Schlaepfer v Australian Securities and Investments Commission

[2017] NSWSC 47

Supreme Court

New South Wales

• Summary available

Medium Neutral Citation:	Schlaepfer v Australian Securities and Investments Commission [2017] NSWSC 47
Hearing dates:	6 February 2017
Date of orders:	15 February 2017
Decision date:	15 February 2017
Jurisdiction:	Common Law
Before:	Garling J
Decision:	(1) Pursuant to s 56A of the Limitation Act 1969, the limitation period for commencing an action in respect of the matters complained of, as pleaded at paragraph 5 of the Statement of Claim filed 11 October 2016, be extended to 11 October 2016. (2)   No order as to costs.
Catchwords:	LIMITATION OF ACTIONS – application for extension of limitation period – defamation – whether it was not reasonable in the circumstances for the plaintiffs to have commenced action within one year from the date of the publication
Legislation Cited:	Evidence Act 1995 Legal Profession Uniform Law Application Act 2014 Limitation Act 1969 Uniform Civil Procedure Rules 2005
Cases Cited:	Carey v Australian Broadcasting Corporation [2010] NSWSC 709; (2010) 77 NSWLR 136 Carey v Australian Broadcasting Corporation [2012] NSWCA 176; (2012) 84 NSWLR 90 Noonan v McLennan [2010] QCA 50 Rayney v Western Australia (No.3) [2010] WASC 83
Texts Cited:	Not Applicable
Category:	Procedural and other rulings
Parties:	Daniel Schlaepfer (P1) Select Vantage Incorporation Company (P2) Merlito Securities Company Ltd (P3)   Australian Securities and Investments Commission (D1) Greg Yanco (D2)
Representation:	Counsel: T Tobin QC (P) J Hmelnitsky SC / M Lewis (D)   Solicitors: Mark O’Brien Legal (P) Ashurst Australia (D)
File Number(s):	2016/302827
Publication restriction:	Not Applicable

Judgment

1. On 11 October 2016, Daniel Schlaepfer, Select Vantage Incorporated and Merlito Securities Company Ltd, the plaintiffs, commenced proceedings by filing a Statement of Claim claiming damages for defamation and injurious falsehood.

2. The plaintiffs claim that the causes of action arise out of a number of publications by Mr Greg Yanco, a senior compliance officer at the Australian Securities and Investment Commission (“ASIC”), which occurred on 21 November 2014 in a series of telephone conversations made to:

1. a named director at Credit Suisse;

2. an unidentified executive at Citibank; and

3. at least one other person at a third, unknown, company.

3. The plaintiffs reserve to themselves the right to expand the number of these publications after discovery and interrogatories.

4. The plaintiffs allege that ASIC is vicariously liable for the conduct of Mr Yanco.

5. The defendants have not yet pleaded to the Statement of Claim.

6. Because the proceedings were commenced after the period of 12 months from the date of the alleged defamatory publications, the plaintiffs by a Notice of Motion filed on 11 October 2016, sought the following order:

“1. That pursuant to s 56A of the Limitation Act 1969, the limitation period for commencing of an action in respect of the matters complained of, pleaded at paragraphs 5 and 22 of the Statement of Claim, be extended until 11 October 2016.”

7. Prior to the commencement of the proceedings, the plaintiffs by correspondence amended that Notice of Motion to make it plain that the extension of time was only sought in respect of the cause of action for defamation contained in paragraph 5 of the Statement of Claim. The cause of action for injurious falsehood set out in paragraph 22 of the Motion, it is accepted, was commenced within time.

8. This judgment deals with the Notice of Motion as amended.

Legislation

9. Section 14B of the Limitation Act 1969 fixes the limitation period on a cause of action for defamation as being one year from the date of the publication of the matter complained of.

10. Section 56A of the Limitation Act provides for an extension of that limitation period. It is in the following terms:

“56A.   Extension of Limitation period by court

1.   A person claiming to have a cause of action for defamation may apply to the Court for an order extending the limitation period for the cause of action.

2. A court must, if satisfied that it was not reasonable in the circumstances for the plaintiff to have commenced an action in relation to the matter complained of within one year from the date of the publication, extend the limitation period mentioned in s 14B to a period of up to three years running from the date of the publication.

3.   A court may not order the extension of the limitation period for a cause of action for defamation other than in the circumstances specified in subsection (2).”

11. Section 56D of the Limitation Act provides that the Court may make an order for the extension of the limitation period even though the application for the order, and the order itself, is made after the limitation period has already expired.

Legal Principles

12. In Carey v Australian Broadcasting Corporation [2012] NSWCA 176; (2012) 84 NSWLR 90 (“Carey”), at [55], Beazley JA (with whom on this issue McColl JA and Sackville AJA agreed) said:

“Her Honour, at [45], construed s 56A as imposing an onus on a plaintiff to satisfy the court that it was not reasonable in the circumstances for him or her to bring proceedings within the limitation period. Her Honour considered that s 56A did not involve the consideration of any prejudice to a defendant. Her Honour also held that s 56A did not confer a discretion. Rather, if the court was satisfied that it was not reasonable in the circumstances for the plaintiff to have commenced the action within one year, the court was required to extend the period of time in which to bring proceedings: see Ahmed v Harbour Radio Pty Ltd [2010] NSWSC 676. The same construction has been given to equivalent provisions in other jurisdictions: see Murphy v Lewis [2009] QDC 37 at [11]-[14]; Noonan v MacLennan [2010] QCA 50; 2 QdR 537 at [15]-[18] per Keane JA; at [30] per Holmes JA and at [48] and [58] per Chesterman JA; Rayney v State of Western Australia (No 3) [2010] WASC 83 at [41] per Martin CJ. I agree with this construction of s 56A. The statutory test does not direct attention to whether it was reasonable not to have commenced proceedings. It requires the court to be satisfied it was not reasonable to have commenced an action within one year from the date of publication of the defamatory matter. This view is consistent with the preferred view given to the section in Noonan v MacLennan.”

