Warpforge Limited v Gorecki - [2022] WASC 435

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION:   WARPFORGE LIMITED -v- GORECKI [2022] WASC 435
CORAM:   KENNETH MARTIN J
HEARD:   21 OCTOBER 2022
DELIVERED          :   13 DECEMBER 2022
FILE NO/S:   CIV 1994 of 2021
BETWEEN:   WARPFORGE LIMITED
First Plaintiff
GRANT CHRISTOPHER REYNOLDS
Second Plaintiff
AND
MARCIN JANUSZ GORECKI
Defendant
MARCIN JANUSZ GORECKI
Plaintiff by counterclaim
AND
WARPFORGE LIMITED
First defendant by counterclaim
GRANT CHRISTOPHER REYNOLDS
Second defendant by counterclaim

Catchwords:

Defamation - Pleadings - Strikeout of proposed defence minute - Leave required - Some defence amendments opposed - Pleas of truth or substantial truth to alternate imputations - Interlocutory rulings

Legislation:

Defamation Act 2005 (WA)

Result:

Leave refused to amend certain paragraphs of minute of amended defence pleading
Special costs orders made on prior application not pursued

Category: B

Representation:

Original Action

Counsel:

First Plaintiff	:	Mr C Chenu
Second Plaintiff	:	Mr C Chenu
Defendant	:	Mr T Lettenmaier

Solicitors:

First Plaintiff	:	Steedman Stagg Lawyers
Second Plaintiff	:	Steedman Stagg Lawyers
Defendant	:	Forbes Kirby

Counterclaim

Counsel:

Plaintiff by counterclaim	:	Mr T Lettenmaier
First defendant by counterclaim	:	Mr C Chenu
Second defendant by counterclaim	:	Mr C Chenu

Solicitors:

Plaintiff by counterclaim	:	Forbes Kirby
First defendant by counterclaim	:	Steedman Stagg Lawyers
Second defendant by counterclaim	:	Steedman Stagg Lawyers

Case(s) referred to in decision(s):

Buckeridge v Walter [2010] WASCA 134
Penton v Calwell [1945] HCA 51; (1945) 70 CLR 219
West Australian Newspapers v Elliott [2008] WASCA 172; (2008) 37 WAR 387

KENNETH MARTIN J:

