Poland v Hedley [No 2]
[2020] WASC 203
•11 JUNE 2020
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: POLAND -v- HEDLEY [No 2] [2020] WASC 203
CORAM: LE MIERE J
HEARD: 16 APRIL 2020
DELIVERED : 11 JUNE 2020
FILE NO/S: CIV 1370 of 2019
BETWEEN: GREGORY DAVID POLAND
Plaintiff
AND
KATE HEDLEY
First Defendant
FAIRFAX DIGITAL AUSTRALIA & NEW ZEALAND PTY LTD
Second Defendant
Catchwords:
Practice and procedure - Application for leave to amend writ of summons - Rules of the Supreme Court 1971 (WA) - Order 21 r 5(2) - Principles applying to applications for leave to amend writ - Case management principles - Whether a claim has no real prospect of success - Arguments on unsettled law
Legislation:
Rules of the Supreme Court 1971 (WA)
Surveillance Devices Act 1998 (WA)
Result:
Plaintiff given leave to amend writ of summons
Category: B
Representation:
Counsel:
| Plaintiff | : | Mr M L Bennett & Mr A Tharby |
| First Defendant | : | Mr M C Goldblatt |
| Second Defendant | : | Mr M C Goldblatt |
Solicitors:
| Plaintiff | : | Bennett + Co |
| First Defendant | : | Carmel Galati |
| Second Defendant | : | Carmel Galati |
Case(s) referred to in decision(s):
Agar v Hyde (2000) 201 CLR 552
Baldry v Jackson [1976] 2 NSWLR 415
Belgravia Nominees Pty Ltd v Lowe Pty Ltd (2017) 51 WAR 341
Berry v British Transport Commission [1962] 1 QB 306
Boase v Axis International Management Pty Ltd (No 2) [2012] WASC 334
British Motor Trade Association v Salvadori [1949] Ch 556
Courtney v Our Lady's Hospital Ltd [2011] IEHC 226
Dey v Victorian Railways Commissioners (1949) 78 CLR 62
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125
Hathaway v Barrow (1807) 1 Camp 151
Lonrho Plc v Fayed (No 5) [1993] 1 WLR 1489
Playboy Club London Ltd v Banca Nazionale del Lavora SpA [2019] EWHC 303 (Comm)
Seavision Investment SA v Evennett (The Tiburon) [1992] 2 Lloyd's Rep 26
Tate & Lyle Food Distribution Ltd v Greater London Council [1982] 1 WLR 149
Wigan v Edwards (1973) 47 ALJR 586
LE MIERE J:
Summary
The plaintiff has applied to amend his writ of summons in terms of the minute of proposed re‑amended writ of summons filed 14 January 2020 (draft amended writ) to add a new cause of action for conspiracy. At the request of the defendants, the plaintiff filed a minute of proposed re‑amended statement of claim (the draft amended SOC) which contains the allegations the plaintiff proposes to make in his re‑amended statement of claim if he is given leave to amend the writ in terms of the draft amended writ.
The defendants oppose the plaintiff having leave to amend the writ. Their objection to the draft amended writ is based upon deficiencies they allege in the plaintiff's draft amended SOC.
For the reasons which follow the plaintiff will be given leave to amend his writ of summons in terms of the draft amended writ.
The existing writ
The first defendant (Ms Hedley) is and was at all material times a journalist and deputy editor of WAtoday, an internet news business conducted by the second defendant (Fairfax Digital), which at all material times maintains the WAtoday website. The third defendant, Mr Hondros, is and at all material times was a journalist employed by Fairfax Digital as WAtoday's political reporter.
The plaintiff's claims concern articles written by Ms Hedley and Mr Hondros and published by Fairfax Digital on its website on 27 and 28 February 2019 (the Articles). The plaintiff says each of the Articles defamed him. The plaintiff's existing claim is for damages for defamation and a permanent injunction.
The proposed amendments
The plaintiff proposes to amend the writ to add a new cause of action for the tort of conspiracy by the defendants to injure the plaintiff by unlawful means. The plaintiff claims that the defendants' publication of the Articles was unlawful in that the defendant knowingly published, alternatively knowingly published a report of, a private conversation that came to their knowledge as a direct or indirect result of the use of a listening device, in breach of s 9(1) of the Surveillance Devices Act 1998 (WA), and the Articles were published by the defendants in furtherance of a conspiracy between them to injure the plaintiff and the plaintiff suffered economic loss as a result of the defendants' unlawful conduct.