13. Although the test is an objective one in the sense that the subjective motivations or thought processes of a plaintiff are not sufficient without more to satisfy it, a plaintiff’s motivations or thought processes are a circumstance which may be relevant as one to which the Court ought have regard: Carey v Australian Broadcasting Corporation [2010] NSWSC 709; (2010) 77 NSWLR 136 at [48] per McCallum J; Carey at [57].

14. The test posed by s 56A is not to be discharged “… by showing that it was not unreasonable to have not commenced within one year …” and further, is recognised as “… a difficult hurdle for a plaintiff to overcome unless there are some unusual circumstances …”: Rayney v Western Australia (No.3) [2010] WASC 83 at [41].

15. Ultimately, the question which the Court is asked to determine in considering whether it was “… not reasonable in the circumstances …” for the action to be commenced is an evaluative process, the outcome of which will vary from case to case, and is particularly fact dependent: Carey per Beazley JA at [61].

16. Keane JA (as his Honour then was) in Noonan v McLennan [2010] QCA 50 said at [16]-[17] the following:

“… In this context one can understand that s 32A(2) of the [Defamation] Act is apt to encompass a case where the plaintiff has been engaged in the pursuit of non-litigious processes to vindicate his or her rights. In such a case, it may well be unreasonable to disrupt those processes and to incur needless expense by commencing proceedings.

One cannot seek to give an exhaustive list of the kinds of cases which might fall within s 32A(2) of the Act, but other cases which come to mind are cases where a plaintiff is not able to establish the extent of the defamation or is without the evidence necessary to establish his or her case during the year after the publication. An action brought in such circumstances might be said to be speculative or irresponsible. In such cases it might be said that the commencement of proceedings and the incurring of costs would be so disproportionate that the prospects of success or of the quantum of damages which might have been expected to be recoverable as to render the commencement of proceedings unreasonable.”

17. The defendant accepts, and the Court can readily accept, that an absence of knowledge of the defamatory utterance would provide a reason why it was not reasonable to commence proceedings within one year. See the comments of Beazley JA in Carey at [61].

Relevant Facts

18. On the hearing of the Notice of Motion, both the plaintiffs and the defendants relied upon affidavits sworn by solicitors based on information and belief. This is permissible: s 75 Evidence Act 1995.

19. Neither of the deponents of the affidavits were required for cross-examination. It was not suggested that either of the deponents were not recounting accurately the information with which they had been provided. Additionally, both parties relied upon correspondence written, generally between solicitors for the parties, either in formal letters or by emails as recounting accurately the circumstances at the time that the letters were written.

20. Notwithstanding the submissions of the defendants, where the Court is dealing with the issues in the proceedings by reference to the civil onus, that is on the balance of probabilities, there is no reason in these proceedings to decline to accept the evidence because there are other more direct means of proving the factual circumstances relied upon.

21. The cause of action in defamation and injurious falsehood is based upon a number of publications said to have been made orally on 21 November 2014, by Mr Yanco, a senior officer of ASIC to:

1. Andrew Couper, a director at Credit Suisse;

2. an unidentified executive at Citibank; and

3. at least one other person at a third, unknown, company.

22. It is pleaded that there may be other publications of which the plaintiffs were unaware at the time of commencing proceedings.

23. It is claimed that the defamatory publications concerned the operations of the plaintiffs in engaging in strategies which had the effect, unlawfully, of manipulation of the financial markets. It also included a suggestion that the plaintiffs had been closed down by two Australian broking firms because of their inappropriate behaviour and that, in addition to some other matters, Mr Yanco wanted the recipient of the telephone call to be aware of ASIC’s concerns about the plaintiffs.

24. On 27 November 2014, ASIC published on its website a document entitled “ASIC Market Supervision Update Issue 53” (“Update 53”). It is unnecessary to set out the entirety of what was there published relating to the plaintiff. It is sufficient to say that the content of Update 53 led to a detailed letter by Mr James Wheeldon, a lawyer, on behalf of the plaintiffs being sent to Mr Yanco at ASIC. That letter dated 3 December 2014 drew attention to two principal matters of fact relating to conduct by ASIC. Mr Wheeldon described those matters in these terms:

“In particular, we refer to:

(a) the termination with immediate effect by Macquarie Securities (Australia) Ltd (‘Macquarie') of its Electronic Execution Agreement (‘the EEA’) with Select Vantage on 21 November 2014.

Our client instructs us that an officer of Select Vantage was informally advised by Macquarie at the time of termination of the EEA that ASIC had made threats to Macquarie to the effect that ASIC would take away Macquarie’s brokerage license unless it immediately ceased doing business with Select Vantage, and that it was this threat from ASIC that led to termination of the agreement.

(b) ASIC’s publication of Issue 53 of the ASIC Market Supervision Update dated November 2014 and published on the internet on or around 27 November 2014 (‘the update’).

