Reynolds v Sharaz
[2023] WASC 327
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
CITATION: REYNOLDS -v- SHARAZ [2023] WASC 327
CORAM: SOLOMON J
HEARD: 24 AUGUST 2023
DELIVERED : 25 AUGUST 2023
PUBLISHED : 25 AUGUST 2023
FILE NO/S: CIV 1051 of 2023
BETWEEN: LINDA KAREN REYNOLDS
Plaintiff
AND
DAVID SHARAZ
Defendant
Catchwords:
Practice and procedure - Security for costs - Where plaintiff is a natural person - Defamation - Where plaintiff is not impecunious - Whether law of Western Australia is likely to apply - Whether the plaintiff's claim is prima facie weak or disproportionate
Legislation:
Australian Constitution, s 44
Defamation Act 2005 (WA), s 11
Rules of the Supreme Court 1971 (WA), O 25
Result:
Application dismissed
Category: B
Representation:
Counsel:
| Plaintiff | : | ML Bennett & CPK Russell |
| Defendant | : | J Maclaurin SC & Mr J O'Hara |
Solicitors:
| Plaintiff | : | Bennett |
| Defendant | : | McNally & Co |
Cases referred to in decision:
Bhatia v Gill [2022] WASC 341
Engel Pty ltd (In Liq) v Leeds; Ailakis v Olivero [2013] WASCA 91
Idoport Pty Ltd v National Australia Bank Ltd [2001] NSWSC 744
Mabrouk Minerals Pty ltd v Mabrouk Holdings Ltd [2008] WASC 132
Moran v Schwartz Publishing Pty Ltd [No 2] [2015] WASC 35
SOLOMON J:
These reasons relate to the defendant's application for security for costs.
It is convenient first to provide an overview of the proceeding.
The plaintiff, Senator Reynolds, is a member of the Liberal Party and has been a senator for Western Australia in the Federal Parliament since 2014. Senator Reynolds was a minister in the Coalition Government from 2019 until the federal election in May 2022. Senator Reynolds' claim is reflected in her amended statement of claim filed on 17 August 2023.
Senator Reynolds' claim arises out of circumstances surrounding the alleged rape of a former Parliament House political staffer, Ms Brittany Higgins. The subsequent handling of Ms Higgins' complaint, the aborted trial of the alleged perpetrator, Mr Bruce Lehrmann, and the associated investigations, reports and settlements arising out of that trial have attracted significant media attention. In the most neutral terms, the journey of Ms Higgins' complaint through this nation's various political, legal and social institutions has sustained the public interest for a variety of reasons and for some length of time.
Senator Reynolds has had some involvement in that journey. In her amended statement of claim, Senator Reynolds pleads that the alleged rape took place at Parliament House in Senator Reynolds' ministerial office. The amended statement of claim pleads that Mr Sharaz is, and was at all material times, the de facto partner of Ms Higgins.
Senator Reynolds brings this action against Mr Sharaz alleging defamation in respect of four social media publications (the Publications). The Publications and defamatory imputations said to arise from each publication may be summarised as follows.
First, the statement of claim refers to a tweet authored and posted by Mr Sharaz on 27 January 2022, (27 January tweet) in which Mr Sharaz shared a webpage published by Senator Reynolds entitled 'Empowering Women'. In that tweet, Mr Sharaz wrote that 'there is a very real chance [Senator Reynolds] will be called to court this year to answer questions on her involvement in Brittany Higgins feeling pressured by her office not to continue with a complaint to police.' The 27 January tweet is alleged to give rise to the defamatory imputations that:
(a)Senator Reynolds pressured Ms Higgins not to proceed with a genuine complaint to the police; and
(b)that Senator Reynolds is a hypocrite in her advocacy for women's interests and empowerment.