Court may give leave to amend writ
Order 21 r 5(2) of the Rules of the Supreme Court 1971 (WA) (RSC) provides relevantly that the Court may at any stage of the proceedings allow the plaintiff to amend the plaintiff's writ. On an application to amend the writ it may be appropriate for the court to have regard to any number of features of the proceeding, the claims made in it, the parties to it and case management principles.
This application is brought relatively early in the proceedings. The only ground raised by the defendants for not exercising the court's discretion to grant leave to amend the writ is that the claim proposed to be added by the amendment has insufficient prospects of success to justify putting the defendants to the time, expense and trouble of defending the claim.
Defendants' grounds for opposing amendments
The defendants oppose the application for leave to amend the writ on the ground that the new cause of action which the plaintiff proposes to plead in the draft amended SOC, if given leave to amend the writ, would, on its introduction, be liable to be struck out on the ground that it discloses no reasonable cause of action. The defendants say that the pleading of the tort of conspiracy in the draft amended SOC discloses no cause of action because it discloses no pecuniary damage suffered by the plaintiff as a result of the alleged conspiracy.
Principles applying to applications for leave to amend writ
The plaintiff submits that his application should be determined without considering whether the draft amended SOC would be struck out on the ground that it discloses no reasonable cause of action. If the defendants wish to apply to strike out the plaintiff's statement of claim, the plaintiff submits that this ought to be done once an amended statement of claim is filed. The issue, the plaintiff submits, is not whether the draft amended SOC discloses an arguable cause of action but whether it is arguable that the plaintiff, if granted leave to file the draft amended writ, could plead an arguable cause of action.
The plaintiff filed the draft amended SOC to show the case the plaintiff wishes to make if he is granted leave to amend his writ.
In his draft amended SOC the plaintiff says he has suffered loss and damage by reason of the Articles. The plaintiff gives particulars of his alleged loss and damage. On the day of the hearing of this application the plaintiff amended his proposed amended SOC to add as a further particular of loss and damage that the plaintiff incurred the costs and fees of lodging the writ of summons in this action. Counsel for the plaintiff, Mr Bennett, submitted that the plaintiff incurred expense in lodging the writ in this action on 28 February 2019 and he paid those fees to the Court before the writ was issued. Therefore, Mr Bennett submits that the cause of action for conspiracy was complete when the writ was issued.
Determining an application for leave to amend a writ is an aspect of case management. The court may refuse leave to amend the writ if it would be a futile and inefficient use of the resources of the parties and the court to allow a party to advance a claim which has no reasonable prospect of success.[1] The court should refuse leave to amend the writ if it is satisfied that the claim which the plaintiff wishes to advance has no real prospect of success.
[1] Belgravia Nominees Pty Ltd v Lowe Pty Ltd (2017) 51 WAR 341 [45].
For the purposes of this application, the plaintiff relies solely on the writ filing fee as damage to complete his cause of action for unlawful conspiracy. Mr Bennett did not submit that if the plaintiff is given leave to amend the writ, the plaintiff will be able to identify any other pecuniary loss he suffered as a result of the conspiracy which he had incurred at the time the writ was issued.
It is therefore appropriate to have regard to the draft amended SOC.
The court should not decide an issue raised in the proceeding in a summary way except in the clearest of cases. Ordinarily, a party is not to be denied the opportunity to place his case before the court in the ordinary way, and after taking advantage of the usual interlocutory processes. The test to be applied has been expressed in various ways but all of the verbal formulae which have been used are intended to describe a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way.[2]
[2] Agar v Hyde (2000) 201 CLR 552 (Gaudron, McHugh, Gummow & Hayne JJ) [57] citing Dey v Victorian Railways Commissioners (1949) 78 CLR 62, 91 (Dixon J); General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125, 130 (Barwick CJ).
The court should take into account that summary disposal of cases may inhibit developments in the law. A summary disposition application, or refusal to give leave to amend to raise an issue, may include arguments on unsettled law. If a party's case relies on a development of the law in these circumstances, that may be significant in deciding whether a claim has no real prospect of success or whether the discretion should be exercised in favour of granting the amendment and allowing the matter to proceed to trial. That consideration applies in this case, as will be seen later in these reasons.
