Russell v S3@Raw Pty Ltd (No 3)

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FEDERAL COURT OF AUSTRALIA

Russell v S3@Raw Pty Ltd (No 3) [2024] FCA 991

File number(s): QUD 398 of 2022
Judgment of: MEAGHER J
Date of judgment: 29 August 2024
Catchwords:

DEFAMATION – Application brought by the third respondent pursuant to s 10A(5) of the Defamation Act 2005 (Vic) to dismiss the defamation claim – Where unclear whether s 10A(5) of the Defamation Act 2005 (Vic) is picked up by s 79 of the Judiciary Act 1903 (Cth) – Whether s 10A(5) of the Defamation Act 2005 (Vic) is inconsistent with s 37P of the Federal Court of Australia Act 1976 (Cth) and r 30.01 of the Federal Court Rules 2011 (Cth) – Whether s 10A(5) limits the discretion of the Court pursuant to s 37P of the Federal Court of Australia Act 1976 (Cth) – Where special circumstances exist to justify postponement in any event – Application dismissed

PRACTICE AND PROCEDURE – Alternative application brought by the third respondent for striking out of the further amended statement of claim pursuant to r 16.21 of the Federal Court Rules 2011 (Cth) – Where third respondent contends that the pleading fails to establish serious harm – Where the pleading discloses a reasonable cause of action – Where the third respondent further contends that the concerns notices are invalid and the pleading should be struck out as an abuse of process – Whether the concerns notices inform the publisher of the serious harm to the person’s reputation alleged to have been caused by the publications – Where inferences may be drawn from other matters in the concerns notices – Application dismissed

Legislation:

Federal Court of Australia Act 1967 (Cth) ss 37M, 37N, 37P, 43

Competition and Consumer Act 2010 (Cth) ss 18, 37(2)

Corporations Act 2001 (Cth) s 471B

Judiciary Act 1903 (Cth) s 79

Federal Court Rules 2011 (Cth) rr 16.21, 16.45, 30.01

Defamation Act 2005 (Vic) ss 10A, 10A(5)

Defamation Act 2013 (UK)
Cases cited:

Georges v Georges [2022] NSWDC 558

Hayson v The Age Company (No 3) (2020) 280 FCR 139

Hun v Aljazeera International (Malaysia) SDN BHD [2023] 1103

Massarani v Kriz (2022) 400 ALR 178 [2022] FCA 80

Newman v Whittington [2022] NSWSC 249

Peros v Blackburn [2024] FCA 177

Rader v Haines [2022] NSWCA 198

Randell v Mclachlain [2022] NSWDC 506

Rizeq v Western Australia (2017) 262 CLR 1; [2017] HCA 23

Russell v S3@Raw Pty Ltd (Proper Place) [2023] FCA 1014

Selkirk v Hocking [2023] FCA 432

Staged Plus Pty Ltd v Yummi Fruit Ice-Creamery Pty Ltd [2024] QDC 088

Teh v Woodworth [2022] NSWDC 411

Whittington v Newman [2024] NSWCA 27
Division: General Division
Registry: Queensland
National Practice Area: Commercial and Corporations
Sub-area: Commercial Contracts, Banking, Finance and Insurance
Number of paragraphs: 81
Date of hearing: 17 April 2024
Counsel for the Applicant: Mr S Webster & Mr A Litster
Solicitor for the Applicant: Synkronos Legal
Counsel for the Respondents: Mr H Clift & Ms L Goad
Solicitor for the Respondents: Macpherson Kelley…
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Details
Case
[2024] FCA 991
Decision Date

CaseChat Overview and Summary

The case before the court was an interlocutory application brought by the third respondent, S3@Raw Pty Ltd, against the applicant, Hayley Russell, in relation to defamation claims made by Russell against the first and third respondents. Russell, who was the manager of the first respondent's business, alleged that defamatory posts were published about her on Instagram by the third respondent, who is the sole director and secretary of the first respondent. Russell sought injunctive relief to remove the posts and restrain further publication, while the third respondent sought to dismiss the defamation claim and for the further amended statement of claim to be struck out.

The court had to decide whether section 10A(5) of the Defamation Act 2005 (Vic), which requires a judge to determine the serious harm element as soon as practicable before a trial, is consistent with the Federal Court of Australia Act 1976 (Cth) and the Federal Court Rules 2011 (Cth). The court also needed to determine whether the concerns notices provided by Russell were sufficient to establish serious harm and if the further amended statement of claim disclosed a reasonable cause of action.

The court found that section 10A(5) of the Defamation Act 2005 (Vic) does not conflict with the Federal Court of Australia Act 1976 (Cth) and the Federal Court Rules 2011 (Cth). The court reasoned that the concept of "special circumstances" under section 10A(5) does not necessarily require a separate pre-trial hearing on the question of serious harm. Instead, the court can consider run-of-the-mill case management issues in determining whether special circumstances exist. The court also found that the concerns notices provided by Russell were insufficient to establish serious harm and that the further amended statement of claim disclosed a reasonable cause of action.