Secondly, Senator Reynolds identified a tweet authored and posted by Mr Sharaz on 4 December 2022, in which he stated 'Senator Reynolds sent her husband in to watch a victim's cross-examination and was texting the defence team tips. Now, [Senator Reynolds] is leaking privileged information to the paper while [Ms Higgins] is fragile in a clinic. When will the bullying end [Senator Reynolds]?' That publication is alleged to give rise to the following defamatory imputations:
(a)Senator Reynolds interfered with the trial of criminal proceedings against Mr Lehrmann; and
(b)Senator Reynolds bullied, and continues to bully, Ms Higgins.
Thirdly, on 1 April 2022 Mr Sharaz authored and published a comment, which he left on a tweet by Senator Reynolds (1 April tweet). The tweet by Senator Reynolds included a statement that she was 'aghast but not surprised' about an aspect of the attitude of the Labor Party on an unrelated matter. Mr Sharaz commented on that tweet that he was 'aghast that despite everything you put a staffer through, you're still a minister but we can all be surprised.' That comment is alleged to give rise to the defamatory imputation that Senator Reynolds was not a fit and proper person to hold a position of Government minister.
On 1 April 2022, Mr Sharaz posted a screenshot of that tweet to his Instagram story.
Fourthly, on 3 December 2022 Mr Sharaz authored and published a comment on Senator Reynolds' Facebook page. The comment was in response to a previous comment left on Senator Reynolds' Facebook post, addressed to Senator Reynolds, in the following terms: 'how are you still in politics?? You destroyed Brittany Huggins (sic). You're a monster who deserves to be in jail.' Mr Sharaz responded expressly to that comment in the following terms: 'Thanks for reminding her. I hope she hears this every day until the day she dies.'
Senator Reynolds alleges that Mr Sharaz's Facebook comment gives rise to the defamatory imputation that:
(a)by reason of her treatment of Ms Higgins, Senator Reynolds was not a fit and proper person to hold a position of Government Minister;
(b)her conduct in dealing with Ms Higgins was morally reprehensible; and
(c)her treatment of Ms Higgins was criminal.
The imputations alleged to arise from the Publications are said to arise on the natural and ordinary meaning of the Publications, or in the context of certain other pleaded background facts.
Senator Reynolds has further pleaded that Mr Sharaz's conduct has been 'improper, unjustifiable and lacking in bona fides' such that it has aggravated the hurt and damage suffered by the plaintiff. That conduct, according to Senator Reynolds, has led her reasonably to believe that it was part of a plan by Mr Sharaz and Ms Higgins to use the allegations of Ms Higgins as a weapon against Senator Reynolds and the Coalition Government. In particularising that plea, the plaintiff has identified statements made by Mr Sharaz in a televised interview, text messages exchanged between Mr Sharaz and Ms Higgins, and meetings between Ms Higgins and members of Parliament said to have been facilitated by Mr Sharaz. In addition, it is alleged that two further aspects of Mr Sharaz's conduct aggravated the damage suffered by Senator Reynolds. First, because the 27 January tweet and the 1 April tweet concerned ongoing criminal investigations, it was therefore inappropriate for Senator Reynolds to engage with or respond to the Publications. Secondly, it is alleged that the Publications contained information that Mr Sharaz knew to be false and inaccurate.
Security for Costs - general principles
As this is an application for security for costs, it is convenient to explain what that means. Generally in litigation, the successful party is entitled to an award of costs in its favour. If a plaintiff's case is unsuccessful, the plaintiff is usually (but not invariably) required to pay the defendant's legal costs (generally, on a scale or 'taxed' basis). The court has a discretionary power to order a plaintiff to provide security to cover the defendant's costs in the event that the plaintiff loses the case and is required to pay the defendant's costs. That is called security for costs. The purpose of a security for costs order is therefore to ensure that the primary purpose of having costs orders can be achieved. A defendant is protected against the risk that a costs order at the end of the day may turn out to be of no value by reason of the impecuniosity of the plaintiff: Idoport Pty Ltd v National Australia Bank Ltd [2001] NSWSC 744 [52].