I am dealing with an opposed application made by the defendant seeking leave to file what would be a further amended defence and amended counterclaim in this action, responding to the statement of claim ('SOC') of the plaintiffs filed 2 March 2022 (folio 6).
Pursuant to orders 1 through 5 of my orders of 7 September 2022 (folio 36), certain paragraphs within the defendant's then defence and counterclaim filed 3 June 2022 were struck out. Under order 6 of those orders there was, however, leave to replead on the basis that an application for leave be made accompanied by a minute of proposed amendments - in respect of paragraphs struck out and sought to be repleaded. In the event that the repleaded amendments submitted under a minute were opposed, I had programmed a timetable for an exchange of submissions between the parties with a view to resolving those issues at a special appointment, if necessary.
Essentially, that course has ensued by reference to a first iteration of a minute of proposed further amended defence and amended counterclaim filed 30 September 2022. That minute, however, has now been overtaken and leave to amend was ultimately sought by the defendant in accord with a substituted minute of proposed further amended defence and amended counterclaim ('Minute') filed 6 October 2022 (folio 46).
Various tranches of written submissions have been filed and exchanged as between the plaintiffs' and the defendant's lawyers in the lead-up to the appointment hearing on 21 October 2022. The plaintiffs have not opposed all proposed repleaded amendments under the Minute. Nevertheless, there remain a basket of disputed proposed defence pleas requiring my resolution.
For the purposes of the hearing, I hold the written outlines of submissions and replies exchanged for the purposes of what is, in effect, a de facto strikeout application advanced against various pleas in the Minute. The plaintiffs, as de facto applicant, rely upon their outline of submissions filed 7 October 2022 (folio 47) and outline of supplementary submissions filed 19 October 2022 (folio 51). For the defendant, in promoting the opposed components of its Minute, he relies upon an initial outline of submissions filed 30 September 2022. On 3 October 2022, however, he then filed a substituted outline of submissions (folio 40). Even later, on 14 October 2022, he filed an outline of submissions in reply (folio 49).
During the course of the hearing, I was able to summarily dispose of an aspect of some controversial pleas within the Minute, in respect of pleas under pars 13.1(b), 13.6(b) and 13.8(b). Those pleas had displayed attempts by the defendant to raise the statutory defence under s 31(1) of the Defamation Act 2005 (WA) (as amended) - to contend for a defence of honest opinion. As seen under the tripartite components of s 31(1), any such opinion must be based on 'proper material'. As I explained during the course of the hearing and some ex tempore reasons then, I was not satisfied that this plea in respect of which leave was opposed, even evaluated at an interlocutory standard of arguability, was supported under the provided particulars of the Minute concerning the conduct of the second plaintiff.
The remainder of these reasons will address earlier challenged pleas in the Minute and attempted to be raised in the defence either by way of pleas of truth or substantial truth, and further, a plea attempting to engage with the principle as was explained by the Court of Appeal in West Australian Newspapers v Elliott [2008] WASCA 172; (2008) 37 WAR 387 (Steytler P and McLure JA), by way of what was referred to as the justification of a Hore-Lacey plea. Towards such a plea McLure P (with whose reasons Owen and Buss JJA agreed) observed in the later decision of Buckeridge v Walter [2010] WASCA 134 at [33], that:
... The test approved in Elliott is that a defendant cannot plead and justify a meaning substantially different from, or more injurious than, the meanings alleged by the plaintiff. It derives from the judgments of Ormiston JA and Charles JA in David Syme & Co Ltd v Hore-Lacy (2001) 1 VR 667 [21] - [22], [52]. As the test is expressed in negative terms, the requirements are cumulative. (original emphasis)
McLure P had continued at [36]:
I agreed with Steytler P in Elliott that the Hore-Lacy test should be applied, including in the determination of interlocutory applications, because his survey of decisions of intermediate appellate courts in Australia revealed general support for the Hore-Lacy test. Moreover, Elliott followed the principle, well-established in this jurisdiction and elsewhere, that the scope for pleading a Polly Peck defence is delineated by the extent to which a plaintiff can depart from his or her pleaded imputations: Elliott [20], [74]; Nationwide News Pty Ltd v Moodie [13], [59], [85]. I see no justification for departing from the law as stated in Elliott.
McLure P then observed at [37]:
... What informed my approach in Elliott to the application of the requirement that a Polly Peck plea not be 'substantially different' from the plaintiff's imputation is that a Polly Peck defence of its nature must permit a defendant to plead and justify an imputation which is sufficiently different from the plaintiff's imputations such that different evidence would be required to justify it [75] - [77]. The evidence relevant to prove the first Polly Peck imputation is also relevant to, but would fall short of, establishing the truth of the respondent's imputation. That is because the Polly Peck imputation is a subset of, and comprehended within, the respondent's imputation. In those circumstances I would not characterise the first Polly Peck imputation as substantially different from the respondent's imputation.
Resisted pleas in the Minute concern two of five publications complained of in the SOC as defamatory publications against the second plaintiff. The first of these publications, of 6 September 2020, was a post on an online review platform called 'Glassdoor', as identified under par 10 of the SOC ('First Publication'). It is not necessary for the purposes of the present application that I set out the Glassdoor post. Relevantly, however, under par 11 of the SOC, it is contended:
11.In its natural and ordinary meaning, the First Publication meant and was understood to mean that the second plaintiff, in his role as the managing director of the first plaintiff:
11.1is manipulative;
11.2has treated multiple employees in a way that has resulted in claims of abusive behaviour being lodged against him;
11.3is a liar;
11.4conducts himself in a way that has caused damage to the mental health of multiple employees of the first plaintiff;
11.5...
11.6defrauds the shareholders of the first plaintiff;
...
The second publication as complained of by the SOC relates to another contended publication by the defendant, this time of 25 September 2020, under an email sent to shareholders of the first defendant as identified under par 12 of the SOC ('Second Publication').
Again, I do not need to set out the content of the Second Publication for the purposes of the present application. I do note, however, that attempted defence pleas under pars 13.3, 13.5 and 13.7 of the Minute are challenged (above and beyond the honest opinion defence pleas under pars 13.1, 13.6 and 13.8, which I have already considered and have effectively disallowed earlier on the present leave application).
Relevantly then to what remains of the present application, I am concerned with challenged attempted responses by the defendant to the plaintiffs' pleas under pars 13.3, 13.5 and 13.7 as follows in the SOC, reading:
13.In its natural and ordinary meaning, the Second Publication meant and was understood to mean that the second plaintiff, in his role as the managing director of the first plaintiff:
...
13.3engaged in misleading or deceptive conduct by misrepresenting to shareholders of the first plaintiff the first plaintiff's intellectual property position;
...
13.5has mistreated multiple employees of the first plaintiff in a way that has resulted in claims of abusive behaviour being lodged against him;
...
13.7is manipulative;
...
I turn to consider what remains of the present application below.