The update levelled serious allegations of criminal conduct against Select Vantage. It also conveys defamatory (and actionable) imputations about Mr Schlaepfer.”

25. The lengthy letter drew ASIC’s attention to the position of the plaintiffs that the material published about them, both to Macquarie and in Update 53, was factually erroneous, and that it had been published without first giving the plaintiffs an opportunity to comment upon it or respond to it. What was of particular significance, the letter noted, was that Update 53 had referred to two actions by market regulators. One by the relevant regulator in Japan, which had led to a fine of ¥60,000 (which amounted to a few hundred Australian dollars), and a second by the financial services authority in the United Kingdom, which had resulted in a fine of £8M to Swift Trade Inc. Whilst Update 53 clearly linked the plaintiffs to that corporation, the plaintiffs denied any ongoing connection, and denied any involvement with the activities related to the fine.

26. The letter went on to assert that Update 53, although it did not mention Mr Schlaepfer by name, nevertheless conveyed defamatory imputations about him. The letter sought a response from ASIC. In that part of the letter, it read as follows:

“We consider that ASIC and/or its officers may be liable to Select Vantage in damages for the tort or injurious falsehood, insofar as:

ASIC has published false or misleading statements about Select Vantage and Mr Schlaepfer;

it acted maliciously in so doing, insofar as it has acted, with the overt intention of damaging Select Vantage and Mr Schlaepfer’s business; and

Select Vantage and Mr Schlaepfer have suffered (and are continuing to suffer) actual monetary loss as a result of these actions.

There may be other torts involved as well. In any event, in order to mitigate the ongoing losses that are being suffered by Select Vantage, we ask that ASIC provide confirmation …

Select Vantage reserves all its rights in the event that a timely and satisfactory response is not received including (among other things) the right to seek an order enjoining ASIC from further unreasonable interference with Select Vantage’s commercial and contractual arrangements.”

27. The letter sought, on behalf of Mr Schlaepfer, a correction to Update 53.

28. Mr Yanco seems to have referred that letter for an appropriate response to a lawyer in the office of the Chief Legal Officer at ASIC, Mr Conrad Gray. Between 9 December 2014 and 15 December 2014, Mr Gray from ASIC and Mr Wheeldon on the behalf of the plaintiffs, engaged in email correspondence designed to find a resolution to the matters of concern raised by the plaintiffs. Again, the detail of that correspondence does not need to be set out.

29. It is important to note, however, that in an early email from Mr Gray to Mr Wheeldon, Mr Gray said in responding to the letter of 3 December 2014, that:

“Given the purpose of this communication I do not propose to respond in detail to the allegations contained in your letter. However, it should be noted that ASIC denies that it made any threat to take away Macquarie Securities (Australia) Ltd’s … license and does not accept that the Market Supervision Update Issue 53 is misleading or defamatory.”

30. The end result of the communications between Mr Gray and Mr Wheeldon was that ASIC published, as part of its next market update (“Update 54”) shortly before Christmas 2014, an agreed wording under the heading “Clarification”. In return for that clarification, the plaintiffs agreed in the following terms:

“Select Vantage and Mr Schlaepfer agree to release ASIC from any claims they may have arising out of the termination by Macquarie of the Electronic Execution Agreement, and the publication of the Market Supervision Update Issue 53.”

31. Although it appears that a formal Deed of Release has not been executed, both parties accepted that there was an effective release in place.

32. Following upon that exchange of correspondence, the lawyers arranged for ongoing contact to occur between the plaintiffs and ASIC represented by Mr Tom Veidners, a member of the Market and Participant Supervision Team, in order to deal with any ongoing issues arising out of the subject matters of the plaintiffs’ dealings in the Australian marketplace, ASIC’s role in supervising the market, and the contents of the various updates. It appears that at around this time, in 2014, ASIC commenced an investigation into Select Vantage and its market dealings.

33. The next matter which it is relevant to note occurred about six months later on 15 May 2015. On the morning of that day, Mr Wheeldon wrote to Mr Veidners, the officer of ASIC with whom there had been some ongoing contact. The email read:

“Dear Tom,

I am writing in regard to Select Vantage and the ASIC investigation that I understand is currently ongoing.

As you know, late last year we reached an agreement to the effect that ASIC would clarify certain public statements it made about Select Vantage (SV) and Daniel Schlaepfer and various related entities, in consideration for which my client would agree not to take any action against ASIC or its officers in respect of those statements.

My client instructs me that SV has received information to the effect that ASIC officers have made unsolicited phone calls to market participants (brokers) stating that SV and Mr Schlaepfer and their affiliates are persona non grata in Australia, that they are suspected of serious wrongdoing, and that market participants should not do business with Mr Schlaepfer or his related entities if they wish to remain in ASIC’s good favour.

This, of course, is extremely damaging to SV and Mr Schlaepfer – not only from a business and financial sense, but also from a reputational point of view. It also seems to fly in the face of the agreement we reached last year.

…

Could you please confirm that ASIC and its officers have not made, and will not make, any false or defamatory statements about SV or Mr Schlaepfer or their various affiliates?

Could you also confirm that SV is entitled to conduct its business in Australia, subject to the law and relevant market rules?

Could you also please let me know what stage the investigation is at, or at least a rough timetable for its expected resolution?”