Order 25 of the Rules of the Supreme Court 1971 (WA) (Rules) deals with security for costs. The relevant provisions are set out in rules 1, 2 and 3 of O 25. They provide as follows:
1.Factors that are not grounds for ordering security for costs
The Court may order security for costs to be given by a plaintiff, but no order shall be made merely on account of the poverty of the plaintiff or the likely inability of the plaintiff to pay any costs which may be awarded against him.
2.Grounds for ordering security for costs
Without limiting the generality of rule 1 the Court may order security for costs to be furnished where the plaintiff -
(a)is ordinarily resident out of the jurisdiction, notwithstanding that he may be temporarily within the jurisdiction;
(b)is about to depart from the jurisdiction;
(c)enjoys within the jurisdiction some privilege which renders him immune, wholly or partially, from the normal processes of execution;
(d)is an undischarged bankrupt or a person who has suspended, or given notice of suspension of, his debts;
(e)is a company in liquidation or under official management, or a company in respect of which a receiver of its property has been appointed;
(f)is a relator suing for the enforcement or declaration of some public right or to have some public trust carried out or some charitable scheme settled;
(g)is in default in respect of any costs ordered to be paid by him in any proceedings previously brought by him against the same defendant or another defendant for substantially the same cause of action or in relation to substantially the same subject matter;
(h)is a person who has in the past vexatiously brought litigation against the same defendant or against any other defendant;
(i)is suing the sheriff in respect of anything done or omitted to be done by the sheriff or his officers in the execution of any judgment of the Court.
3.Court has discretion
The granting of security shall be in the discretion of the Court, and in determining whether an order should be made the Court shall take into consideration -
(a)the prima facie merits of the claim;
(b)what property within the jurisdiction may be available to satisfy any order for costs against the plaintiff;
(c)whether the normal processes of the Court would be available within the jurisdiction for enforcement of any order for costs made against the plaintiff.
It is well established that the factors set out under O 25 are not exhaustive, and that the court's discretion is not limited to those factors. The relevant factors will vary from case to case and the power is always exercised to serve the interests of justice.[1]
[1] Engel Pty ltd (In Liq) v Leeds; Ailakis v Olivero [2013] WASCA 91; Mabrouk Minerals Pty ltd v Mabrouk Holdings Ltd [2008] WASC 132 [57].
As is made plain by O 25 r 1, an order for security for costs is not to be made solely because a plaintiff is likely to be unable to pay the costs which may be awarded against him or her. That important principle creates an obvious tension in the exercise of the court's discretion. On the one hand, the court's power is designed to ensure that a defendant is protected against the inability of the plaintiff to pay the defendant's costs. Yet the plaintiff's inability cannot of itself be a reason to award security. That tension has been observed in a number of cases. It is generally resolved by balancing the particular factors applicable in each case in the interests of justice.
Traditionally, the courts have been reluctant to award security for costs against a plaintiff who is a natural person as distinct from a corporation. This is a reflection of the law's historical concern to ensure that all people are afforded access to justice through the courts. As most defamation matters are prosecuted by natural persons, the award of security in defamation proceedings is perhaps less common than in other types of litigation.
The application of the principles in the context of defamation proceedings was reviewed and explained by his Honour Kenneth Martin J in Moran v Schwartz Publishing Pty Ltd [No 2],[2] and more recently in Bhatia v Gill.[3] In his review of the authorities, Martin J observed that some factor, in addition to inability to pay, is generally required to attract the court's discretionary power to award security for costs against a natural person.[4] Examples of such additional factors (that is, in addition to the inability to pay) include; residence outside Australia, prosecuting a claim for the benefit of others, and lack of prospects.
Evidence
[2] Moran v Schwartz Publishing Pty Ltd [No 2] [2015] WASC 35.
[3] Bhatia v Gill [2022] WASC 341.
[4] Bhatia v Gill [2022] WASC 341 [5].
