Sarina & Anor v O'Shannassy

[2019] FCCA 732

FEDERAL CIRCUIT COURT OF AUSTRALIA

SARINA & ANOR v O'SHANNASSY [2019] FCCA 732

Catchwords:

COURTS AND JUDICIAL SYSTEM – Federal jurisdiction – proceeding commenced in Federal Circuit Court of Australia (Court) by two applicants alleging contraventions by respondent of s.18(1), s.20, and s.50 of the Australian Consumer Law (ACL), being Schedule 2 to the Competition and Consumer Act 2010 (Cth) (Act), and also asserting causes of action in defamation – Court has jurisdiction under s.138A of the Act in relation to any matter arising under the ACL subject to the limitation that it does not have jurisdiction to award an amount for loss or damage that exceeds $750,000 - applicants concede that causes of action based on alleged contraventions of the ACL have no reasonable prospects of success because the ACL applies as a law of the Commonwealth only to the conduct of corporations and the respondent is not a corporation – whether notwithstanding concession that claims based on the ACL have no reasonable prospects of success the Court has jurisdiction to determine causes of action based on defamation – whether the causes of action for defamation and those for contravention of the ACL arise out of a common substratum of facts such that the causes of action for defamation and the claims under the ACL form part of a single controversy – Court has jurisdiction to determine causes of action based on defamation.

PRACTICE AND PROCEDURE – DEFAMATION – application for leave to file amended statement of claim in the form of a proposed amended statement of claim – whether imputations pleaded in proposed amended statement of claim are reasonably capable of arising from the matter by which it is alleged the imputations were conveyed – all imputations capable of so arising but one of the proposed imputations not capable of bearing defamatory meaning – leave to file amended statement of claim granted in the form of the proposed amended statement of claim subject to a number of omissions.

PRACTICE AND PROCEDURE – whether applicants estopped from pursuing claims on the ground that they ought reasonably have raised them in earlier proceedings in the Local Court of New South Wales – not unreasonable for the applicants not to have raised claims in earlier proceedings.

Legislation:

Australian Constitution, ss.71, 75, 76, 77

Competition and Consumer Act 2010 (Cth), Schedule 2, ss.18(1), 20, 50, 131(1), 138A

Defamation Act 2005 (Cth), s.6(1)

Judiciary Act 1903 (Cth), ss.79, 80

Local Court Act 2007 (NSW), s.33(1)(b)

Cases cited:

Adeang v The Australian Broadcasting Corporation [2016] FCA 1200

Air Link Pty Ltd v Paterson (2005) 223 CLR 283

Chakravarti v Advertiser Newspapers Ltd [1998] HCA 37

Dow Jones & Company Inc v Gutnick (2002) 210 CLR 675

Fairfax Media Publications Pty Ltd v Bateman [2015] NSWCA 154

Favell v Queensland Newspapers Pty Ltd [2005] HCA 52

Fencott v Muller (1983) 152 CLR 570

Hall-Gibbs Mercantile Agency Ltd v Dun (1910) 12 CLR 84

In re The Judiciary and Navigation Acts (1921) 29 CLR 257

Johnson Tiles Pty Ltd v Esso Australia Pty Ltd [2000] FCA 1572

Mirror Newspapers Ltd v Harrison (1982) 149 CLR 293

Orion Pet Products Pty Ltd v Royal Society for the Prevention of Cruelty to Animals(Vic) Inc [2002] FCA 860

Packer v Mirror Newspapers Ltd (1969) 90 WN (Pt 1) NSW 308

Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457

Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589

R v Curtis (No 3) [2016] 866

Rana v Google Inc [2017] FCA 156

Re Wakim [1999] HCA 27

Shelton v National Roads and Motorists Association Ltd  [2004] FCA 1393

Sungravure Pty Ltd v Middle East Airlines Airliban SAL (1975) 134 CLR 1

Trkulja v Google LLC [2018] HCA 25

Webb v Block (1928) 41 CLR 331

First Applicant: CLINTON SARINA

Second Applicant: MARTIN GREEN

Respondent: JOHN O'SHANNASSY

File Number: SYG 1339 of 2018

Judgment of: Judge Manousaridis

Hearing date: 25 September 2018

Date of Last Submission: 1 November 2018

Delivered at: Sydney

Delivered on: 29 March 2019

REPRESENTATION

Counsel for the Applicant: Mr R Rasmussen

Solicitors for the Applicant: Sanford Legal

Counsel for the Respondent: Mr T Crispin

Solicitors for the Respondent: Lloyd & Lloyd Solicitors

ORDERS

1. The application is dismissed to the extent it relies on alleged contraventions by the respondent of provisions of the Australian Consumer Law, being Schedule 2 to the Competition and Consumer Act 2010 (Cth).

2. The applicants have leave to file an amended statement of claim in the form, or substantially in the form, of the draft amended statement of claim annexed to the affidavit of Simon Campbell Maxwell made on 14 September 2018 (PASOC) save that:

   (a)the amended statement of claim shall omit paragraphs 18A, 18B(1), and 19 of the PASOC, and shall also omit matters that have been included in the PASOC solely for the purpose of alleging or supporting a claim that the respondent contravened provisions of the Australian Consumer Law; and

   (b)the applicants may, if so advised, include in the amended statement of claim a reformulated imputation to replace the imputation alleged in paragraph 18B(1) of the PASOC.

3. The respondent’s application in a case filed on 17 July 2018 is otherwise dismissed.

4. The costs of the application in a case filed by the applicants on 17 September 2018 and the costs of the application in a case filed by the respondent on 17 July 2018 are reserved.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 1339 of 2018

CLINTON SARINA

First Applicant

MARTIN GREEN

Second Applicant

And

JOHN O'SHANNASSY

Respondent

REASONS FOR JUDGMENT

Introduction

1. Before the Court are two applications in a case. One is filed by the respondent, Mr O’Shannassy, seeking an order that the application and statement of claim be struck out on the ground that the applicants, Mr Sarina and Mr Green, do not have reasonable prospects of succeeding on their claims, and also because the proceeding they have brought is an abuse of process. The other application in a case is filed by the applicants seeking leave to amend the statement of claim.

2. In the statement of claim as currently filed the applicants allege Mr O’Shannassy engaged in conduct that was misleading or deceptive in contravention of s.18(1) of the Australian Consumer Law (ACL), being Schedule 2 to the Competition and Consumer Act 2010 (Cth) (CC Act) and, or in the alternative, Mr O’Shannassy engaged in conduct that was unconscionable, in contravention of s.20(1) of the ACL. In addition the applicants allege Mr O’Shannassy published emails that conveyed defamatory imputations concerning the applicants.