34. A copy of that email was also sent to Mr Yanco. The email was referred to Mr Conrad Gray for a response. On 18 May 2015, Mr Gray responded in the following relevant terms:

“In response to your email to Mr Veidners I note the following matters:

1.   We are unaware of any comments of the type alleged being made by ASIC officers. If you have any further details about these alleged comments, please let us know.

2.   It is not ASIC’s role to advise on SV’s entitlement to engage in business in this jurisdiction.

3.   ASIC does not generally comment on the progress of its investigations: please see Information Sheet 152 for more information about ASIC’s policy on commenting publicly on its investigations.”

35. The email also declined an invitation which had been made by Mr Schlaepfer to meet Mr Yanco whilst he (Mr Yanco) was travelling in New York.

36. From the terms of Mr Wheeldon’s email of 15 May 2015, and in particular the sentence “It also seems to fly in the face of the agreement we reached last year”, I am satisfied that the “unsolicited phone calls” being referred to were communications alleged to have occurred since the publication of Update 54 which contained the agreed clarification in December 2014.

37. This conclusion, reached from the terms of the correspondence, accords with the contents of the second affidavit of Mr Mark O’Brien, the plaintiff’s lawyer, who set out the information he was provided by Mr Schlaepfer, namely that:

“(a)   the instructions from him referred to in the email resulted from his becoming aware between late April 2015 and 13 May 2015, that ASIC had called Chi-X Australia and Morgan Stanley advising them not to do business with Select Vantage or Mr Schlaepfer because ’we have this guy dead to rights’;

(b)   the instructions related only to those statements purportedly made by ASIC in the calls that followed publication of Update 53 (published December 2014) and ’had nothing to do with any statements made prior to the publication of Update 53, the subject of these proceedings …’. “

38. On 24 June 2016, Deutsch Miller, a firm of lawyers acting for Select Vantage and Mr Schlaepfer, wrote to ASIC. The letter drew attention to the background including that on 28 January 2015, ASIC informed the solicitor then acting for the plaintiffs; that it was undertaking a “high priority” investigation - apparently in relation to Select Vantage’s trading activities in 2014; that on 5 March 2015, ASIC informed the solicitor that the matter was now the subject of a formal investigation; that on 16 November 2015, ASIC informed the plaintiffs’ solicitor that ASIC was in the final stages of completing its analysis regarding Select Vantage’s trading; and, finally, that on 2 June 2016, in response to an enquiry from Deutsch Miller, ASIC informed them that “there are no further issues that ASIC seeks to address with your client at this time”.

39. The letter recounted many offers that had been made by Select Vantage and Mr Schlaepfer to assist ASIC and provide them with information. It attached a chronology setting out the details of those offers.

40. The purpose of the letter was to seek a meeting between ASIC and Mr Schlaepfer. The letter requested:

“Mr Schlaepfer proposes to be in Sydney on 7 and 8 July. We are writing to request that he be afforded a face-to-face meeting with you at ASIC’s Sydney offices at a time that is convenient to you on those dates.”

41. It went on to say:

“Mr Schlaepfer instructs us that he has been reliably informed that representatives of ASIC have repeatedly advised Australian market participants – brokers considering effecting trades on behalf of Select Vantage – that they risk being given a direction by ASIC under Market Integrity Rule 5.6.12 to cease conducting automated order processing if they were to effect trades on behalf of Select Vantage.”

42. The evidence does not reveal any response to the request for a meeting, or the assertion of any ongoing conduct by ASIC officers of the kind described.

43. On 30 June 2016, Mr Schlaepfer was forwarded an email which had been originally written on 21 November 2014 by Mr Andrew B Couper of Credit Suisse to seven addressees, and copied to two other addressees who, so it appears, were all officers of Credit Suisse (“the Couper email”). The subject matter of the Couper email was “ASIC Call – Heads Up”. The body of the document was as follows:

“Just took a call from Greg Yanco (ASIC head of market supervision) – NOTE - this does not involve any actions by CS.

ASIC have concerns about a particular Entity who is layering the market

ASIC is aware that the Entity has been closed down at two brokers because of their behaviour

ASIC is aware this entity would be quite a payer to brokers (fees)

This would be a DMA

ASIC was NOT able to advise the name of the Entity but were able to advise that they are related to Swift Trade, Select Vantage and Merlito. Peter Beck (or Becj) is associated with Swift Trade

ASIC needs us to be aware of their concerns.

Can you please check if we have any clients with associations with the above entities and be aware of new clients and apply heightened diligence.

Interesting call on a Friday afternoon.”

44. A few days later, when he was in Sydney on 8 July 2016, Mr Schlaepfer consulted Mr O’Brien and sought his advice with respect to the defamatory contents of the Couper email. Mr O’Brien, conscious of his obligations under the relevant legal profession legislation which required him to be satisfied that there were reasonable grounds for believing, on the basis of provable facts, and a reasonably arguable view of the law, that a claim for damages had reasonable prospects of success, formed the view that he needed further information and detailed instructions before he could advise Mr Schlaepfer whether or not to commence defamation proceedings.

45. Mr O’Brien then took a number of steps to obtain that information and be in a position to receive proper instructions. Again it is unnecessary to set all of these out, because ASIC did not argue on this motion that once Mr Schlaepfer consulted Mr O’Brien, that there was any undue or inappropriate delay in the processes followed by Mr O’Brien which led to the commencement of proceedings.

