Sarina v O'Shannassy

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FEDERAL COURT OF AUSTRALIA

Sarina v O’Shannassy [2021] FCA 1649  

Appeal from:

Sarina v O’Shannassy (No. 5) [2020] FCCA 2911

Sarina v O'Shannassy (No. 6) [2020] FCCA 3422
File number(s): NSD 1269 of 2020
Judgment of: RARES J
Date of judgment: 19 November 2021
Catchwords: APPEAL AND NEW TRIAL – whether trial judge erred in rejecting unchallenged evidence of three witnesses about same events – whether findings glaringly improbable or contrary to compelling inferences – where judge did not raise any concern with parties about unchallenged evidence before rejecting it
DEFAMATION – s 33 of the Defamation Act 2005 (NSW) – whether finding open that unlikely that applicants would suffer any harm where matter complained of written by solicitor accusing applicants of criminal conduct – whether events after publication relevant to circumstances of publication – whether defence under s 33 requires absence of likelihood to harm to reputation only, or reputation and feelings – Held: appeal allowed, matter remitted for assessment of damages
Legislation: Defamation Act 2005 (NSW) ss 28, 30, 31 and 33
Cases cited:

Barrow v Bolt [2015] VSCA 107

Hough v London Express Newspapers Limited [1940] 2 KB 507

Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361

Lee v Lee (2019) 266 CLR 129

Masterton Homes Pty Ltd v Palm Assets Pty Ltd (2009) 261 ALR 382

Praed v Graham (1889) 24 QBD 53

Smith v Lucht [2017] 2 Qd R 489

Szanto v Melville [2011] VSC 574

TAL Life Ltd v Sheutrim (2016) 91 NSWLR 439

Trkulja v Google LLC (2018) 263 CLR 149
Division: General Division
Registry: New South Wales
National Practice Area: Other Federal Jurisdiction
Number of paragraphs: 101
Date of hearing: 19 November 2021
Counsel for the Appellants Mr K P Smark SC and Mr N G Olson
Solicitor for the Appellants Kalantzis Lawyers
Counsel for the Respondent Mr B McClintock SC and Mr T Crispin
Solicitor for the Respondent Lloyd & Lloyd Solicitors

ORDERS

NSD 1269 of 2020
BETWEEN:

CLINTON SARINA

First Appellant

MARTIN GREEN

Second Appellant
AND:

JOHN O'SHANNASSY

Respondent

ORDER MADE BY:

RARES J

DATE OF ORDER:

19 NOVEMBER 2021

THE COURT ORDERS THAT:

1.The appeal be allowed.

2.Order 1 made by the Federal Circuit Court of Australia on 30 October 2020 be set aside and in lieu thereof ordered that:

1. There be judgment for the applicants.

3.Order 6 made by the Federal Circuit Court of Australia on 17 December 2020 be set aside and in lieu thereof it be ordered that:

6. The respondent pay the applicants’ costs of the proceedings that are not the subject of the costs referred in orders 1-5, such costs to be agreed, or if there be no agreement, to be taxed under Pt 40 of the Federal Circuit Court Rules 2001.

4.The cross-appeal be dismissed.

5.The respondent pay the appellants’ costs including their costs as cross-respondents to the cross-appeal.

6.The matter be remitted for the assessment of the appellants’ damages to the Federal Circuit and Family Court…

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Details
Case
[2021] FCA 1649
Decision Date

CaseChat Overview and Summary

In the case of Sarina v O'Shannassy, the appellants, Mr Sarina and Mr Green, appealed against the decision of the trial judge who dismissed their claims of defamation against Mr O'Shannassy. The appellants argued that the trial judge erred in rejecting the unchallenged evidence of three witnesses about the same events and made findings that were glaringly improbable or contrary to compelling inferences. The primary legal issues were whether the trial judge erred in rejecting the unchallenged evidence and whether the findings were open to challenge based on the evidence presented.

The court found that the trial judge erred in rejecting the unchallenged evidence of the three witnesses, who testified that they had a meeting at the Langham Hotel to discuss the allegations made by Mr O'Shannassy. The court held that the trial judge's reasoning was unsound and contrary to compelling inferences, as he failed to consider the evidence holistically and instead rejected it based on an implausible assumption about the conversation between Mr George and Mr O'Shannassy. The court also found that the trial judge did not raise any concerns with the parties about the unchallenged evidence before rejecting it, which was a procedural error.