3. In their application in a case the applicants seek leave to file an amended statement of claim in the form of the proposed amended statement of claim (PASOC) annexed to the affidavit of Mr Maxwell, solicitor for the applicants, made on 14 September 2018. In the PASOC the applicants seek to add a cause of action based on an asserted contravention of s.50 of the ACL.

Course of applications

1. I heard the applications in a case on 25 September 2018. Recognising that the applications in a case gave rise to overlapping issues, counsel for the parties directed their submissions to the PASOC. That was sensible. If the applicants have no reasonable prospects of succeeding on the claims made in the PASOC, or if to permit the applicants to rely on the PASOC would constitute an abuse of process, the application to amend the statement of claim should be dismissed, and so should the proceeding. If, on the other hand, the PASOC pleads reasonable causes of action, and to permit the applicants to maintain them does not amount to an abuse of process, an order giving the applicants leave to file the PASOC should be made, and the proceeding continue to a hearing.

2. Relatively late into the hearing of the applications in a case, it became apparent that counsel for the applicants wished to amend the PASOC. I granted counsel for the applicants a short adjournment to permit him to formulate the amendments. Counsel formulated proposed amendments, and these are contained in documents I marked “MFI1” and “MFI2”. MFI1 proposes to add three sentences to the current paragraph 16(b) of the PASOC, and MFI2 proposes to add two paragraphs after paragraph 18 of the PASOC. At the conclusion of the hearing I made orders permitting the parties to file further written submissions in relation the proposed amendments to the PASOC. Mr O’Shannassy filed submissions on 5 October 2018, and the applicants filed submissions on 15 October 2018.

3. In the course of considering my judgment after I heard the applications in a case, I formed the view there was an issue of jurisdiction which counsel did not raise, and which I considered should be addressed. At my request my associate sent the parties the following email:

   His Honour has requested that I bring the following matters to your attention:

   The Federal Circuit Court of Australia has jurisdiction under s.138A of the Competition and Consumer Act 2010 (Cth) (CC Act) “in relation to any matter arising under this Part of the Australian Consumer Law in respect of which a civil proceeding is instituted by a person other than the Commonwealth Minister”. “This Part” is Part XI of the CCAct which is headed “Application of the Australian Consumer Law as a law of the Commonwealth”. The expression “Australian Consumer Law” is defined in s.130 of the CCAct to mean “Schedule 2 as applied under Subdivision A of Division 2 of this Part”. Subsection 131(1) of the CC Act provides that “Schedule 2 applies as a law of the Commonwealth to the conduct of corporations, and in relation to contraventions of Chapters 2, 3 or 4 of Schedule 2 by corporations”.

   Although the proposed statement of claim alleges contraventions of s.18(1) and s.50 of Schedule 2 of the CC Act, it does not allege that either of those contraventions were engaged in by a corporation; and the proposed statement of claim does not otherwise allege any conduct by any corporation. In those circumstances his Honour would appreciate receiving submissions from the parties on the following questions:

   a)Given the proposed amended statement of claim does not allege any contravening or other conduct by a corporation, do the applicants have any reasonable cause of action based on contraventions of s.18 or s.50 of Schedule 2 to the CC Act?

   b)Assuming (a) is answered in the negative, does the Court nevertheless have any jurisdiction to entertain the causes of action in defamation? (See Rana v Google Inc [2017] FCAFC)? More particularly, assuming (a) is answered in the negative, is the applicant’s invocation of the Court’s jurisdiction “colourable in the sense that it was made for the improper purpose of fabricating jurisdiction”? (See Johnson Tiles Pty Ltd v Esso Australia Pty Ltd [2000] FCA 1572, at [29]; [88])

   His Honour would appreciate receiving submissions within seven days or within such further time as the parties may reasonably request.

   Given the issues raised in this email, his Honour proposes not to give judgment until after the parties have had an opportunity to provide further submissions, and his Honour has had an opportunity to consider those submissions. That means that the current listing at 9.30 am on 19 October 2018 will be vacated.

4. The parties responded by filing submissions on the matters raised in the email. In their submissions, the applicants conceded that, because the PASOC does not allege any contravening or other conduct by a corporation, they do not have any reasonable cause of action based on contraventions of s.18 or s.50 of the ALC.[1] They submitted the claims they make pursuant to the ACL should be struck out, but the claims in defamation should be permitted to continue.[2]

   [1] Submissions in Response to Questions Posed by His Honour on 16 October 2016, page 2

   [2] Submissions in Response to Questions Posed by His Honour on 16 October 2016, page 5

5. Given the issues identified in my associate’s email concern this Court’s jurisdiction, it will be necessary that I first consider the question of jurisdiction. To be in a position to do that, it will be necessary to set out the facts alleged in the PASOC as amplified by the evidence before me, and the causes of action the applicants claim arise on those alleged facts.

Facts pleaded in the PASOC

1. Sometime before 30 June 2017 the second applicant, Mr Green, introduced the first applicant, Mr Sarina, to Mr O’Shannassy for the purpose of inquiring whether Mr O’Shannassy could arrange a loan for $35,000 to Mr Sarina for a development Mr Sarina was involved with in Queensland. On 30 June 2017 Mr O’Shannassy advanced $35,000 to Mr Green.

2. The applicants allege that in late July 2017 or early August 2017 Mr Green sought the repayment of the $35,000 together with an alleged “facilitation fee” of $15,000 and “fees and interest”.[3] Mr Sarina denied liability to pay any facilitation fee or the “fees and interest” demanded by Mr O’Shannassy.[4]

   [3] PASOC, [4]

   [4] PASOC, [5]

3. On 29 September 2017 Mr O’Shannassy sent an email to Mr Sarina.[5] The recipient list of the email suggests it was also sent to “Marty G”, which I take to be a reference to Mr Green. The applicants allege the email was also sent to the directors of Fleur De Vie Beverages Pty Ltd (Fleur), Mr Coleman and Mr George, and that those directors, the applicants, and Mr O’Shannassy were all shareholders of Fleur.[6] In that email Mr O’Shannassy complained about attempts he had made to contact Mr Green for the repayment of the loan, and stated as follows:

   Your failure to attend meetings as agreed and your failure to communicate with me has left me with no other choice but to put in place institution of proceeding to recover the money you borrowed.

   You should seek your own legal advice and keep in mind your and Martin Greens (sic) dishonest and unconscionable behaviour. I at one stage considered you friends and colleagues. I now only consider you spivs and con artists.

   [5] PASOC, [16]; annexure “A”

   [6] PASOC, [16(b)], MFI1

4. On 5 October 2017 Mr O’Shannassy sent an email to Mr Sarina headed “OVERDUE PAYMENT BREACH OF CONTRACT”.[7] The email complained Mr Green and Mr Sarina were not responding to Mr O’Shannassy’s telephone calls, and Mr Sarina was not honouring what Mr O’Shannassy asserted were the terms of the loan agreement.