46. One of the steps which Mr O’Brien took was to write to ASIC. He did so on 5 August 2016, in terms which included the following:

“Defamation

1.   On 30 June 2016 Daniel Schlaepfer first became aware of a telephone call made on Friday 21 November 2014 by Greg Yanco on behalf of ASIC to Andrew Couper, then Director of Credit Suisse Compliance Australia.”

47. The letter then set out the contents of that phone call, drawn directly from the Couper email and set out the defamatory imputations said to have been conveyed by the telephone call referred to in the Couper email. The letter went on:

“4.   It is highly probably that Mr Yanco, at about the same time, also contacted other financial institutions and made the same or similar allegations about my client. Full particulars will be ascertained through subpoenas and discovery in the defamation proceedings I am now instructed to commence.

…

6.   Mr Schlaepfer is entitled to an extension of the 12 month limitation period for commencing proceedings, due to first becoming aware of the defamatory statements on 20 June 2016. Mr Schlaepfer is a resident in Canada and consulted me at the earliest available opportunity after 20 June 2016 for advice on remedies available to him.

…

10.   At the time of the purported release, Mr Wheeldon and Daniel Schlaepfer were unaware of the conduct and defamatory statements by Mr Yanco on behalf of ASIC as outlined above. Had Daniel Schlaepfer been aware of the allegations made by Mr Yanco and the telephone call to Credit Suisse and to other financial institutions, they would not have provided a release in the terms then given, or at all.”

48. The letter went on to make a number of demands. Included in those demands were the following:

“(b)   a list of the names and contacts of other officers at financial institutions contacted by Greg Yanco in November 2014 and given the same information as conveyed to Andrew Couper of Credit Suisse, as detailed in paragraph 2 above.”

49. A response was sought within 14 days. On 18 August 2016, Ashurst Australia wrote to Mr O’Brien informing him that they had been instructed for ASIC (and Mr Yanco) and that they anticipated providing a response by the end of the following week.

50. Somewhat later than that, but on 29 August 2016, Ashurst on behalf of ASIC responded in terms which included the following:

“We refer to your letter dated 5 August 2016, and are instructed that ASIC denies that your clients are entitled to the relief claimed in your letter.

…

We are instructed that our client confirms that on or about 21 November 2014, Mr Yanco had a conversation with Mr Andrew Couper.

We understand that your clients have sought to obtain documents relating to that conversation under a Freedom of Information request made by Deutsch Miller, Solicitors, and a response will be provided to that request.

We are instructed that Mr Yanco denies the conversation was in the terms set out in paragraph 2 of your letter. In particular, it is denied that he named an entity of concern or any associated entities or individuals.

Further, we are instructed that the conversation did not include the statement ‘ASIC is not able to advise the name of the entity but can advise that it is related to Swift Trade, Select Vantage and Merlito’. We are instructed that it is possible a reference was made to similar trading identified by overseas regulators.

We are instructed that the conversation between Mr Yanco and Mr Couper was part of Mr Yanco’s duty to ensure a market participant had the appropriate controls and monitoring in place in relation to possible breaches of the market integrity rules and market manipulation.

… “

51. That letter rejected any claim of defamation made in Mr O’Brien’s letter and did not respond in any way to the request set out in [47] for provision of a list of names and the contact details of other officers at financial institutions contacted by Mr Yanco in November 2014.

52. Mr O’Brien noted in his affidavit that Deutsch Miller, who were acting for the plaintiffs on various regulatory matters, made an FOI Act application on 25 May 2006 “… for any written communications between ASIC and any market participants in Australia and overseas concerning the plaintiffs”. He received, on 2 September 2016, a copy of a letter of that date written by ASIC indicating that “… Greg Yanco, the second defendant, on 21 November 2014, had made similar allegations about the plaintiffs to Citi”.

53. Further preparations for the commencement of proceedings took place, which are detailed in Mr O’Brien’s affidavit. Ultimately, he deposed:

“After obtaining final instructions from Mr Schlaepfer, I was in a position to certify the Statement of Claim as required by the Legal Profession Uniform Law Application Act on 11 October 2016, and the Statement of Claim was then filed in the Supreme Court on that day.”

Submissions of ASIC

54. ASIC accepts that the time which elapsed from 30 June 2016 to 11 October 2016 was not an unreasonable period for the commencement of proceedings, if the first time at which the plaintiffs became aware of the defamatory publication was 30 June 2016. The way in which ASIC put that submission formally in its written submissions was this:

“In the circumstances, the defendants did not take issue with the relief sought if the Court is otherwise persuaded that it was not reasonable for the plaintiffs to have commenced proceedings within 12 months.”

55. Accordingly, the submissions of the defendants concentrated on the principal question of whether it was not reasonable for the plaintiffs to have commenced the proceedings within 12 months from 21 November 2014, that is to say, on or before 21 November 2015.

56. The defendants submitted that the Court would not be satisfied that it was not reasonable in the circumstances for the plaintiffs to have commenced an action within one year of the defamatory publication.

57. The defendants identify a number of circumstances upon which they rely. First, they submit that the reference in the letter dated 3 December 2014, from James Wheeldon to ASIC, to the fact that the publication of Update 53 may have involved “other torts” suggests that it was open to the plaintiffs at that time to further investigate, and they should have investigated, the “other torts” which they suspected had taken place. They also submit that it was open to the plaintiffs to identify whether the defamatory conversation said to have occurred on 21 November 2014 in fact occurred.