Cause of action must be complete
The power of amendment conferred by the Rules of the Supreme Court do not permit the amendment of a writ so as to include a cause of action which was not in existence at the time when the writ was issued. To bring in such a cause of action is to admit a cause of action which could not have been sued upon at the time the writ was issued. A cause of action which has arisen since the proceedings commenced must be the subject of separate proceedings. It cannot be added by way of amendment.[3]
[3] Baldry v Jackson [1976] 2 NSWLR 415; Wigan v Edwards (1973) 47 ALJR 586, 596; Boase v Axis International Management Pty Ltd (No 2) [2012] WASC 334 [66] (Beech J).
The tort of conspiracy
It is generally accepted that an element of the tort of conspiracy is that the plaintiff must prove actual pecuniary or financial loss as a result of the defendants' acts done in furtherance of their agreement.[4]
[4] See for example, Sappideen and Vines Fleming's the Law of Torts (10th ed) [30.220].
A plaintiff may recover for expenses incurred as a result of the tort. For example, in British Motor Trade Association v Salvadori,[5] the Court of Appeal of England and Wales held that a sufficient element of damage is shown where expenses are necessarily incurred by the claimant in investigating and counteracting the machinations of the defendants.
[5] British Motor Trade Association v Salvadori [1949] Ch 556.
In Lonrho Plc v Fayed (No 5),[6] the Court of Appeal of England and Wales held that while loss of employment, loss of profit and loss of custom all suffice as damage, damages for injury to reputation or feelings are not recoverable in conspiracy. It has been pointed out that Lonrho Plc v Fayed (No 5) was a case concerning a lawful means conspiracy.[7] However, it is likely to provide the approach for unlawful means conspiracies also.[8]
[6] Lonrho Plc v Fayed (No 5) [1993] 1 WLR 1489.
[7] Carty H, An Analysis of the Economic Torts (2nd ed) 136.
[8] This has been challenged by Chan GKY, 'Never Say Never for the Truth Can Hurt: Defamatory but True Statements in the Tort of Simple Conspiracy' (2017) 31 Melbourne University Law Review 321.
The parties have proceeded on the basis that the plaintiff must show that he suffered actual pecuniary loss before the issue of the writ. I will proceed on the same basis.
The critical issue
Counsel for the defendants, Mr Goldblatt, submitted that the cause of action which the plaintiff proposes to plead in his draft amended SOC, if given leave to amend the writ, has no prospect of success because it discloses no pecuniary loss suffered by the plaintiff as a result of the alleged conspiracy which had been incurred when the writ was issued.
The critical question is whether the plaintiff's proposed case, that the costs and fees of lodging the writ of summons in this action is pecuniary loss sufficient to support the plaintiff's claim for damages for unlawful conspiracy, has no real prospect of success.
That question raises two issues. The first concerns causation and remoteness of damage. The second concerns litigation costs as damages.
Causation and remoteness
The defendants submit that incurring the cost of issuing the writ claiming damages and an injunction for defamation was not caused by, and is not a reasonably foreseeable consequence of, the alleged unlawful conspiracy.
There is authority that damages are not limited by the remoteness rule and are available for all financial losses flowing directly from the commission of the tort of conspiracy.[9]
[9] Witting C, 'Intra‑corporate Conspiracy: An Intriguing Prospect' (2013) Cambridge Law Journal 178, 189, fn 82.
In any event, I find for the reasons advanced by Mr Bennett, that the plaintiff's proposed case that issuing a writ for defamation was caused by, and was a reasonably foreseeable consequence of, the publication of the Articles, which the plaintiff says are acts done by the defendants to carry out the unlawful conspiracy, has a real prospect of success.
Mr Bennett submits that in the circumstances of this case, the plaintiff causing a writ for defamation to be issued was not just reasonably foreseeable but actually foreseen by the defendants when they published the first article on 27 February, because the publication was preceded by an email that Ms Hedley sent to the Peel Regional Development Commission which prompted a response from the plaintiff's solicitors, which is referred to in the statement of claim as the first letter. The first letter warns of the intention of the plaintiff to sue for defamation and warns that publication will be a breach of the Surveillance Devices Act.