   [7] PASOC, [17], annexure “C”

5. On 1 November 2017 Mr O’Shannassy sent another email to Mr Sarina which commenced as follows:[8]

   s 192E(1)(b) Obtain financial advantage or cause financial advantage by deception Penalty 10 years max

   More recent authorities have held that in cases of white-collar crime, the purposes of punishment are best met by way of the imposition of full-time imprisonment rather than an intensive correction order . . .

   [8] PASOC, [17], annexure “D”

6. Mr O’Shannassy then set out a passage from the judgment of McCallum J in R v Curtis (No 3),[9] and a lengthy passage from a source or sources not identified which identify the factors relevant to assessing a sentence for fraud. Mr O’Shannassy concluded his email with the following:

   The above look very familiar. Any way I will let the police deal with this issue. I will pursue all the way to bankruptcy. Thanks for all the paper trail.

   [9] [2016] 866

7. On 20 December 2017 Mr O’Shannassy sent the following email to Mr George and Mr Coleman: [10]

   [10] PASOC, [16], annexure “B”

   I must apologise. I discovered that I had not completed the notification of my resignation as company secretary. I will do that over the next few days.

   I again warn you of the nefarious nature of Martin Green and Clinton Sarina. I am giving you some information so that you can be fully informed.

   I hear from a colleague Gary Stewart Martin Green is under investigation by the Legal Services Commissioners yet again. The issues [sic] is fraud. They are both in serious trouble so I would be very careful in any dealing with these rogues.

   Clinton has court proceedings against him in the Supreme Court for what I am told is fraud again. You need to make up your own minds on how you deal with Martin Green and Clinton Sarina. But I would google them both. They have both been involved in a fraud matter in which one party went to gaol for 6 years and in which the judge said that id [sic] Martin Green gave evidence he would have gone to gaol as well.

   I suggest you read the court judgment.

8. The applicants allege,[11] and I understand it is common ground, that on 25 December 2017 Mr O’Shannassy commenced proceedings in the Local Court of New South Wales seeking recovery of what the PASOC describes as the “alleged debt”, which in paragraph 4 of the PASOC appears to be defined to include the $35,000 loan, the “facilitation fee”, and the “fees and interest”. That appears to be confirmed by the statement of claim filed in the Local Court, which is in evidence. The statement of claim alleges that on 30 June 2017 Mr O’Shannassy and Mr Sarina agreed that Mr O’Shannassy would lend Mr Sarina $35,000, and that Mr Sarina would repay the loan by 18 August 2017 together with “an additional facilitation fee of $15,000”. The statement of claim also alleges Mr Sarina agreed he would pay interest at the rate of 15%. The proceeding was commenced only against Mr Sarina.

   [11] PASOC, [6]

9. The applicants further allege, and, again, I understand it is common ground, that on 4 February 2018, without notice to them, Mr O’Shannassy obtained default judgment against Mr Sarina; that on 15 February 2018 Mr Sarina applied to set aside the default judgment, and that, on 15 March 2018, being the appointed date for the hearing of Mr Sarina’s application to set aside the default judgment, Mr Sarina and Mr O’Shannassy settled the proceeding with the consequence that the default judgment was set aside.

The asserted causes of action

1. Based on these facts or alleged facts, the applicants assert three causes of action. The first is that Mr O’Shannassy engaged in conduct that contravened s.18(1) of the ACL, which provides that a “person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive”. The contravening conduct is Mr O’Shannassy’s sending the emails of 29 September 2017 and 20 December 2017.

2. The second cause of action is one based on s.50 of the ACL which provides as follows:

   (1)    A person must not use physical force, or undue harassment or coercion, in connection with:

   (a)     the supply or possible supply of goods or services; or

   (b)     the payment for goods or services; or

   (c)     the sale or grant, or the possible sale or grant, of an interest in land; or

   (d)     the payment for an interest in land.

   (2)    Subsections (1)(c) and (d) do not affect the application of any other provision of Part 2‑1 or this Part in relation to the supply or acquisition, or the possible supply or acquisition, of interests in land.

3. The applicants allege that the harassment or coercion is to be inferred from the totality of the matters alleged in the PASOC, annexure “C” (being the email sent 5 October 2017 to which I have referred above), and annexure “D” (being the email sent on 1 November 2017 to which I have also already referred). The applicants further allege that the frequency, nature, and content of the communications alleged in the PASOC were calculated by Mr O’Shannassy to force Mr Green to exert pressure on Mr Sarina to pay the alleged “facilitation fee” and “fees and interest” to Mr O’Shannassy.

4. The third cause of action is for defamation. It is alleged that the emails of 29 September 2017 and 20 December 2017 conveyed a number of defamatory imputations concerning the applicants. I will set out the imputations alleged in the PASOC later in these reasons.

Jurisdiction

1. As I have already noted, the applicants accept that, because the PASOC does not allege any contravening or other conduct by a corporation, they do not have any reasonable cause of action based on contraventions of s.18 or s.50 of the ALC. They submit the claims they make under the ACL should be struck out, and the causes of action in defamation should be permitted to proceed.[12] The question that arises is whether, given the applicants’ concession that the ACL claims should be struck out, the Court has jurisdiction to determine the claims for relief based on defamation.

   [12] Submissions in Response to Questions Posed by His Honour on 16 October 2016, page 5

Principles

1. Whether this Court has jurisdiction to entertain the applicants’ claims for relief based on defamation depends, at least in substantial part, on whether there is a “matter” before the Court and, if so, whether the claims for relief based on defamation form part of the “matter”. This way of stating the questions relating to the Court’s jurisdiction to determine the claims for relief based on defamation arises from the nature of the judicial power of the Commonwealth, as provided for by s.71 of the Constitution, the means by which Parliament may vest any part of the judicial power of the Commonwealth in a court Parliament creates under s.71 of the Constitution, and the particular means by which Parliament has conferred jurisdiction on this Court under s.138A(1) of the CC Act, which provides that jurisdiction is conferred on this Court “in relation to any matter” arising under Part XI of that Act and the ACL “in respect of which a civil proceeding is instituted”. That grant of jurisdiction is subject to s.138A(2) which provides that this Court does not have jurisdiction to award an amount for loss or damage that exceeds $750,000 or, if another amount is specified in the regulations, that other amount.