58. I am not satisfied that the reference to other torts in the letter included a reference to other defamatory statements made by Mr Yanco, or any other officer of ASIC, prior to the publication of Update 53.

59. In the context of the letter, the statement to the effect that there may well have been other torts, was a prudent statement by the plaintiffs’ lawyer seeking to preserve all of the plaintiffs’ rights to bring claims against ASIC arising out of the two identified factual circumstances set out at the start of the letter, namely the termination by Macquarie of the EEA, and the publication by ASIC of Update 53. There were, at that time and arising out of those factual circumstances, other torts capable of ready identification which may have given rise to a cause of action against the defendants such as misfeasance in public office, tortious interference in contractual relationships, negligent misstatements, or perhaps simple negligence in the undertaking of administrative function.

60. Given the existence of other identifiable torts, and the identification of only two limited factual circumstances at the commencement of the letter, I do not read the statement relied upon by ASIC with respect to “other torts” as including other defamatory utterances on 21 November 2014, which were, on any view, then unknown to the plaintiffs.

61. Accordingly, I am not satisfied that this failure to investigate the occurrence of any defamatory publications prior to Update 53 is a circumstance which is of any weight to be taken into account in evaluating the plaintiffs’ conduct in not commencing proceedings within 12 months.

62. The second circumstance to which ASIC points is the fact that in late April and early May 2015, the first plaintiff believed ASIC had made telephone calls to market participants (brokers) which defamed both him and Select Vantage, by reference to their unlawful market behaviour.

63. The defendants submitted that, particularly in light of ASIC’s response with respect to these statements, it was incumbent on the plaintiffs to undertake some further enquiry into, not just the statements about which they had evidence, namely statements made in April or May 2015, but also about any other statements which ASIC may have made at any time in the past about a similar subject matter.

64. ASIC submitted that the failure of the plaintiffs to make any further enquiry, having received the ASIC response which did not accord with the assertions made by the plaintiffs, was wholly inadequate, and would result in the Court concluding that the plaintiffs could not satisfy the statutory test.

65. It does not seem to me that this circumstance is at all relevant in the Court’s consideration of the plaintiffs’ failure to commence the current proceedings within 12 months of 21 November 2014.

66. First, the correspondence related to statements being made by ASIC at a time much later (about six months) and well removed from the statements now sued upon. Secondly, the correspondence related to the question of whether in making such statements, ASIC was in breach of the agreement which had been reached in December 2014. Thirdly, in the face of ASIC’s response that “we are unaware of any comments of the type alleged being made”, it is not at all unreasonable for the plaintiff not to have pursued any further investigations. Had there been a document containing a note of such telephone calls as were alleged, it would have been made available, one would expect, to the lawyer handling the matter on behalf of the ASIC regulatory staff. One can assume that the lawyer made reasonable enquiries as to whether the conversations occurred. Accepting that the lawyer’s response was a truthful one, and there is no reason to believe otherwise, then there is no reason to conclude that any further enquiry, such as by an FOI Act application, would have resulted in any other response. Fourthly, except with the benefit of hindsight, there was no reason for the plaintiffs to connect communications in April or May 2015 with anything that may have been said prior to December 2014.

67. This is not a circumstance which warrants any weight in the consideration by the Court of whether the plaintiffs have discharged the statutory test.

68. The third circumstance relied upon by the defendants is that there is a discrepancy between what Mr O’Brien said in his letter of 5 August 2016 and what he said in his affidavit of 11 October 2016. This discrepancy, it is submitted, gains significance because there is no direct evidence from Mr Schlaepfer capable of being subjected to cross-examination by the defendants, as to when he first knew, from any source, that Mr Yanco, or any other officer of ASIC, had made defamatory comments about him or the plaintiffs to market participants on or about 21 November 2014, in addition to what may have been said to Macquarie.

69. The defendants submitted that in the letter of 5 August 2016, Mr O’Brien said that his instructions were that his client first became aware of the telephone call to Mr Couper on 30 June 2016. In his affidavit of 1 November 2016, Mr O’Brien deposed to his instructions from Mr Schlaepfer that on 30 June 2016 he first became aware of the Couper email, which summarised the telephone conversation of that day between Mr Yanco and Mr Couper.

70. The defendants submitted that the plaintiffs have not provided any evidence to the Court as to when, in fact, they first became aware of the telephone call.

71. The significance of that is, the defendants submitted, that past events demonstrate that the plaintiffs have established contacts in the Australian market place and receive, at least informally, information from time to time indicating what ASIC may have been saying about them. The defendants pointed to the fact that information was received informally by the plaintiffs in November 2014 about information provided by ASIC to Macquarie. They point to the fact that in April and May 2015 information was received by the plaintiffs about what was then being said about them in the market place by ASIC, and finally, the defendants point to the fact that Mr Schlaepfer received a copy of the email on 30 June 2016 from a person who either was at that time or else had been, an employee of Credit Suisse.

72. The defendants submitted that in light of these available sources for the supply of information, the absence of a statement as to precisely when Mr Schlaepfer first learned of the defamatory conversation, given by direct evidence, in a way which could be tested in cross-examination, the Court ought not be persuaded that Mr Schlaepfer first learned of the conversation on or about 30 June 2016 and, further, the Court ought not be persuaded that the conduct of the plaintiffs met the test required by s 56A of the Limitation Act.