Costs as damages
Mr Goldblatt submits that the cost of filing a writ is a litigation cost and litigation costs are irrecoverable as damages.
The distinction between damage and litigation costs
In tort the usual measure of damages is the reliance measure of damages. The aim is to put the plaintiff back into the position he would have been in if the tort had not been committed. The plaintiff may recover for expenses incurred as a result of the defendants' wrongful act. The costs of the litigation would, if ordinary principles governing the recoverability of damages were applicable, represent recoverable damages.[10]
[10] See Seavision Investment SA v Evennett (The Tiburon) [1992] 2 Lloyd's Rep 26, 34 (Scott LJ).
However, as a general rule, litigation costs cannot be recovered as damages.[11] All of the costs of litigation which arise out of a tortious act are the result of that tort but not all such costs are recoverable as damages.[12] The main consideration in distinguishing between damages and litigation costs is the dominant purpose for which the expense was incurred. If the purpose was litigation, the expense can be recovered as only litigation costs and not damages.[13]
[11] For example, in Tate & Lyle Food Distribution Ltd v Greater London Council [1982] 1 WLR 149, 152, Forbes J held that the expenditure of managerial time in remedying an actionable wrong can properly form a head of damage but 'excluding anything which might properly be regarded as preparation for litigation'.
[12] See Merrett L, 'Costs as Damages' (2009) 125 Law Quarterly Review 468, 472.
[13] See Merrett at 473.
The general rule is that litigation costs cannot be claimed as damages. The author of the twentieth edition of McGregor on Damages explained that it would make nonsense of the rules about costs if the successful party in an action who has been awarded costs could claim in a further action, by way of damages, the amount by which the costs awarded to him fell short of the costs actually incurred by him.[14] Nevertheless there are exceptional cases where a party may claim litigation costs as damages.[15]
[14] Edelman J, McGregor on Damages (20th ed,) [21‑003].
[15] Edelman J, McGregor on Damages [21‑012] ‑ [21‑076].
Exceptions to the general rule
Mr Bennett relied on the decision of O'Neil J in the High Court of Ireland in Courtney v Our Lady's Hospital Ltd,[16] where the plaintiff recovered damages for the nervous shock and psychiatric illness that arose from the circumstances of her daughter's death. The plaintiff also sought to recover the costs of her representation at the inquest into her daughter's death. O'Neil J said that whether the claimed expense could be recovered turned on whether it was an item of damage that can be recovered in an action for negligence, and this in turn meant it must be ascertained whether the expense was one which, arising from the tort committed, was reasonably foreseeable. The court found that the expense was reasonably foreseeable and awarded the costs as damages.
[16] Courtney v Our Lady's Hospital Ltd [2011] IEHC 226.
McGregor on Damages refers to the conspiracy case of Hathaway v Barrow,[17] where the conspiracy was to prevent the claimant from obtaining his certificate under what was called a commission of bankrupt and for these purposes the conspirators had unsuccessfully petitioned the Lord Chancellor, who had ordered them to pay the claimant's costs; these had been taxed but not discharged. Sir James Mansfield ruled that no part of the claimant's costs could be recovered in his action. McGregor on Damages says that this makes sense as far as the party and party costs are concerned, as they might at any time be paid by the conspirators and 'must, therefore, be considered as satisfaction'. But the judgment continues:
Nor could he admit proof of the extra costs; as it would be incongruous to allow a person one sum as costs in one Court, and a different sum for the same costs in another Court.[18]
McGregor on Damages says that this shows that the judge thought it a plain case of simply attempting in a second action to obtain as damages the costs not awarded in the first, without appreciating that the presence of an independent tort could make all the difference. Moreover, this decision of 1807 was long before the general principles had been worked out by the courts, and is at odds with the important views expressed by Devlin and Danckwerts LJJ in the leading case in this area of Berry v British Transport Commission.[19]
[17] Hathaway v Barrow (1807) 1 Camp 151.
[18] Hathaway v Barrow 152 ‑ 153.
[19] Berry v British Transport Commission [1962] 1 QB 306.
The decision of the Court of Appeal of England and Wales in Berry is more similar to the present case. In Berry the plaintiff brought an action for malicious prosecution against the British Transport Commission, which had prosecuted her for pulling a train communication cord. The Court of Appeal of England and Wales held that the expenses which the claimant had incurred in the course of her defence and of her successful appeal, in excess of the sum awarded to her in the criminal proceeding, was sufficient to support her action for malicious prosecution.