The court allowed the appeal, set aside the orders of the trial judge, and ordered that there be judgment for the applicants. The court also ordered that the matter be remitted for the assessment of the appellants' damages to the Federal Circuit and Family Court of Australia (Division 2) and be heard by a judge other than the primary judge. The respondent was ordered to pay the appellants' costs, including their costs as cross-respondents to the cross-appeal. The cross-appeal was dismissed.

In conclusion, the court found that the trial judge erred in rejecting the unchallenged evidence and made findings that were contrary to compelling inferences. The appeal was allowed, and the matter was remitted for the assessment of damages. The respondent was ordered to pay the appellants' costs. The cross-appeal was dismissed.

Orders

Orders of the court

1. The appeal be allowed.

2. Order 1 made by the Federal Circuit Court of Australia on 30 October 2020 be set aside and in lieu thereof ordered that:

1. There be judgment for the applicants.

3. Order 6 made by the Federal Circuit Court of Australia on 17 December 2020 be set aside and in lieu thereof it be ordered that:

6. The respondent pay the applicants’ costs of the proceedings that are not the subject of the costs referred in orders 1-5, such costs to be agreed, or if there be no agreement, to be taxed under Pt 40 of the Federal Circuit Court Rules 2001.

4. The cross-appeal be dismissed.

5. The respondent pay the appellants’ costs including their costs as cross-respondents to the cross-appeal.

6. The matter be remitted for the assessment of the appellants’ damages to the Federal Circuit and Family Court of Australia (Division 2) pursuant to s 28(1)(f) of the Federal Court of Australia Act 1976 (Cth) and be heard by a judge other than the primary judge.

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

Background

Background to the litigation

As I describe the trial judge’s reasons below, I will make findings about the errors in his assessment process.Background Fleur de Vie had a paid-up capital of $100. Each of Mr George and Mr Coleman held 24 shares, Mr Green, 12, and another person, whose name did not appear in the trial judge’s findings, another 24 shares. Mr O’Shannassy was the company secretary. His Honour found that Mr Sarina was the only person who had provided substantial funds to Fleur de Vie. He had lent it $10,000. The purpose of establishing the company was to market bottled water, but the business was looking for a resource from which, as it were, to tap water to bring the project to market. The basis for the appellants’ claims in defamation was an email that Mr O’Shannassy sent, at 9:22pm on 20 December 2017, to Mr George and Mr Coleman, in the following terms: Mr O’Shannassy appears to have been in practice as a solicitor. It is not clear whether Mr Green also was in practice, although the above email suggested that he was. The trial judge found that the matter complained of conveyed the following three common imputations about each of Mr Green and Mr Sarina, namely:(1)he was a fraud (imputations 2 and 8);(2) he is one of standover man, Mr McGurk’s two closest confidants (imputations 3 and 9); and(3)he is a fraudulent businessman (imputations 7 and 12). In addition, his Honour found that the matter complained of conveyed the following separate imputations about, respectively, Mr Green and Mr Sarina:(4)Mr Green had so conducted himself, as at 20 December 2017, that the Legal Services Commissioner had a reasonable suspicion that the second Applicant [Mr Green] had engaged in fraud and was investigating him for that conduct (Imputation 1).(5)Mr Sarina has further supreme court proceedings against him for fraud (Imputation 13) Mr O’Shannassy pleaded the following substantial defences:(1)justification of the imputations that each appellant was a fraud and a fraudulent businessman; (2)qualified privilege under s 30 of the Defamation Act 2005 (NSW). (3)publication of a public document under s 28 of the Act, being a reference to the judgment of the Supreme Court of the Australian Capital Territory in the link attached to the email. (4)fair report, apparently being the republication of the links to the electronic newspaper articles in The Sydney Morning Herald headlined “McGurk duo linked to $150 million loan fraud - SMH.com.au” and The Daily Telegraph website captioned “michael mcgurk in fraud charges”. (5)honest opinion under s 31, and, (6)triviality under s 33, which provides as follows:33 Defence of trivialityIt is a defence to the publication of defamatory matter if the defendant proves that the circumstances of publication were such that the plaintiff was unlikely to sustain any harm. The trial judge disposed of the justification defences and those under ss 28, 29 and 31 in four single and short paragraphs, essentially finding that there was no basis for any of them. In particular, he dismissed the defence of justification, as follows:190. Mr O’Shannassy pleads that if each of Imputations 2, 7, 8 and 12 was conveyed by the publication of the Email [being the matter complained of], they are each substantially true. The only basis on which Mr O’Shannassy relies for establishing the truth of these Imputations is the conduct Mr Sarina and Mr Green manifested in relation to the dispute that arose about the terms on which Mr O’Shannassy had lent $35,000 to Mr Sarina. Mr O’Shannassy has not pleaded or particularised or otherwise articulated how such conduct, to the extent it is revealed by the evidence before me, could conceivably support a finding of fraud. The material on which Mr O’Shannassy relies, therefore, is incapable of supporting a finding in terms of Imputations 2, 7, 8 and 12.