2. Section 71 of the Constitution provides that the “judicial power of the Commonwealth shall be vested in . . . the High Court of Australia, and in such other federal courts as the Parliament creates, and in such other courts as it invests with federal jurisdiction”. Under s.77(i) of the Constitution Parliament may make laws “[w]ith respect to any of the matters mentioned in the last two sections . . . [d]efining the jurisdiction of any federal court other than the High Court”. Section 75 of the Constitution identifies five “matters” in relation to which the High Court has original jurisdiction; and s.76 identifies four matters in relation to which Parliament may make laws conferring original jurisdiction on the High Court, one of which is “any matter . . . arising under any laws made by the Parliament”. As the High Court said in In re The Judiciary and Navigation Acts:[13]

   This express statement [contained in s.75, s.76, and s.77 of the Constitution] of the matters in respect of which and the Courts by which the judicial power of the Commonwealth may be exercised is, we think, clearly intended as a delimitation of the whole of the original jurisdiction which may be exercised under the judicial power of the Commonwealth, and as a necessary exclusion of any other exercise of original jurisdiction.

   [13] (1921) 29 CLR 257, page 265

3. A central element of the delimitation of the jurisdiction to exercise the judicial power of the Commonwealth that may be conferred on a federal court is the notion of “matter”. That word bears two related meanings. One is “the subject matter for determination in a legal proceeding”.[14] Sections 75 and 76 of the Constitution identify a number of subject matters that are capable of being determined by the High Court or by any federal or State court in which Parliament vests jurisdiction under s.77 of the Constitution. The other meaning of “matter” is the character of the determination a court can be authorised to make; and that is a determination that establishes “some immediate right, duty or liability”, as opposed to a determination “divorced from any attempt to administer the law”.[15] Relevant to what I am required to decide is the first of the two meanings of “matter”.

   [14] In re The Judiciary and Navigation Acts (1921) 29 CLR 257, page 265

   [15] In re The Judiciary and Navigation Acts (1921) 29 CLR 257, page 265

4. Sections 75 and 76 of the Constitution define exhaustively the subject matters in relation to which Parliament can confer jurisdiction on a federal court. With the exception of s.75(v) of the Constitution, they do not purport to define the subject matters by reference to claims for relief or causes of action. That leaves open the possibility that “matter”, when used in s.76(ii) of the Constitution in the expression “arising under any laws made by the Parliament”, could be construed as not being restricted to claims for relief based on laws made by the Parliament. And it is the case that “matter” has been so construed. “Matter”, as it applies to s.76(ii) of the Constitution, has been construed to mean a single controversy between litigating parties in which one or more of the parties wholly or in part seek to rely on a claim or a defence it is contended arises under a law made by the Parliament. The modern foundation for this principle is the judgment of the plurality in Fencott v Muller:[16]

   [I]t is necessary to attribute to “matter” in ss. 75 and 76 of the Constitution a connotation which does not deny to federal judicial power its primary character: that is, the power of a sovereign authority “to decide controversies between its subjects, or between itself and its subjects, whether the rights relate to life, liberty or property” . . . . The unique and essential function of the judicial power is the quelling of such controversies by ascertainment of the facts, by application of the law and by exercise, where appropriate, of judicial discretion. In identifying a s. 76(ii) matter, it would be erroneous to exclude a substantial part of what is in truth a single justiciable controversy and thereby to preclude the exercise of judicial power to determine the whole of that controversy. What is and what is not part of the one controversy depends on what the parties have done, the relationships between or among them and the laws which attach rights or liabilities to their conduct and relationships.

   [16] (1983) 152 CLR 570, page 608 (reference omitted)

5. On this construction a “matter”, at least when used in relation to the expression “arising under any laws made by the Parliament” in s.76(ii) of the Constitution, is a set of alleged facts that have such a degree of commonality as to give rise to one justiciable controversy, even though the one controversy may give rise to more than one claim for relief or defence, provided that at least one of the claims for relief or at least one defence is alleged to arise under a law of the Parliament. Different expressions have been used to describe the required degree of commonality among alleged facts before they can legitimately be characterised as giving rise to one justiciable controversy. An influential formulation is that given by Mason J (as his Honour then was) in Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd, who referred to “common transactions and facts” arising “out of a common substratum of facts”.[17] Also influential is the following formulation given by Gummow and Hayne JJ in Re Wakim:[18]

   What is a single controversy ‘‘depends on what the parties have done, the relationships between or among them and the laws which attach rights or liabilities to their conduct and relationships’’. There is but a single matter if different claims arise out of ‘‘common transactions and facts’’ or ‘‘a common substratum of facts’’, notwithstanding that the facts upon which the claims depend ‘‘do not wholly coincide’’. So, too, there is but one matter where different claims are so related that the determination of one is essential to the determination of the other, as, for example, in the case of third party proceedings or where there are alternative claims for the same damage and the determination of one will either render the other otiose or necessitate its determination. Conversely, claims which are ‘‘completely disparate’’, ‘‘completely separate and distinct’’ or ‘‘distinct and unrelated’’ are not part of the same matter.

   Often, the conclusion that, if proceedings were tried in different courts, there could be conflicting findings made on one or more issues common to the two proceedings will indicate that there is a single matter. By contrast, if the several proceedings could not have been joined in one proceeding, it is difficult to see that they could be said to constitute a single matter.

   [17] (1981) 148 CLR 457 at page 512

   [18] [1999] HCA 27; (1999) 198 CLR 511 at [140]- [141] (references omitted)

6. In Rana v Google Inc the Full Federal Court provided the following explanation of “matter”:[19]

   The “matter” is the justiciable controversy between the parties arising out of the substratum of facts and claims representing, or amounting to, the dispute or controversy between or amongst the parties. Where federal and non-federal claims comprise the same justiciable controversy, a court exercising federal jurisdiction will have jurisdiction to resolve the entire matter in the exercise of its federal jurisdiction.

   [19] [2017] FCA 156, at [17]

7. One implication of construing “matter” as meaning a single controversy which may include both a federal and a non-federal issue is that “[u]pon the existence of federal jurisdiction, the matter remains within federal jurisdiction regardless of how the federal issue or issues within it are ultimately resolved”.[20] That is so even where the federal claim is dismissed or abandoned.[21] This principle, however, is subject to an exception; it does not apply “where the federal claim that is made is “colourable” in the sense that it was “made for the improper purpose of fabricating jurisdiction” such that it was not made bona fide”.[22]

   [20] Rana v Google Inc [2017] FCA 156, at [21]

   [21] Rana v Google Inc [2017] FCA 156, at [21]

   [22] Rana v Google Inc [2017] FCA 156, at [21]

8. What I have discussed so far is the constitutional meaning of “matter”. Whether or not in any given case this Court has jurisdiction in relation to any controversy, however, does not depend, at least directly, on whether the controversy is a “matter” within the meaning of the Constitution. The immediate questions are whether Parliament, consistently with s.77(i) of the Constitution, has enacted a law conferring jurisdiction on this Court and, if so, whether the controversy which is before the Court falls within the terms of the grant of jurisdiction.