The parties filed affidavits for the purposes of this application. The defendant relied upon the following affidavits:
(a)affidavit of Kathleen McNally (sworn 17 August 2023);
(b)affidavit of Maddison McLauchlan (sworn 23 August 2023); and
(c)affidavit of Maddison McLauchlan (sworn 24 August 2023).
The plaintiff relied upon:
(a)affidavit of Senator Linda Reynolds (sworn 14 August 2023); and
(b)affidavit of Rachel Ross (sworn 23 August 2023).
On the evidence, it was uncontroversial that Senator Reynolds is far from impecunious. At the same time, she could not be characterised as particularly wealthy. The financial predicament of Senator Reynolds was described, without objection, as being 'average' for someone of her background, age, professional status and station in life. It is not necessary to descend into the fine detail of Senator Reynolds' financial circumstances which in any event are largely a matter of public record.
Two further aspects of Senator Reynolds' financial circumstances are, or ought to be, uncontroversial. First, if this litigation travels its full course, the cost to each of the parties will be very significant. That burden will be significantly greater to the losing party, who is likely to be required to pay the other side's costs. It is very likely that the aggregate quantum of such costs will constitute a very significant, perhaps insurmountable, financial burden for either party, particularly in the absence of some form of assistance from third parties. I should however observe that this is hardly a unique feature of litigation in this, or for that matter many other, courts. Modern litigation and its cost is such that many matters that are taken through to their conclusion are likely to be financially crippling, sometimes even for the winning party.
Secondly, under s 44 of the Australian Constitution, if Senator Reynolds becomes a bankrupt, she will be unable to retain her place in the Senate. That plainly serves as a serious disincentive to Senator Reynolds to any conduct that may lead to her bankruptcy. That would include a failure to pay costs ordered by the court.
The defendant's contentions
Senior counsel for Mr Sharaz appeared to accept that Senator Reynolds is not impecunious and that her prospective incapacity to pay the costs of a concluded and unsuccessful proceeding is not of itself sufficient to warrant an order for the provision of security. It was however contended that there were 'unique considerations' of this case that combined to render an order for security for costs appropriate and necessary.
First, senior counsel for Mr Sharaz pointed to the unique magnitude of the expense of the litigation should it continue through to its conclusion. Senior counsel submitted that it was likely on the evidence that the costs would exceed Senator Reynolds' capacity to pay. Thus, although Senator Reynolds was far from impecunious, the nature of this litigation was such that its full cost would likely be beyond her means.
Secondly, senior counsel for Mr Sharaz submitted that it was at least arguable, if not likely, that the applicable law is not the law of Western Australia but rather, the law of the Australian Capital Territory, where the Federal Parliament is located, or another Eastern States jurisdiction. The significance of that is that the statutory provisions in the Australian Capital Territory (and other Eastern States jurisdictions) provide for additional barriers to the prosecution of a claim for defamation beyond that required by the law in Western Australia. In particular, the claim is required to be preceded by a formal 'concerns notice'. In addition, there is a threshold requirement of 'serious harm'. That means that if the plaintiff cannot demonstrate that a valid concerns notice was provided in respect of a publication, or that the harm suffered by the plaintiff was sufficiently serious, the action cannot succeed or indeed proceed.
Senior counsel submitted that Senator Reynolds' claim cannot satisfy those threshold requirements. Not all the Publications were preceded by a concerns notice. The affidavit of Maddison McLauchlan sworn 24 August 2023 annexed a concerns notice dated 6 January 2023, issued by Senator Reynolds' lawyers to Mr Sharaz, in respect of two of the Publications. Senior counsel for Mr Sharaz suggested that there may be defects in that concerns notice rendering it noncompliant with the statutory requirements in the Australian Capital Territory or other Eastern State jurisdictions.
Further, senior counsel submitted that the vast sea of publicity and media commentary on the issues the subject of the action necessarily means that the few individual and now historic publications complained of amounted to a drop in the ocean. The Publications themselves, therefore, cannot possibly have caused serious harm.