In conclusion, the court dismissed the interlocutory application brought by the third respondent. The court held that there were special circumstances in the case that justified postponing the determination of serious harm until trial. The court also found that the further amended statement of claim should not be struck out as it disclosed a reasonable cause of action and the concerns notices were not sufficient to establish serious harm. The court ordered that the parties confer and provide agreed draft orders to progress the proceeding to trial or list a case management hearing if no agreement was reached.

Orders

Orders of the court

1. The amended interlocutory application filed on 4 March 2024 be dismissed.

2. The third respondent pay the applicant’s costs of and incidental to the amended interlocutory application filed on 4 March 2024.

3. By 4:00pm AEST on 12 September 2024, the parties are to provide the Court with any agreed draft orders providing for the steps to be taken to progress the proceeding to trial.

4. If the parties are unable to agree on the draft orders referred to in order 3, the proceeding be listed for a case management hearing on a date to be advised administratively.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

For the reasons that follow, the interlocutory application is dismissed. BACKGROUND The third respondent was the sole director and secretary of the first respondent, a company which operated as a boutique Pilates and Barre studio in Ripponlea, a suburb of Melbourne in Victoria (the business). The applicant worked as a manager at the business pursuant to an Option and Service Agreement. In November 2022, the first third respondents are alleged to have published a post on the social media platform, Instagram, about the applicant (Main Post). The applicant alleges that the various statements made in that post carried defamatory imputations including that the applicant had acted deceitfully, dishonourably and in breach of her contract with the respondents, that she had conceived and executed a dishonourable plan to pretend that she was purchasing the respondents’ business when she had no intention of doing so, and, as pleaded in paragraph 46 of the FASOC, that the applicant had “cheated the respondents out of a valuable business with substantial goodwill”. The third respondent pleads that the Main Post was removed approximately 10 minutes after being posted. On 11 November 2022, the applicant sent to the first and third respondents a concerns notice in relation to the Main Post (First Concerns Notice). The applicant did not receive a response to the First Concerns Notice. In January 2023, the first and third respondents further published a number of Instagram posts about the applicant (January Posts). The statements in the posts are alleged to have further defamatory imputations as to the applicant’s character, including that she is a thief, is untrustworthy and deceitful, acted dishonourably and that she unlawfully misused confidential information of the business. On 20 February 2023, the applicant sent the first and third respondents a second concerns notice (Second Concerns Notice). On the same day, the third respondent replied by email as follows: I reject your letter in its entirety for its characterization of my comments. Everything I have said in my comments was an accurate description of the circumstances of Hayley’s involvement with my business and the events that followed. On 27 February 2023, the applicant filed an interlocutory application seeking injunctive relief for the January Posts to be removed, as well as restraining the first and third respondents from re-publishing the Main Post and January Posts and publishing any material to the same or substantially the same effect as the Main Post and January Posts. On 23 March 2023, the applicant filed an amended interlocutory application seeking orders including that the third respondent be taken to have been served with the interlocutory application filed on 27 February 2023. On 23 March 2023, the interlocutory application was heard. The third respondent did not appear at the hearing. On 28 March 2023, the applicant filed an amended originating application and a FASOC which included the claim regarding the January Posts.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Accordingly, the relevant paragraphs ought not to be struck out on the basis of the concerns notices. CONCLUSION For the reasons above, the amended interlocutory application ought to be dismissed. I do not consider that s 10A(5) is caught by s 79 of the Judiciary Act. However, even if it were caught, I consider there are special circumstances in this case which justify the postponement of the serious harm element until trial. With respect to the strike out application, I consider the relevant paragraphs of the FASOC ought not be struck out on the basis that they are an abuse of process. As well, I consider that the FASOC as currently pleaded discloses the requisite causes of action and ought not be struck out. Costs ought to follow the event. Given that the application is dismissed, the matter should now progress to trial. To that end, the parties are requested to confer and provide to the Court any agreed draft orders progressing the proceeding to trial. If no agreement as to the appropriate orders is reached, a case management hearing should be listed.

