentation of any action he may bring to vindicate his reputation and/or protect his reputation against further attack .” (italics added)

10 He asserted that preliminary discovery was necessary because of a rule confining the use of subsequently discovered materials to the purpose for which they have been produced on discovery, and restricting the use that might otherwise be made of documents so produced. Riddick v Thames Board Mills Ltd [1977] 1 QB 881 was cited as authority for the proposition. No Australian authority was cited, but the existence of such a rule was not disputed.

11 During the course of oral argument the basis on which the claim is made was spelled out as twofold:

(i) to obtain any additional documents which might provide a further cause of action to the plaintiff; and
(ii) to enable the plaintiff to evaluate the availability to the defendants of any potential defences to a claim.

12 So far as this court is concerned, r 5.3 confers a power broader in its scope than any it had under the Supreme Court Rules, which preceded the UCPR. That scope is, so far, untested.

13 The counterpart of r 5.3 in the Federal Court Rules (which is not in identical terms) has been the subject of some judicial consideration. I accept that decisions on that rule, save where it can be shown that there is divergence in the substance between the two rules, are of guidance in the interpretation of r 5.3. The Federal Court rule is as follows:

“ FEDERAL COURT RULES – ORDER 15A RULE 6
Discovery from prospective respondent

Where:

(a) there is reasonable cause to believe that the applicant has or may have the right to obtain relief in the Court from a person whose description has been ascertained;

(b) after making all reasonable inquiries, the applicant has not sufficient information to enable a decision to be made whether to commence a proceeding in the Court to obtain that relief; and

(c) there is reasonable cause to believe that that person has or is likely to have or has had or is likely to have had possession of any document relating to the question whether the applicant has the right to obtain the relief and that inspection of the document by the applicant would assist in making the decision;

the Court may order that that person shall make discovery to the applicant of any document of the kind described in paragraph (c).”

14 Analysis of the UCP rule shows that an order may not be made against either defendant unless, in relation to that defendant, the court is satisfied of five separate matters. They are:

(i) that the plaintiff may be entitled to make a claim against that defendant;
(ii) that the plaintiff has made reasonable enquiries;
(iii) that, notwithstanding that the plaintiff has made reasonable enquiries, he/she is unable to obtain sufficient information to decide whether or not to commence proceedings against that defendant;
(iv) that that defendant may have, or may have had, possession of a document or thing that could assist in determining whether or not the plaintiff is entitled to make such a claim for relief;
(v) that inspection of that document would assist the plaintiff to make a decision (whether to commence proceedings).

15 In Alphapharm Pty Ltd v Eli Lilly Australia Pty Ltd (unreported, FCA, 24 May 1996), at [41] Lindgren J set out a number of propositions concerning the application of the rule. Relevantly for the present case, his Honour held that paragraphs 6(a) and 6(c) of the Federal Court rule pose objective tests, although the paragraph 6(b) test also contains a subjective element. These paragraphs are the equivalent of what is identified above as (i), (iv) and (v).

16 Significantly, Lindgren J observed, in the proposition numbered 6, held that the questions posed by the Federal Court rule:

“are to be answered in the context of an adversary system of forensic contest in which a proposed respondent is ordinarily entitled to withhold its evidence, certainly prior to the commencement of proceedings.”

Further, the questions are to be answered in the light of the nature of the cause of action contemplated and the range of information potentially available in respect of a cause of action of that kind. He rejected a submission made on behalf of the respondent in that case that the rule was rendered unavailable where the applicant already had available evidence establishing a prima facie case for the granting of relief. Such a construction would, he held, “impose an artificial constraint” on the rule:

“not supported by its terms or its purpose to exclude, a priori , all cases in which the insufficiency of the information possessed by the applicant to enable a decision to be made whether to litigate is due to a matter of ‘defence’ which would defeat the prima facie case.”

17 I take this to mean that Lindgren J was of the view that the power conferred by the rule is available to be invoked by a potential plaintiff who, it can be seen, on the information and material already in his/her possession, has, prima facie, a cause of action, but who wishes to explore, before embarking on the action, potential defences available to the proposed defendant. In CGU Insurance Ltd v Malaysia International Shipping Corporation Berhad [2001] FCA 1223; 187 ALR 279, Tamberlin J adopted the same view, and, in the context of the case before him, distinguished between making some enquiries and making all reasonable enquiries (as required by the Federal Court rule). That, however, has little application to the rule here under consideration because this is one of the distinguishing features between the two rules. The Federal Court rule makes the power available after “all reasonable enquiries” have been made; the UCP rule merely requires that “reasonable enquiries” be shown to have been made. In this Court Young CJ in Eq has taken the view that the UCP rule is wider than that of the Federal Court: Panasonic Australia Pty Ltd v Ngage Pty Ltd [2006] NSWSC 399.

18 It is also to be noted that, even if the plaintiff takes all of the five hurdles, the power to make an order remains discretionary: see Alphapharm, proposition 5.