9. Relevant to the case before me is s.138A(1) of the CC Act. It confers jurisdiction on this Court “in relation to any matter arising under this Part or the Australian Consumer Law in respect of which a civil proceeding is instituted by a person other than the Commonwealth Minister”. “Australian Consumer Law” is defined in s.130 of the CC Act to mean “Schedule 2 as applied under Subdivision A of Division 2 of this Part”. Subsection 131(1) of the CC Act provides that “Schedule 2 applies as a law of the Commonwealth to the conduct of corporations, and in relation to contraventions of Chapters 2, 3 or 4 of Schedule 2 by corporations”. On a plain reading of the text of s.131(1) of the CC Act, and subject to some exceptions,[23] Schedule 2 applies only to the conduct of corporations, and only in relation to their contravening Chapters 2, 3, and 4 of the ACL.

   [23] See s.6 of the CC Act

10. The constitutional meaning of “matter”, nevertheless, is relevant in a number of ways. First, it defines the extent of Parliament’s power to confer jurisdiction on a federal court. In other words, the grant of jurisdiction must be a law that falls within s.77 of the Constitution, namely,  a law that defines the jurisdiction of the court “[w]ith respect to any of the matters mention in” s.75 and s.76 of the Constitution. Second, the grant of jurisdiction by s.138A(1) of the CC Act uses the words in s.76(ii) of the Constitution, namely, “matter arising under” a particular law of the Parliament. That suggests, if not demands, that the expression “matter arising under” Part XI of the CC Act or of the ACL bear the same meaning as “matter . . . arising under any laws made by the Parliament”, except that the expression will be limited to matters arising under a particular law of the Parliament, namely, Part XI of the CC Act and the ACL in respect of which a civil proceeding is instituted.

Parties’ submissions

1. The applicants submit that, although their claims under the ACL have no reasonable prospects of success and, for that reason, they should be struck out, the Court has jurisdiction to hear and determine the causes of action based on defamation because the applicant’s invocation of the Court’s jurisdiction was not colourable. They submit there is a genuine controversy between them and Mr O’Shannassy arising out of “a course of conduct that sounded in damages of a reputational nature”.[24] The applicants submit that, given the conduct on which they rely includes “the email of 20 December 2017 upon which the Applicants propound their claim in defamation”, there “was a legitimate basis for assuming that the Court would have jurisdiction to determine this controversy given the Respondent’s status as a company secretary”.[25] Finally, the applicants submit that the mere fact a federal claim is found to be untenable does not deprive the Court of jurisdiction over the non-federal element of a controversy.[26]

   [24] Submissions in Response to Questions Posed by His Honour on 16 October 2016, page 2

   [25] Submissions in Response to Questions Posed by His Honour on 16 October 2016, page 2

   [26] Submissions in Response to Questions Posed by His Honour on 16 October 2016, page 5

2. Mr O’Shannassy, on the other hand, submits that, for the reasons submitted before me at the hearing, the applicants’ claims based on misleading or deceptive conduct, unconscionable conduct, and undue harassment or coercion “were hopelessly flawed”, and they “are naught but a vehicle to bring defamation proceedings in this Court”. Mr O’Shannassy further submits that, given the hopelessness of the claims based on the ACL, the inference that should be drawn is these claims “served only to fabricate jurisdiction for defamation proceedings to be heard in” this Court.

Is there a “matter arising under” the ACL?

1. I am not satisfied the applicants brought claims purportedly under the ACL for the purpose of fabricating jurisdiction. The applicants, through their counsel, made considered submissions in support of the tenability of these claims, and counsel for the applicants delivered his submissions with conviction. Further, the ground on which the applicants now concede their claims under the ACL are not tenable is that the ACL applies only to the conduct of corporations. That, however, was not a matter Mr O’Shannassy raised; it is a matter I instructed my associate to bring to the parties’ attention after I heard the applications in a case. That suggests that all parties incorrectly assumed the ACL was capable of applying to Mr O’Shannassy’s alleged conduct. In these circumstances I am satisfied the applicants properly invoked the jurisdiction of this Court in relation to the claims they make under the ACL.

2. The next question is whether the alleged facts on which the applicants rely in support of the purported claims under the ACL and the alleged facts on which they rely for their claims based on defamation are such that it can be said that the claims arise out of ‘‘common transactions and facts’’ or ‘‘a common substratum of facts’’, notwithstanding that the facts upon which the claims depend ‘‘do not wholly coincide’’. In my opinion they do. The facts on which the applicants rely in their statement of claim for alleging that Mr O’Shannassy contravened s.18 and s.20 of the ACL are the same as the facts on which the applicants rely for claiming Mr O’Shannassy defamed them, namely the sending of emails on 29 September 2017 and 20 December 2017.

3. It follows, therefore, that the applicants’ claims for relief based on defamation and under the ACL constitute a single controversy; and, for that reason, the Court has jurisdiction to determine the applicants’ claims for defamation.

Defamation claims – no reasonable prospects of success?

1. Mr O’Shannassy submits the applicants do not have reasonable prospects of succeeding in their claims for relief based on defamation, either in the form those claims are pleaded in the current statement of claim, or in the form they propose to plead them in the PASOC. Mr O’Shannassy further submits the applicants are estopped from maintaining any claim for defamation because of the operation of the principles associated with the High Court’s judgment in Port of Melbourne Authority v Anshun Pty Ltd.[27] Before I consider Mr O’Shannassy’s submissions, it will be necessary to refer to three matters. The first is the law I am required to apply; the second is the identification of the elements of a cause of action based on defamation, and the requirements for pleading such a cause of action; and the third is the form in which the applicants plead their causes of action based on defamation.

   [27] (1981) 147 CLR 589

Law to be applied

1. The law I am required to apply is to be determined by the application of s.79 and s.80 of the Judiciary Act 1903 (Cth) (Judiciary Act). Subsection 79(1) 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.

2. As is apparent from its text, the intended operation of s.79(1) of the Judiciary Act is broad. Relevantly to the issues before me, s.79(1) has been held to “pick up” rules of pleading and their amendment.[28]

   [28] Air Link Pty Ltd v Paterson (2005) 223 CLR 283

3. Section 80 of the Judiciary Act provides:

   So far as the laws of the Commonwealth are not applicable or so far as their provisions are insufficient to carry them into effect, or to provide adequate remedies or punishment, the common law in Australia as modified by the Constitution and by the statute law in force in the State or Territory in which the Court in which the jurisdiction is exercised is held shall, so far as it is applicable and not inconsistent with the Constitution and the laws of the Commonwealth, govern all Courts exercising federal jurisdiction in the exercise of their jurisdiction in civil and criminal matters.

4. The proceeding is before me as a judge of this Court sitting in the State of New South Wales. It is therefore the law of the State of New South Wales I must apply; and, to the extent the rules of procedure that apply to a proceeding in this Court do not apply to an action based on defamation, I am to apply the rules of procedure that are applied in New South Wales.