Thirdly, senior counsel for Mr Sharaz submitted that even if the law of Western Australia applied, and there was therefore no threshold statutory requirement of serious harm, the effect of the vast publicity is such that the Publications could not of themselves have caused reputational harm that would result in an award in damages of any substantial amount. The proceedings therefore are disproportionate; the costs will invariably be of great magnitude whereas the monetary relief can only be minimal.
Fourthly, senior counsel for Mr Sharaz directed attention to other circumstances which, independently of the applicable law, were said to render Senator Reynolds' claim manifestly weak. Within the vast ocean of publicity, there was much commentary that was critical of Senator Reynolds for a variety of reasons but most importantly, for matters that related to the subject of the Publications, that is, her dealings with Ms Higgins and responses to Ms Higgins' complaint. The impact of that publicity was that Senator Reynolds' reputation was already well tarnished such that the Publications had no material impact. The effect of the allegedly defamatory Publications was therefore of negligible consequence and the case is therefore weak, or at least, negligible enough to render the action wholly disproportionate to its cost.
In order to illustrate the damaging impact of the broad wave of media commentary, affidavit evidence was filed on behalf of Mr Sharaz which annexed what was said to be a representative sample of that publicity. It included media articles from various sources critical of Senator Reynolds and the then-Coalition Government, of which she was at that time a minister.
Senior counsel for Mr Sharaz pointed to another asserted weakness of Senator Reynolds' claim. Although Mr Sharaz had not advanced an application to strike out parts of the statement of claim, senior counsel contended that various defects in the statement of claim reflected the lack of merit in the claim generally. I invited senior counsel for Mr Sharaz to direct me to a clear example of his concerns. I was directed to paragraphs 5 and 19 of the statement of claim. Paragraph 5 pleads the first publication referred to at [8] above, and paragraph 19 pleads the defamatory imputation said to arise from that publication. Senior counsel for Mr Sharaz submitted that the publication did not have the capacity to bear the pleaded imputation. The allegation could therefore not succeed. Senior counsel for Mr Sharaz was anxious to point out that although he directed attention to that example in response to my request for a clear illustration of his concern, his concerns were not limited to that example.
Disposition
I accept that although Senator Reynolds is far from impecunious, if these proceedings continue to their natural conclusion, the costs will be very significant, perhaps crippling, and possibly beyond Senator Reynolds' means. As I have already noted, this is hardly a unique feature of this proceeding. On the contrary, it is an unfortunate but common feature of contemporary litigation. In my view, it does not provide a basis to order security for costs against a plaintiff who is a natural person.
Further, as I have already observed, s 44 of the Constitution provides a strong disincentive to Senator Reynolds to avoid the consequences of any failure to pay costs that she may be ordered to pay to Mr Sharaz.
I am also not persuaded, certainly at this stage of the proceedings, that I am in a position to assess the claim as weak or disproportionate. That is for a number of reasons.
First, a significant plank of the submissions on behalf of Mr Sharaz in this regard rested on the proposition that the law of Western Australia was arguably not applicable, or likely not to apply. I am not presently in a position to determine that question, nor has there been any application which would require me to do so. The choice of law in defamation proceedings is determined by s 11 of the Defamation Act 2005 (WA) which is in equivalent terms in other relevant jurisdictions. This is not the occasion to give detailed consideration to the analysis required by that section. It is sufficient for me to observe at this point, that in my view it is far from obvious that the law of Western Australia would not apply. In the circumstances, I do not discount the possibility that it may ultimately be found that the law of another jurisdiction may be applicable. However, on the evidence before me in the present circumstances, I would not regard that prospect of sufficient force so as to conclude that the claim is weak and that it is therefore appropriate to award security against a plaintiff who is a natural person.