Evidence

Evidence Before The Court

In Masterton Homes Pty Ltd v Palm Assets Pty Ltd (2009) 261 ALR 382 at 404–405 [105], Campbell JA, with whom Allsop P and Basten JA agreed, (and see also TAL Life Ltd v Sheutrim (2016) 91 NSWLR 439 at 480 [198] per Leeming JA) said that:While the evidence was not cross-examined on, that does not necessarily mean that the judge was obliged to accept it. A judge can reject evidence that has not been cross-examined on if, for example, it was inconsistent with other evidence that he accepted, or if it was inherently incredible: Sullman v Sullman [2002] DFC 95-248; [2002] NSWSC 169 at [304]–[306]; Caldwell v J A Neilson Investments Pty Ltd (2007) 69 NSWLR 120; [2007] NSWCA 3 at [96]; Ellis v Wallsend District Hospital (1989) 17 NSWLR 553 at 586–8. Nor did the rule in Browne v Dunn (1893) 6 R 67 (Browne) prevent the judge from rejecting the evidence. That is because Ms Maude had given her evidence on affidavit in advance of the trial (including an account of the conversation with Mr Miles that she told Mr Newport about), and Mr Miles had replied to that affidavit in advance of the trial. Mr Miles’ reply included denying that his client was prepared for the appellant to receive the benefit of all the BBX dollars as BBX dollars were of no use to it, and saying that he did not agree to any proposition that removed his client’s ability to choose whether to take BBX dollars or set aside cash. Exchange prior to trial of affidavits that disclose the position of the respective parties concerning a particular evidentiary matter can prevent a Browne point being successfully raised:West v Mead (2003) 13 BPR 24,431; [2003] NSWSC 161 at [95]–[99]. Thus, I do not accept that the absence of cross-examination required the judge to accept Mr Newport’s evidence.(emphasis added) In Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361 at 384 – 385 [62]–[64], Heydon, Crennan and Bell JJ discussed the appropriate inferences that a trial judge may draw about the failure of a witness (such as Mr George, who was not a party) to give evidence of a particular kind. Their Honours said (at 384 [62]):Witnesses are supposed to answer questions put by counsel responsively; they are supposed to give a full answer but no more. It is one thing to say that a witness was not asked the right questions. It is another thing to say that the witness did not answer the questions that were asked. And it is an even more serious thing to say that a witness was “reluctant” to answer. The duty of a witness is to tell the truth, the whole truth and nothing but the truth so far as the questions asked seek it. (emphasis added) In contrast, in Kuhl 243 CLR at 384–385 [63], their Honours said that when a party, (such as Mr O’Shannassy) is not asked, or does not give evidence in chief, on a topic “the court will be less likely to draw inferences favourable to that party from other evidence in relation to the issue” (footnotes omitted). As I describe the trial judge’s reasons below, I will make findings about the errors in his assessment process.Background