5. The relevant law is in part contained in the Defamation Act 2005 (NSW) (Defamation Act). That Act “relates to the tort of defamation at general law”.[29] Thus, the relevant law relating to defamation consists of the principles of the common law that define the elements of the tort of defamation, principles of equity that apply to the common law tort of defamation,[30] and the provisions of the Defamation Act that modify or abolish principles of the common law or of equity that apply to the tort of defamation.

   [29] Defamation Act 2005 (Cth), s.6(1)

   [30] Section 4 of the Defamation Act defines “general law” to mean “the common law and equity”.

Elements of, and pleading, a cause of action for defamation

1. The following statement of the elements of a cause of action for defamation may be taken to be accurate for the purposes of these reasons:[31]

   [31] Halsbury’s Laws of Australia, LexisLexis, last updated 25 January 2018, at 145-15 (footnotes omitted)

   The tort of defamation consists of the communication of a defamatory meaning ‘of and concerning the plaintiff’ to a person other than the plaintiff. The communication may be achieved through many means . . . Any such communication is known as, and amounts to, publication and must itself contain, either directly or by implication, a defamatory meaning. A publication is defamatory of a person if it tends, in the minds of ordinary reasonable persons, to injure his or her reputation either by:

   (1)    disparaging him or her;

   (2)    causing others to shun or avoid him or her; or

   (3)    subjecting him or her to hatred, ridicule or contempt.

1. A pleading of a cause of action for defamation must allege the facts constituting the publication of the matter by which the defamatory meaning was conveyed; and, except, perhaps, where the matter published is capable of conveying only one meaning,[32] the statement of claim must state the defamatory meaning it is alleged was conveyed by the publication of that matter. [33] The defamatory meaning must, at least in New South Wales,[34] be alleged “in the form of an imputation of and concerning the plaintiff”.[35] The word “impute” is an ordinary English word and “is properly used with reference to any act or condition asserted of or attributed to a person”;[36] and to “make an imputation concerning a person is to attribute some act or condition to him, or in other words, simply to make a statement concerning him”.[37]  Further:[38]

   As noted by Gleeson CJ in Drummoyne Municipal Council v Australian Broadcasting Commission, a requirement to specify a particular meaning will “in its practical application” raise questions of degree. He continued:

   “Almost any attribution of an act or condition to a person is capable of both further refinement and further generalisation. In any given case a judgment needs to be made as to the degree of particularity or generality which is appropriate to the occasion, and as to what constitutes the necessary specificity. If a problem arises, the solution will usually be found in considerations of practical justice rather than philology.”

   [32] See, for example, Packer v Mirror Newspapers Ltd (1969) 90 WN (Pt 1) NSW 308, at pages 309-10

   [33] There is a degree of complexity in the rule governing the pleading of causes, of action and defences in defamation, particularly as they have evolved in New South Wales: see Fairfax Media Publications Pty Ltd v Bateman [2015] NSWCA 154, at [157]-[203] (Basten JA)

   [34] See Fairfax Media Publications Pty Ltd v Bateman [2015] NSWCA 154, at [157]-[203]\

   [35] Adeang v The Australian Broadcasting Corporation [2016] FCA 1200, at [15] (Rares J)

   [36] Hall-Gibbs Mercantile Agency Ltd v Dun (1910) 12 CLR 84, at page 91 (Griffith CJ)

   [37] Sungravure Pty Ltd v Middle East Airlines Airliban SAL (1975) 134 CLR 1, page 10 (Gibbs CJ)

   [38] Fairfax Media Publications Pty Ltd v Bateman [2015] NSWCA 154, at [167] and [168] (Basten JA) (footnotes omitted)

   The Chief Justice approved a test formulated by Hunt J in Whelan v John Fairfax & Sons Ltd:

   “The issue which has to be decided in the particular case is whether there is likely to be confusion either at the pleading stage or at the trial in relation to the meaning for which the plaintiff contends.”

2. The pleaded imputation must be one that is reasonably capable of being conveyed by the matter published. Whether a pleaded imputation is reasonably capable of being so conveyed is a question of law;[39] and although such question permits only one answer, whether any particular pleaded imputation is reasonably capable of being conveyed by the publication is “a question about which reasonable minds may sometimes differ”.[40] In Trkulja v Google LLC the High Court identified the relevant principles for determining whether a published matter is capable of being defamatory:[41]

   The test for whether a published matter is capable of being defamatory is what ordinary reasonable people would understand by the matter complained of.  In making that assessment, it is necessary to bear in mind that ordinary men and women have different temperaments and outlooks, degrees of education and life experience. As Lord Reid observed in Lewis v Daily Telegraph Ltd, “[s]ome are unusually suspicious and some are unusually naïve”.  So also are some unusually well educated and sophisticated while others are deprived of the benefits of those advantages. The exercise is, therefore, one of attempting to envisage a mean or midpoint of temperaments and abilities and on that basis to decide the most damaging meaning that ordinary reasonable people at the midpoint could put on the impugned words or images considering the publication as a whole.

   As the Court of Appeal of England and Wales observed in Berezovsky v Forbes Inc, that exercise is one in generosity not parsimony. The question is not what the allegedly defamatory words or images in fact say or depict but what a jury could reasonably think they convey to the ordinary reasonable person; and it is often a matter of first impression.  The ordinary reasonable person is not a lawyer who examines the impugned publication over-zealously but someone who views the publication casually and is prone to a degree of loose thinking.  He or she may be taken to “read between the lines in the light of his general knowledge and experience of worldly affairs”, but such a person also draws implications much more freely than a lawyer, especially derogatory implications, and takes into account emphasis given by conspicuous headlines or captions. Hence, as Kirby J observed in Chakravarti v Advertiser Newspapers Ltd, “[w]here words have been used which are imprecise, ambiguous or loose, a very wide latitude will be ascribed to the ordinary person to draw imputations adverse to the subject”.

   [39] Favell v Queensland Newspapers Pty Ltd [2005] HCA 52, at [9]

   [40] Trkulja v Google LLC [2018] HCA 25, at [30]

   [41] [2018] HCA 25, at [31], [32] (footnotes omitted)

3. It may also be revenant to note that “on an application for summary dismissal . . . the plaintiff’s case as to the capacity of the publications to defame him is to be taken at its highest”.[42]

   [42] Trkulja v Google LLC [2018] HCA 25, [30]

The causes of action pleaded in the PASOC

1. The PASOC, when read with MFI2 (which is how I will continue to read the PASOC), alleges there were two publications of defamatory matter, these being the emails of 29 September 2017 and 20 December 2017.[43] The PASOC then alleges as follows:

   [43] PASOC, [16]

   18A.On 20 December 2017 the Respondent published an email of and concerning the first and second applicants certain defamatory matter a copy of which is annexed hereto and marked ‘A’.