19 The purpose for which the power is conferred by r 5.3 is stated within sub-paragraph (a). It is:

“to obtain sufficient information to decide whether or not to commence proceedings against the prospective defendant …”

20 These questions are also to be considered against the background of the nature of the relief made available by r 5.3. This is, before any substantive proceedings have been commenced, to require a prospective defendant to give discovery of documents that are or have been in the prospective defendant’s possession and that relate to the question of whether or not the plaintiff is entitled to make a claim for relief. This is potentially an extremely demanding task and a considerable imposition upon a defendant. Depending upon the specificity with which the documents ordered to be discovered are identified, it may require the prospective defendant to make an assessment of the potential relevance of documents or other things to putative proceedings that have not yet been formulated. It may require a very lengthy and detailed examination of documents and records. It is not a power to be exercised lightly. It is, no doubt, for that reason that the power is not to be exercised unless and until the plaintiff has been shown to have made reasonable enquiries otherwise.

21 It is important to remember that two separate claims, independent of each other, are here made: one against the first defendant, and one against the second. They are to be treated separately. The outcome of the application will not necessarily be the same in each case. Each has to be assessed on its own merits.

22 Counsel who appeared for both defendants did not contend that the plaintiff had not established, as against the first defendant, that he might be entitled to make a claim for relief (in defamation). Having regard to the contents of the letter I have set out above, I am amply satisfied that the plaintiff may be so entitled so far as the first defendant is concerned.

23 Such a concession was not, however, made, either explicitly or implicitly, so far as the second defendant is concerned. It was argued that the plaintiff has not met the relevant standard. In written submissions it was put that there was nothing other than the assertion in the affidavit that the plaintiff may be entitled to make such a claim against the second defendant.

24 I accept this contention. All that was said about the second defendant in the letter was that he terminated the employment of the plaintiff’s son when he learned that he (Jamie Papa) had been overpaid. As a consequence the first defendant, in the letter, then queried the purpose of the payments of those funds to Mr Papa Jnr. There was no suggestion that the second defendant was involved in the overpayments; just the opposite, in fact, since the allegation made in the letter was that he terminated them on becoming aware of them.

25 There is nothing in the letter, and nothing else in the evidentiary material, which would enable me to be satisfied that the plaintiff may be entitled to make a claim for relief against the second defendant. The claim against him fails at the threshold. So far as he is concerned, it is unnecessary to consider the remaining questions.

26 So far as the first defendant is concerned, the next questions are whether the plaintiff has established that he has made reasonable enquiries, and, if so, that those enquiries have failed to yield sufficient information.

27 Counsel for the plaintiff essentially conceded that no enquiries had been made prior to the issue of the summons, but argued that the subsequent correspondence remedies the defect. I accept that the relevant time is the time the court is considering the application. If reasonable inquiries have not been made prior to the filing of the application, but are made prior to hearing, an order may nevertheless be made. Counsel relied upon that part of the plaintiff’s solicitors’ letter to the defendants’ solicitors stating that they would treat the defendants’ solicitors’ letter as an invitation for the defendants to give verified discovery. I do not see that this in any way remedies the deficiency. The other point counsel made was that enquiries would be likely to be futile, thus obviating the need to make them. I am not satisfied that this has been shown to be the case. The inquiries required by the rule are not limited to inquiries made of the prospective defendant(s).

28 I am not satisfied that the plaintiff has met the test of reasonable enquiries.

29 It follows that the plaintiff has not satisfied the next test, that, following the making of reasonable enquiries, he has been unable to obtain sufficient information to make the necessary decision.

30 Nor am I satisfied that the plaintiff has established that the first defendant may have in his possession documents that may assist him in determining whether or not to proceed with the proposed litigation.

31 This raises another question, which arose during the course of argument, but was not taken up on behalf of the defendants, and was not fully explored. The views which follow are, therefore, tentative. However, I should express my concern at the notion, plainly held by the plaintiff’s legal representatives, that r 5.3 discovery is available for the purpose of identifying causes of action additional to that which provides the foundation for the application made to the court under r 5.3(1). That, it seems to me, is contradicted by the words “whether or not the applicant is entitled to make such a claim for relief” in sub-para (b).

32 On behalf of the defendants the point was taken that the plaintiff’s expressed desire for access to the documents is for the purpose of the preparation and presentation of any action he may bring to vindicate his reputation and/or protect his reputation against further attack. This was characterised as a misconception. I agree. The rule is directed to determination of whether or not to convene proceedings. Preparation and presentation of a case once commenced does not appear to me to be a purpose that comes within the rule; that is of a function of discovery after suit, and not a function of preliminary discovery. I accept the defendant’s contentions in this respect.

33 The defendants also complained of the scope of the documents sought in the summons. Having regard to what I have said about the potentially demanding nature of any orders made under the rule, I consider that there may well be some substance in this complaint. However, it is not necessary to decide whether relief ought, if granted, be more limited than is mentioned in the orders as drawn.

34 The amended summons will be dismissed with costs.

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