Decision

Reasons for decision

The trial judge then found: [91] Although Mr George does not in his affidavit address the email he sent to Mr O’Shannassy at 8:46 am on 24 December 2017, he was cross-examined about it. Mr George agreed that, as he stated in his email, he had consulted with Mr Sarina and Mr Green; he was satisfied “to the point that we could proceed at risk”; that was “more of a business decision . . . a reluctant business decision”; he was “obviously not thrilled about the explanations”, but he “would rather there not be any mess”, and he was “satisfied that we would be able to find solutions”. Mr George also said he believed “there were still a lot of unanswered questions”, and that “at the time of sending that email, I was certainly conscious that these allegations had been made by Mr O’Shannassy”, and that “they were very much in . . . the back of my mind . . . the entire time”. I do not accept this evidence to the extent it repeats the evidence Mr George gave in his affidavit which I have also not accepted. It is also manifestly inconsistent with the text of the emails Mr George sent to Mr O’Shannassy on 21 and 24 December 2017, and the email he sent to the email addresses of Mr O’Shannassy and Mr Coleman, but addressed to Mr Sarina at 10:54 am on 24 December 2017.(references omitted and emphasis added) During the hearing of the appeal, the parties referred to the following part of the cross-examination of Mr George at the trial:Yes. And then, if I am right, you then responded by wishing Mr O’Shannassy a merry Christmas but said that you were looking forward to not hearing from them again? ---- That’s correct. Yes.Right. So it’s a fair encapsulation of that email, isn’t it, Mr George, to say that you’ve considered what he had to say. You don’t accept it. You’ve spoken to the other two. And you accept what they had to say about it? ---- I wouldn’t put it in those words at all. I believe that there were still a lot of unanswered questions. And those questions very much did stem from things that were lingering, if you will, based on the statements made. But it was very clear to me that there had been a breakdown in the relationship. And I wasn’t interested in engaging in a back-and-forth that wasn’t going to be, I guess, progress the organisation any further.(emphasis added) Importantly, Mr Green gave evidence that he met with Mr Coleman at a banquet in Chinatown on 26 December 2017 in which they had a conversation, that his Honour set out (at [92]): [92] Mr Green says that on 26 December 2017 he met with Mr Coleman at a banquet in Chinatown. According to Mr Green, a conversation to the following effect occurred: Mr Coleman: Andrew and I have done some further research and due diligence regarding the email sent to us by O’Shannassy and we are satisfied that you guys are OK. The contents of the email did cause us some considerable concern however and we had to spend a little time satisfying ourselves that things were OK.Mr Green: Thank you for your confidence.(references omitted and emphasis added)

Ratio Decidendi

Legal Principle Established

Mr O’Shannassy contended that the trial judge correctly surmised that, had he had to assess damages, the appellants were only entitled to nominal damages. He submitted that there would be no point in remitting the matter to assess damages were the appeal on liability to be allowed.Consideration I am of opinion that his Honour erred in rejecting the unchallenged evidence of the three men that they had had a meeting at the Langham Hotel as they deposed. At no point did his Honour ask himself why three men, including Mr George, who was not a party and did not appear to have, nor was it suggested in the appeal that he had, some motive not to tell the truth, would each separately testify to and concoct a story, or be mistaken about having had a conversation on a precise occasion at the Langham Hotel that covered the subject matter of Mr O’Shannassy’s conversation on 17 November 2017 with Mr George. His Honour seems to have postulated a variety of answers to unasked questions that Mr Green, Mr Sarina or Mr George could have given in respect of their unchallenged evidence had they been asked them, and then made adverse findings based on those postulations. As I have pointed out, his Honour’s construction of the matter complained of, juxtaposing it with Mr George’s account of the conversation on 17 November 2017, cannot bear scrutiny. In my opinion, the findings that Mr George did not have a conversation to the effect that he had deposed on 17 November 2017 and that there was no meeting at the Langham Hotel are glaringly improbable and contrary to compelling inferences: Lee 266 CLR at 148–149 [55]. The duty of a judge or jury as a tribunal of fact is to have regard to all of the evidence and weigh the whole of it together. His Honour’s approach seems to have been, sequentially, to not accept Mr George’s evidence about the conversation on 17 November 2017 that he gave without any challenge to his veracity; and then find that the two others’ evidence was “implausible” because they attested to the same conversation that his Honour had already rejected in separately addressing Mr George’s evidence. The trial judge did so on no other substantive basis than his Honour thought it was implausible that Mr George had had the 17 November 2017 conversation in which Mr O’Shannassy told him some, but not all of the, information later revealed in the matter complained of. From this unsound premise, his Honour reasoned that the three men could not have had the meeting to discuss Mr O’Shannassy’s allegations that Mr George said he made in the conversation. In my opinion, his Honour’s findings and reasons for not accepting the appellants’ and Mr George’s evidence are glaringly improbable and contrary to compelling inferences, unsound, and cannot stand.Mr O’Shannassy’s oral challenge to the finding on imputation Mr O’Shannassy challenged in oral argument on the appeal the trial judge’s finding that the matter complained of conveyed imputation 3 that Mr Green was one of standover man Mr McGurk’s two closest confidants.