   18B.The said matter in its natural and ordinary meaning conveyed or was understood to have conveyed the following defamatory imputations:

   (1)The second applicant is under investigation by the legal services commissioner for fraud.

   (2)The second applicant is a fraud.

   (3)The first applicant is a fraud.

   (4)The first applicant went to gaol for 6 years.

   (5)The second applicant would have gone to gaol if he had given evidence.

   19.Further and in addition the Applicants say the Respondent published the said emails . . . which were defamatory of the Applicants which has caused the Applicants great pain of body and mind and had brought them into public hatred, ridicule and contempt and has caused financial loss to their business and the Applicants have been otherwise greatly damnified.

Respondent’s attack on pleading

1. It would be convenient if I identify and consider in turn each criticism counsel for Mr O’Shannassy makes of the manner in which PASOC pleads the causes of actions based on defamation.

2. First, counsel for Mr O’Shannassy submits that paragraph 18B of the PASOC is defective because it alleges the publication of the letter conveyed, or was understood to have conveyed, a defamatory imputation. Counsel submits that a defendant to a defamation action is not liable for imputations “understood” to have been conveyed that do not in fact arise from the material; either “the material conveyed defamatory imputations, or it did not, there is no middle ground”.[44] Counsel for the applicants, on the other hand, submits that paragraph 18B of the PASOC “is orthodox”.

   [44] Respondent’s Submissions on Application to Amend Statement of Claim, [6]

3. Although it is possible to read paragraph 18B of the PASOC as alleging that, in the alternative to the “said matter” having conveyed the defamatory imputations, the “said matter” was understood (by some unidentified person or persons) to have conveyed such imputations, that would not be a reasonable reading of paragraph 18B. That is so because what paragraph 18B alleges would convey or which would be understood as conveying the imputations pleaded in paragraph 18B is the “said matter in its natural and ordinary meaning”. That implies the applicants allege that is the “natural and ordinary meaning” of the “said matter” – an objective fact - that conveyed the alleged imputations. Perhaps the pleader included the words “would be understood” to support the allegation of publication made in paragraph 18A of the PASOC. As Isaacs J said in Webb v Block, to “publish a libel is to convey by some means to the mind of another the defamatory sense embodied in the vehicle”.[45] And as the plurality said in Dow Jones & Company Inc v Gutnick, “[h]arm to reputation is done when a defamatory publication is comprehended by the reader, the listener, or the observer”; and “publication is a bilateral act – in which the publisher makes it available and a third party has it available for his or her comprehension”.[46]

   [45] Webb v Block (1928) 41 CLR 331, page 363

   [46] Dow Jones & Company Inc v Gutnick (2002) 210 CLR 675, at [26]

4. Although the inclusion in paragraph 18B of the PASOC of the words “or was understood to have conveyed” detracts from the clarity of what the applicants allege, the presence of those words does not constitute any formal defect, and does not otherwise render paragraph 18B an embarrassing pleading.[47]

   [47] Shelton v National Roads and Motorists Association Ltd [2004] FCA 1393, at [18] (Tamberlin J): ““Embarrassment” in this context refers to a pleading that is susceptible to various meanings, or contains inconsistent allegations, or in which alternatives are confusingly intermixed, or in which irrelevant allegations are made that tend to increase expense.”

5. Second, counsel for Mr O’Shannassy submits the first pleaded imputation distorts the words used in the email to an unnatural meaning. The words of the email counsel submits the first imputation distorts are the following (emphasis added by counsel):

   I hear from a colleague Gary Stewart, Martin Green is under investigation by the Legal Services Commissioners yet again. The issues [sic] is fraud. They are both in serious trouble so I would be very careful in any dealing with these rogues.

6. Counsel submits that the emphasised portions of this passage “clearly place any implications in the context of” Mr O’Shannassy’s “personal views and opinion of the Applicant”.[48] Counsel further submits that the Legal Services Commissioner does not have jurisdiction to investigate a solicitor for fraud. In any event, counsel submits the words are not reasonably capable of conveying the imputation and, further, they are incapable of being defamatory. Counsel submits Australian authorities have determined that reports of investigations into criminal investigations “will generally not hold defamatory imputations”.[49]

   [48] Respondent’s Submissions on Application to Amend Statement of Claim, [8] (emphasis in original)

   [49] Respondent’s Submissions on Application to Amend Statement of Claim, [8].

7. I do not agree that the text of the letter is incapable of supporting the imputation that the second applicant, Mr Green, is under investigation by the Legal Services Commissioner for fraud. The real question is whether the imputation itself is capable of being defamatory.

8. It is the case, as counsel for Mr O’Shannassy submits, that “a report which does no more than state that a person has been arrested and has been charged with a criminal offence is incapable of bearing the imputation that he is probably guilty”.[50] That, however, is not the imputation pleaded. All that is pleaded is the Legal Services Commissioner is investigating Mr Green, and that by itself is incapable of being defamatory. Perhaps the applicants intend to allege the letter conveyed the imputation that Mr Green had acted in a way that warranted a suspicion by the Legal Services Commissioner that Mr Green may have engaged in fraud.[51] If that is their intention, an imputation to that effect must be pleaded. I would, therefore, not permit the filing of a statement of claim that pleads an imputation to the effect pleaded in paragraph 18B(1) of the PASOC.

   [50] Mirror Newspapers Ltd v Harrison (1982) 149 CLR 293, at page 300

   [51] See Favell v Queensland Newspapers Pty Ltd [2005] HCA 52, at [12]: “A mere statement that a person is under investigation, or that a person has been charged, may not be enough to impute guilt. If, however, it is accompanied by an account of the suspicious circumstances that have aroused the interest of the authorities, and that point towards a likelihood of guilt, then the position may be otherwise.”

9. Third, counsel for Mr O’Shannassy submits that the second and third pleaded imputations that each of the applicants “is a fraud” is “curious” because that assertion does not appear in the text of the email. That means that the imputation arises by implication. In those circumstances, counsel submits, the imputations are defective in form because the imputation “is a fraud” is capable of meaning many things.

10. I do not accept these submissions. The word “fraud” appears three times in the email sent on 20 December 2017, once each in relation to each of the applicants, and once in relation to bother of them. And although it is the case that “is a fraud” could mean many things, that is not the consequence of the imputations pleaded, but of Mr O’Shannassy’s having used that expression in his email. Where “words have been used which are imprecise, ambiguous or loose, a very wide latitude will be ascribed to the ordinary person to draw imputations adverse to the subject”.[52]

    [52] Chakravarti v Advertiser Newspapers Ltd [1998] HCA 37, at [134] (Kirby J)

11. Fourth, counsel for Mr O’Shannassy submits the fourth imputation is found nowhere in the email sent on 20 December 2017. All that is stated is that the applicants “have both been involved in a fraud matter in which one party went to gaol for 6 years”.[53] I do not accept these submissions. It is true the email only states that “one party went to gaol”. The email also states, however, that if Mr Green had given evidence “he would have gone to gaol as well”. It would be reasonably open to the reader of the email to read it as implying that the party who had gone to gaol for the fraud matter was the first applicant, Mr Sarina.