73. Mr Schlaepfer was ordinarily a resident in Canada. It was clear from the evidence that he was visiting Australia in July 2016. It was during that visit that he first consulted Mr O’Brien.

74. I am satisfied from the evidence that it was on 30 June 2016 that Mr Schlaepfer first became aware of the Couper email. I do not understand that factual conclusion to be challenged by ASIC. Even if it was, the information contained in the document admitted as Exhibit 2, an email from Mr Schlaepfer forwarding the Couper email to Mr Wheeldon, demonstrates that he (Mr Schlaepfer) received that email on 30 June 2016.

75. I am also satisfied that it was on 30 June 2016 that Mr Schlaepfer first became aware of the telephone call of 21 November 2014. Those were his instructions to his solicitor, Mr O’Brien. Those instructions were repeated by Mr O’Brien in the first paragraph of his letter of 5 August 2016 to ASIC. The timeframe for the recounting of these events, namely 30 June 2016 to 8 July 2016, when Mr Schlaepfer consulted Mr O’Brien, is not of such a length that is likely to have produced a mistaken recollection.

76. I do not see any discrepancy of substance between the statement in the letter of 5 August 2016, and the statement in Mr O’Brien’s affidavit. In my view, they are compatible and can readily sit together. In combination, they demonstrate that Mr Schlaepfer became aware of the telephone call and received the email at the same time.

77. It is of some significance in understanding this circumstance, that the person who sent the email to Mr Schlaepfer on 30 June 2016 which forwarded the Couper email, did not include any covering note or discussion about that email or its contents. He did not say, for example, “As discussed with you previously” or “As discussed on the telephone, here is the email about which we spoke”. There was no such reference. If the email was a follow up to a previous contact or a telephone conversation, whenever that may have occurred, one might ordinarily have expected that something to that effect would have been said.

78. I observe that in passing, no counsel drew attention to the contents of paragraph 6 of the letter of 5 August 2016, from Mr O’Brien to ASIC. The contents of that paragraph are set out at [47] above. No counsel drew the Court’s attention to the proposition that the date in that paragraph of 20 June 2016, may have been a statement capable of being relied upon as to when Mr Schlaepfer first learned of the conversation of 21 November 2014.

55. In the context of the facts asserted in the letter, and in light of the contents of Mr O’Brien’s affidavit, and the fact that no party sought to rely upon the date of 20 June 2016 as being of any significance, I have formed the view that, on the probabilities, that date is a typographical error for 30 June 2016. Accordingly, it adds nothing to the analysis of this circumstance.

56. Alternatively, if the correct view is that 20 June 2016, and not 30 June 2016, was the date upon which Mr Schlaepfer first became aware that a conversation had occurred on 21 November 2014, I am not satisfied that a difference of 10 days between that point in time and when he received the email upon which he sought advice promptly, is of any significance in terms of indicating that it was not reasonable for the plaintiffs to have commenced the proceedings at an earlier time than they did. Nor that he did not commence proceedings within a reasonably prompt period after first learning of the defamatory publication. After all, had he disclosed the fact of the conversation to Mr O’Brien but had no documentary evidence of it, it seems to me that Mr O’Brien could not have been satisfied of the requisite test required by the legal profession legislation to enable him to properly commence proceedings, by filing a Statement of Claim.

57. In the circumstances, I am not satisfied that this discrepancy, nor the absence of Mr Schlaepfer from the witness box, gives rise to any reason to conclude other than that Mr Schlaepfer first knew of the defamatory publication on 30 June 2016.

58. Finally, the defendants point to the fact that it was not until sometime in late May 2016 that Deutsch Miller, a firm of solicitors acting for the plaintiffs, lodged a Freedom of Information Act application with ASIC seeking, amongst other things, documents containing evidence of conversations had by Mr Yanco with market participants in November 2014. The defendants pointed to the fact that when such an application was lodged, and responded to by ASIC, there was a document provided which indicated that contact had been made with an executive at Citibank. The defendants submitted that the ability of any party to make an FOI application is something which is well known to lawyers acting for corporations who are engaged in dealings with government agencies. They submitted that the enquiry made by Deutsch Miller could easily have been made in early 2015 and well within the limitation period fixed for the commencement of defamation proceedings. The defendants submitted that the failure by the plaintiffs to have lawyers make these enquiries is a circumstance which tells against the Court concluding that it is satisfied that the plaintiffs have met the statutory test.

59. I accept that the existence of applications under Freedom of Information legislation is a well-known technique for eliciting documents from government agencies, either by corporations or individuals who have dealt with agencies of government.

60. However, there needs to be a reason, or an event which provides a reason for, or else which precipitates the making of, such an application. The defendants submitted that, as is apparent from Mr O’Brien’s letter of 5 August 2016, he was conscious that where an officer of ASIC had spoken to one market participant, it might reasonably be expected that they had spoken to other market participants. Such a suspicion, the defendants submitted, is one which ought to have been in the minds of the plaintiffs or their lawyers in November and December 2014, or else early in 2015 when Update 54 and the agreement for release were being discussed. Accordingly, the defendants submit that the plaintiffs did not take all reasonable steps to ascertain the existence of the defamatory oral publications.