Secondly, I am not persuaded that the vast sea of publicity somehow necessarily renders the Publications of negligible or less significance. It appears to me to be equally arguable that the volume of that publicity renders comments from those with the greatest proximity to Ms Higgins, such as the Ms Higgins' partner, all the more significant. I am therefore not persuaded at this stage that the ubiquitous and voluminous media commentary diminishes the significance of the Publications, or had the effect that Senator Reynolds' reputation was relevantly impugned independently of the Publications.
In that regard, as noted above, a representative sample of that vast media reporting was tendered in support of the proposition that Senator Reynolds' reputation was already tarnished such that the impact of Mr Sharaz's comments could not have been damaging in any material sense. That selection comprised some fourteen media articles. I appreciate that it was said, necessarily, to be only a sample. If the matter proceeds to trial, no doubt the evidence will be far more extensive. Nevertheless, the sample, such as it was, did not serve to demonstrate that Mr Sharaz's comments were rendered insignificant by the flood of media commentary. The sample included two articles reporting that Senator Jacqui Lambie called for Senator Reynolds' resignation. As I observed in the course of argument, a call for resignation from a rival politician hardly stands out as remarkable. The sample also included three articles from The Guardian, one from The New York Times, and one from a website called Junkee.com. It is difficult to conclude that publications of that nature would have so altered Senator Reynolds' reputation as to render Mr Sharaz's commentary immaterial.
In any event, as counsel for Senator Reynolds pointed out, previous publications of that nature are unlikely to be relevant. Counsel for Senator Reynolds directed attention to George's Defamation Law in Australia (4th ed.) at [36.4], in which the author writes that:
Previously published defamatory publications of the plaintiff are not relevant to the plaintiff's reputation, even if they are to the same effect. It cannot be submitted that the plaintiff's reputation was already damaged at the time of publication by another publication previously published.
Fourthly, the amount of financial compensation is only one aspect of the relief generally sought in defamation proceedings. Vindication and restoration of a plaintiff's reputation can be equally if not more important than the quantum of the financial compensation. Thus even if the proceedings have the potential to be financially disproportionate, that may not be the central concern of a plaintiff.
Finally, in respect of senior counsel's concerns about the amended statement of claim, I would observe that disputes about pleadings are not uncommon in defamation matters, and commonly arise in the course of proceedings. It is well established that an application for security ought to be brought promptly and early in the life of proceedings. It is therefore unremarkable that security may be sought in circumstances where there remain outstanding concerns about the pleading. The expression of such concerns does not necessarily indicate that the claim is weak. I am therefore not persuaded that the outstanding concern regarding the pleading is a factor that weighs significantly in favour of the grant of security. This is especially so as in my view it is far from clear that the Publication identified at paragraph 5 of the amended statement of claim is incapable, on its plain and ordinary meaning (or when read in the context of other pleaded facts), of carrying the defamatory imputation of which Senator Reynolds complains. I appreciate that the concerns of senior counsel for Mr Sharaz are not limited to those paragraphs but the example provided by counsel did not demonstrate that the nature of the concerns were such as to lead to the conclusion at this stage that the claim is necessarily weak.
For the reasons I have explained, I am not persuaded that the circumstances of this matter warrant departure from the usual course so as to require the provision of security from a plaintiff who is a natural person and far from impecunious. Accordingly, the defendant's application will be dismissed.
Post-script
In the regrettable circumstances of this matter, I am moved to add the following post-script, reflecting the sentiments I expressed at the end of the hearing on 24 August. This application has, necessarily, been exclusively concerned with the financial cost of the litigation. But money is not the only, and probably not the biggest cost. The human cost of litigation looms large. No one should imagine they can remain immune from the psychological stress and emotional pain of litigation of this nature. The human cost too can be crippling, sometimes insurmountable. As in all matters, the court urges, and is anxious to assist the parties to explore means of resolving the dispute without the necessity of a trial.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
IS
Associate to the Honourable Justice Solomon
25 AUGUST 2023
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