Ratio Decidendi

Legal Principle Established

The third respondent rejected that any of those circumstances are sufficient to be “special circumstances” such as to justify the postponement of the determination of serious harm. Counsel for the third respondent submitted, with respect to the timing of the application, that a mediation took place in December 2023, and that deferring to bring interlocutory applications until after a mediation is a “sensible approach”. Counsel for the third respondent also noted that his client was unrepresented until after the mediation. Consideration As a threshold matter, it is appropriate to first consider whether s 10A(5) of the Act is picked up by s 79 of the Judiciary Act. Section 79(1) of the Judiciary Act provides: The laws of each State or Territory, including the laws relating to procedure, evidence, and the competency of witnesses, shall, except as otherwise provided by the Constitution or the laws of the Commonwealth, be binding on all Courts exercising federal jurisdiction in that State or Territory in all cases to which they are applicable. The purpose of this provision was explained by Bell, Gageler (as his Honour then was), Keane, Nettle and Gordon JJ in Rizeq at [63]: The incapacity of a State Parliament to enact a law which governs the exercise of federal jurisdiction by a court, whether it be a federal court or a State court, explains the necessity for s 79 of the Judiciary Act and is the key to understanding the nature and extent of its operation. Section 79 is a law, enacted under s 51(xxxix) of the Constitution, which serves to ensure that the exercise of federal jurisdiction is effective. The section fills a gap in the law governing the actual exercise of federal jurisdiction which exists by reason of the absence of State legislative power. The section fills that gap by picking up the text of a State law governing the exercise of State jurisdiction and applying that text as a Commonwealth law to govern the manner of exercise of federal jurisdiction. The section has no broader operation. In Selkirk, an application was brought by the respondents seeking that the serious harm element be determined prior to trial. O’Callaghan J considered that it is “sufficiently unclear” as to whether ss 10A(5) and (6) of the Act give rise to any potential inconsistency, referring to ss 37M, 37N and 37P of the Federal Court Act: Selkirk at [35] and [43]. While his Honour ultimately considered that it was not necessary to resolve that matter (at [43]), his Honour stated the following at [37] – [42]: Sub-section 10A(5) requires a judge to determine whether the publication of defamatory matter about a person has caused, or is likely to cause, serious harm to the reputation of the person “as soon as practicable before a trial commences unless satisfied that there are special circumstances justifying the postponement of the determination to a later stage of the proceeding (including during the trial)”.The matters that a judge may take into account in deciding whether there are “special circumstances” are defined in s 10A(6) to include, but are not limited to, the cost implications for the parties; the resources available to the court at the time; and the extent to which establishing the serious harm element is linked to other issues for determination during the trial for the proceeding. As to the last of those considerations, the “other issues for determination” may include whether the alleged defamatory imputations were conveyed in the first place, because under s 10A “serious harm” is an additional element of the cause of action. See Rader v Haines [2022] NSWCA 198 at [17] (Brereton JA, with whom Macfarlan JA and Basten AJA agreed).On one view, those non-exhaustive matters are not aptly described as “special” circumstances. They seem to me, on the contrary, to require the giving of attention to what are nowadays run-of-the-mill case management considerations, which are matters that a judge of this court may, and routinely does, take into account in giving directions about practice and procedure under s 37P of the Federal Court Act. Viewed that way, there would be no inconsistency between ss 10A(5) and (6) of the Defamation Act and s 37P of the Federal Court Act. On the contrary, to use Bromwich J’s word, the former would be “complementary” to the latter, and not involve any inconsistency within the meaning of s 79 of the Judiciary Act.On another view, it may be thought that the requirement of “special circumstances” is to be given content by the literal meaning of those words because the draftsperson presumably chose the words to be meaningful. As Lord Hoffmann put it in Chartbrook Ltd v Persimmon Home Ltd [2009] 1 AC 1101 at 1112 –13 [17], “[t]he words used as labels are seldom arbitrary. They are usually chosen as a distillation of the meaning or purpose of a concept intended to be more precisely stated in the definition.” If by the inclusion of the word “special”, the legislature is taken to have intended that a separate pre-trial hearing on the question of serious harm must occur unless “exceptional” or the like circumstances are made out, such a provision might very well be said to fetter, and thus be inconsistent with, not only the broad and wide-ranging case management considerations provided for in s 37P of the Federal Court Act, but also the undoubted power under that section (and r 30.01 of the Federal Court Rules 2011 (Cth)) to order that a question arising in a proceeding be heard separately from any other questions.The courts have long warned of the potential perils of hearing separate trials of issues. In Tepko Pty Ltd v Water Board (2001) 206 CLR 1 at 55 [168]–[170], for example, Kirby and Callinan JJ said:… The attractions of trials of issues rather than of cases in their totality, are often more chimerical than real. Common experience demonstrates that savings in time and expense are often illusory, particularly when the parties have, as here, had the necessity of making full preparation and the factual matters relevant to one issue are relevant to others, and they all overlap.The second and related comment is this. A party whose whole case is knocked out on a trial of a preliminary or single issue, may suspect, however unjustifiably, that an abbreviated course was adopted and a decision reached in the court’s, rather than the parties,’ interests.Thirdly, there is an additional potential for further appeals to which the course of the trial on separate issues may give rise. Indeed, that could occur here were this appeal to be allowed and a retrial had in which the remaining issues of causation and damages were decided. Single-issue trials should, in our opinion, only be embarked upon when their utility, economy, and fairness to the parties are beyond question.Whether and to what extent those considerations may or should be taken into account by a judge of this court in determining whether she or he is satisfied of the existence of “special circumstances” under s 10A(5) of the Defamation Act seems to me to be a further possible source of difficulty.