61. It is equally clear that ASIC did not volunteer to the plaintiffs at that time that they had had any discussions with any other market participant with respect to the plaintiffs. In other words, the frame of reference of the discussions in late 2014 was that described in the letter from Mr Wheeldon of 30 October 2014, referred to at [23]-[25] above, namely any discussions leading to the termination of the commercial arrangements between Macquarie and the plaintiffs, which discussions were denied by ASIC, and the publication to the market of Update 53.

62. Those circumstances, without any further knowledge, would not in my view have given rise to any reasonable suspicion or soundly-based expectation on the part of the plaintiffs or their lawyers, that ASIC or its officers would have been telephoning participants in the market place, particularly those with whom the plaintiffs had no commercial dealings, to tell them information the substance of which subsequently appeared in Update 53. After all, the purpose of putting information in Update 53 was to inform all participants in the market of particular facts and circumstances which ASIC regarded as relevant to the lawful and ordered operation of the markets.

63. The defamatory publications sued upon are one or more discrete telephone conversations with particular market participants whom ASIC, so it appears, desired to inform, about the plaintiffs. In those circumstances, I do not think that anyone acting reasonably would have thought to have submitted an FOI application at that time either in the terms which were subsequently submitted by Deutsch Miller or in any broader terms.

64. None of the submissions made by the defendants raise circumstances which, upon analysis, tell against the plaintiffs satisfying the Court of the matters necessary to obtain an extension of time.

65. However, this analysis is not the end of the matter. The defendants have no onus of proof and do not have to demonstrate that what the plaintiffs did or failed to do, meant that they did not satisfy the statutory test. On the contrary, it is a matter for the plaintiffs to prove that it was not reasonable for them, in the circumstances, to have commenced proceedings, within 12 months of the publication of the defamatory material.

66. It has been convenient to discuss the circumstances to which the defendants draw attention in order to deal with whether they are circumstances to be taken into account by the Court in considering whether the plaintiffs have discharged the requisite onus. For the reasons which I have expressed, they are not circumstances of any weight in the evaluative exercise the Court is required to undertake.

Plaintiffs’ Submissions

91. The plaintiffs submitted that the principal relevant circumstance which leads to the conclusion that they met the statutory test is that Mr Schlaepfer first knew of the telephone call on 30 June 2016 and moved promptly thereafter. The plaintiffs’ submit that because the telephone call (or calls) was an oral slander, it was reasonable of them to have waited to receive some documentary corroboration of the fact, and content, of the phone call before commencing proceedings. The Couper email which provided that corroboration was first received on 30 June 2016.

92. The plaintiffs submitted that there was no reason to make any enquiries about the possible existence of that defamatory publication, or others similar to it, unless and until it had some indication, or sense, that such defamatory publications had in fact been made.

93. I accept that submission. In my view, there was no circumstance sufficient to cause the plaintiffs to have any reason to undertake any investigations as to the existence or otherwise of any defamatory publications made by an officer of ASIC prior to the publication of Update 53, and the communication with Macquarie.

Conclusion

94. The plaintiffs are required to satisfy the Court that it was not reasonable, in the circumstances, for them to have commenced proceedings within one year of the publication of the matter complained of.

95. In summary, I am satisfied of the following circumstances:

1. Mr Schlaepfer did not become aware of the oral publication of the allegedly defamatory statement by Mr Yanco to Mr Couper at any time before 30 June 2016;

2. there is no reason to differentiate the position of knowledge of that publication as between each of the three plaintiffs. Accordingly, I am satisfied that none of the plaintiffs knew of that publication before 30 June 2016;

3. none of the plaintiffs knew of the oral publication of the allegedly defamatory statements made by Mr Yanco to an executive at Citibank, prior to the receipt by Deutsch Miller of a response by ASIC of the FOI application. Although the date is not proved in the evidence, I am satisfied that it was, on the probabilities, a time after 29 August 2016, being the date of the letter from Ashurst set out at [50] above;

4. none of the plaintiffs, or their legal advisers, had any reason to suspect that, prior to the issue of Update 53, Mr Yanco, or any other officer of ASIC, had made allegedly defamatory statements about the plaintiffs other than those which were allegedly made to Macquarie Securities (Australia) Ltd on or about 21 November 2014, or by way of Update 53;

5. it was not reasonable to expect that any of the plaintiffs would have initiated enquiries, prior to 30 June 2016, which were intended to identify whether, and if so to what extent, or to whom, Mr Yanco or any other officer of ASIC, may have spoken to about the plaintiffs; and

6. at no time prior to October 2016, did any legal practitioner certify, in accordance with the relevant legal professional legislation, that proceedings were in an appropriate state to be commenced. I am not satisfied that there was any earlier point in time when any such certification could have been made.

96. In those circumstances I am satisfied that it was not reasonable for the plaintiffs in the circumstances to have commenced proceedings for defamation within the 12 month limitation period.

Summary

97. Given that the plaintiffs have satisfied me of the statutory test in s 56A of the Limitation Act, then it follows that the Court must extend the limitation period.

98. It is not in dispute that the date to which the limitation period should be extended is 11 October 2016, being the date upon which the Statement of Claim was filed.

Orders

99. The Court makes the following orders:

1. Pursuant to s 56A of the Limitation Act 1969, the limitation period for commencing an action in respect of the matters complained of, as pleaded at paragraph 5 of the Statement of Claim filed 11 October 2016, be extended to 11 October 2016.

Costs

100. Neither party sought costs in the event that the order in the Notice of Motion was made. Accordingly, no order for costs will be made.

**********

Decision last updated: 15 February 2017