Berry is different from the case presently being considered in a number of respects. First, it concerned two separate proceedings. Secondly, the first proceeding was not a civil action. Thirdly, the plaintiff in the second action was the defendant in the first action.
The decision of a Deputy Judge of the High Court of England and Wales in Playboy Club London Ltd v Banca Nazionale del Lavora SpA[20] is closer to the issues raised in this case. The claimant was a club which ran a casino. It had suffered losses after giving credit to a gambler on the strength of a credit reference from the defendant bank which proved to be worthless. The club obtained judgment against the bank in negligence. The bank appealed. As a result of evidence which emerged during the trial, whilst the appeal was pending before the Court of Appeal, the club issued fresh proceedings against the bank in deceit. The club succeeded in its negligence action at trial but the Court of Appeal overturned the first instance decision on the ground that the club had sought the reference from the bank through an agent, and the bank had only assumed responsibility to the agent. The club applied to amend its claim to add, as a new head of damage in the deceit proceedings, the costs it had incurred in the unsuccessful negligence proceedings.
[20] Playboy Club London Ltd v Banca Nazionale del Lavora SpA [2019] EWHC 303 (Comm).
The Deputy High Court Judge held that the test to be applied on an opposed application to amend a statement of case is whether the proposed new claim has a real prospect of success. The bank opposed the application on two bases. First, the bank argued that the costs of the original action cannot be said to have been directly caused by, or to have flowed as a direct consequence of, the alleged deceit, and were not incurred reasonably, by way of mitigation or otherwise. The Deputy Judge did not uphold that objection, stating that he was not convinced that no reasonable judge could find in the claimant's favour on the issues of causation, remoteness or mitigation.
The second basis, which the Deputy Judge described as a more fundamental objection, was the bank's contention that costs as damages on the facts of the case are irrecoverable as a matter of principle. The bank said that there is no case in which the costs (a) of a previous legal action (b) between the same parties (c) in which the claiming party was unsuccessful and had costs awarded against it, have been awarded to the claiming party as damages in (a) a subsequent legal action (b) between the same parties (c) so as, effectively, to reverse the costs award previously made.
The Deputy Judge discussed earlier authorities including Berry which he said 'was a case quite far removed from the facts of the present case'. Counsel for the club argued that Berry and other authorities referred to and chapter 21 of the 20th edition of McGregor on Damages are consistent with the club's claim that the proposed amendment can form a new exception, or an exception consistent with established exceptions, to the general rule that, when costs have been awarded in a civil action between particular parties, a claimant in a later action between the same parties, cannot claim further costs between them as damages. Counsel emphasised that the second action in deceit was different from the claim for negligence in the original action. The Deputy Judge concluded that the argument of principle, novel as it was, should not be determined summarily. His Honour said:
Since the nature of the claim is unprecedented, it may be difficult to establish, but I think that the prospects of the Claimant succeeding are more than merely fanciful. Obviously, it will be harder for it to do so than if a clear and directly comparable precedent did exist. But that is not to say it cannot be done. It may be that a case like this one will be allowed to succeed in some circumstances and not in others so (as Devlin LJ said in Berry) the point should be decided at trial and not by refusing permission to amend so that it cannot be argued at all.
If the plaintiff failed in his defamation action, for example because the imputations alleged are found to be true, and subsequently commenced a new action for conspiracy in which he claimed as damage suffered as a result of the conspiracy the costs incurred in the defamation action, the case would be very similar to the Playboy case. I do not think it is necessarily fatal to the plaintiff's claim that he might succeed in his defamation claim. He might fail in his defamation claim and not recover the cost of the filing fee in his defamation claim, and if he does so fail, the filing fee is a loss that would have been incurred by the plaintiff prior to the issue of the writ.
I am not satisfied the plaintiff's claim that the cost of the filing fee may be damage resulting from the alleged conspiracy by the defendants has no reasonable prospect of success. It may be that the plaintiff may succeed in some circumstances and not in others. The point should be decided at trial and not by refusing leave to amend so that it cannot be argued at all.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
GG
Associate to the Honourable Justice Le Miere11 JUNE 2020
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