    [53] Respondent’s Submissions on Application to Amend Statement of Claim, [13]

12. Fifth, counsel for Mr O’Shannassy submits it is far from clear how a defamatory imputation could be conveyed “from a private communication internal to the company, let alone from the first complained of ‘publication’, addressed only to the two Applicants”. It is true that a publication of matter to a person cannot give rise to an action for defamation by that person in relation to any defamatory imputation conveyed by such publication concerning that person. Thus, to the extent the email of 29 September 2017 was sent only to the applicants, Mr Sarina could not maintain an action for the publication to him of a defamatory imputation that concerned him, and Mr Green similarly could not maintain a cause of action in defamation for the publication to him of a defamatory imputation that concerned him. Each could, however, maintain a cause of action for defamation in relation to the communication of an imputation concerning him to the extent that imputation was published to the other.

13. There appears to be no need to further consider the email of 29 September 2017 because the applicants do not plead that any imputations have been conveyed by this email. The imputations on which the applicants seek leave to rely are restricted to those they allege Mr O’Shannassy conveyed by the email he sent on 20 December 2017. In those circumstances, paragraph 19 of the PASOC is embarrassing and should be removed from the PASOC, as should paragraph 18A.

14. Finally, that the email of 20 December 2017 may have been a “private internal communication to the company” does not prevent its constituting the publication of defamatory imputation and, for that reason, is actionable for defamation.

15. Sixth, counsel for Mr O’Shannassy submits the statement of claim does not particularise the damages it is alleged the applicants suffered because of the alleged defamation. That, however, is no reason for finding the causes of action in defamation are untenable or are an abuse of process. Defamation “is generally actionable without proof of damage”.[54]

    [54] Orion Pet Products Pty Ltd v Royal Society for the Prevention of Cruelty to Animals(Vic) Inc [2002] FCA 860, at [198]. See also Bristow v Adams [2012] NSWCA 166, at [2], where Basten JA said it was clearly the case that the overwhelming weight of authority supports the conclusion that damage is presumed.

Anshun estoppel

1. The principle on which Mr O’Shannassy relies is associated with the judgments of the High Court in Port of Melbourne Authority v Anshun Pty Ltd.[55] In that case an employee of Anshun Pty Ltd claimed damages from both Anshun and the Port of Melbourne Authority (Authority) for injuries he sustained while operating a crane the Authority had hired to Anshun. Anshun and the Authority each filed claims for contribution against the other. Anshun and the Authority were both found liable to pay damages to the employee, and the Authority was ordered to pay to Anshun contribution of 90% of the amount of the judgment the applicant recovered against the Authority and Anshun. The Authority commenced fresh proceedings against Anshun for the recovery of the amount it had paid to the employee, relying an indemnity Anshun had given the Authority in relation to the operation of the crane. Anshun submitted the Authority was estopped from maintaining the action because it ought reasonably to have raised the indemnity in the earlier proceeding. The High Court upheld that submission.

   [55] (1981) 147 CLR 589

2. The plurality formulated the following principle:[56]

   In this situation we would prefer to say that there will be no estoppel unless it appears that the matter relied upon as a defence in the second action was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it. Generally speaking, it would be unreasonable not to plead a defence if, having regard to the nature of the plaintiff's claim, and its subject matter it would be expected that the defendant would raise the defence and thereby enable the relevant issues to be determined in the one proceeding. In this respect, we need to recall that there are a variety of circumstances, some referred to in the earlier cases, why a party may justifiably refrain from litigating an issue in one proceeding yet wish to litigate the issue in other proceedings e.g. expense, importance of the particular issue, motives extraneous to the actual litigation, to mention but a few.

   [56] (1981) 147 CLR 589, [37]

3. Counsel for Mr O’Shannassy submits the applicant should have read their claims for defamation in the Local Court proceeding. Counsel submits Mr Sarina was “free to file cross-claims and/or seek that the proceedings be transferred to an alternate jurisdiction”, and that Mr Green “was free to seek to join the proceedings to prosecute his own cross-claim”.[57] I do not accept these submissions.

   [57] Respondent’s Submissions Application to Strike Out Statement of Claim, [3.3]

4. First, although there was an order disposing of the Local Court proceeding, that order was made by agreement between Mr O’Shannassy and Mr Sarina, and without a contested hearing before the Court, and before, so I infer, Mr Sarina filed a defence. It is impossible to imagine how it could be said Mr Sarina ought reasonably to have been expected to file a cross-claim for defamation in circumstance where he and Mr O’Shannassy had agreed to resolve the Local Court proceeding by having the default judgment set aside. Second, the Local Court does not have jurisdiction to hear or determine a proceeding for defamation.[58] It is therefore difficult to see how it could be said Mr Sarina acted unreasonably by not seeking to file a cross-claim for defamation when Local Court had no jurisdiction to hear or determine such a claim. Third, assuming the Local Court has power to transfer to a court of appropriate jurisdiction a claim for defamation improperly commenced in the Local Court, it would be unreasonable to have expected Mr Sarina to have commenced defamation proceedings in a court that does not have jurisdiction to entertain such proceeding with a view to have it transferred to a court that does have jurisdiction. Fourth, counsel for O’Shannassy has presented no authority for the proposition that the principles in Anshun apply to a person who was not a party in a proceeding in which it is said he or she ought reasonably have raised a claim, and who otherwise is not privy in interest with a person who was a party in the proceeding.

   [58] Local Court Act 2007 (NSW), s.33(1)(b)

Disposition

1. In the light of these reasons, I propose to:

   a)dismiss that part of the application and statement of claim that relies on contraventions of the ACL;

   b)grant the applicants leave to file an amended statement of claim in the form or substantially in the form of the PASOC after removing from it those allegations that relate solely to the claims based on the ACL, and paragraphs 18A, 18B(1), and 19;

   c)grant the applicants leave to replead the imputation pleaded in paragraph 18B(1) of the PASOC, if so advised;

   d)otherwise dismiss Mr O’Shannassy’s application that the proceeding be dismissed; and

   e)reserve the question of costs.

2. At the time I pronounce my orders I will make directions for the further conduct of the case or otherwise appoint a directions hearing on a day suitable to the parties.

I certify that the preceding sixty-nine (69) paragraphs are a true copy of the reasons for judgment of Judge Manousaridis

Date: 29 March 2019