Paragraphs 11.1 and 13.7 - First and Second Publications

As mentioned, a common imputation raised in these pars concerning the First and Second Publications is that they defame the second plaintiff by a natural and ordinary imputation arising from the published words - to the effect that he 'is manipulative'. In the attempt to answer and defend against that imputation the defendant, by a proposed plea under what is seen at par 11.1(b) of the Minute, would seek to plead that the implication is true or, alternatively, substantially true. Particulars then follow. Essentially, they identify an incident out of which it is contended that the second plaintiff had manipulated the defendant into producing financial modelling that inflated the first plaintiff's predicted profit with respect to the first plaintiff's product

- being composite ute trays.
I mention what is found under pars 1(a)k - n of the particulars given in support of this plea - in relation to certain assumptions that the defendant says were provided to him by another employee, a Mr Jiang, as regards the physical characteristics of the relevant composite product to be used in the financial model (as defined in par 1(a)j).
The contention essentially is that the defendant was manipulated because the information in the assumptions as provided via Mr Jiang, were not based on his own calculations and that he had, in fact, been instructed by the second plaintiff to provide them to the defendant. The defendant further contends that had the second plaintiff provided those assumptions to the defendant directly, then he would have challenged the credibility or reliability of the information provided to him given its source - something he did not do when the information had been provided via Mr Jiang.
So, the question to be addressed, but only at the interlocutory threshold test of arguability to support a plea of justification or substantial truth, is whether what has been provided lays an arguable foundation for the defence to stand for trial. In other words, is there enough here for the triers of fact at a later defamation trial to find a defence of justification or substantial truth, made out. The challenge for the plaintiffs is that such particulars do not sufficiently engage to support, even viewed at the arguability threshold, such a truth defence vis-à-vis the imputation that the second plaintiff 'is manipulative'.
The second plaintiff points to another in principle difficulty concerning the generalised nature of an imputation that the second plaintiff 'is manipulative', in contrast to the mere single incident as is relied upon by the particulars. He says that one incident cannot be accepted as rising to the level of making good a more generalised trait, concerning him being manipulative. The second plaintiff relies upon observations to that end found in Penton v Calwell [1945] HCA 51; (1945) 70 CLR 219 of Latham CJ and Williams J at 240 - 241, in relation to the imputation in that case, that the plaintiff was an habitual liar. Their Honours had observed:
Such a charge can be established only by an accumulation of instances.
At pars 14 and 15 of his substituted outline of submissions filed 3 October 2022 the defendant, for his part, looks to accept that to establish the truth of an imputation that the second plaintiff was manipulative, it must be shown that he took a course of intentionally unscrupulous conduct to achieve a particular result.
On my assessment, both of the grounds of objection put against this attempted defence plea by the second plaintiff, must be accepted. An identification of one incident will not, by convincing analogy with the liar imputation in Penton v Calwell, be sufficient, even if accepted as proved, to make good a more generalised pejorative trait of, 'is manipulative'. Put even more succinctly by counsel for the plaintiffs, Mr Chenu, I would accept that 'one swallow does not make a summer'.
The plea is also deficient in that the foreshadowed facts as exposed under the particulars of justification sought to be relied upon, cannot, even arguably in my assessment, constitute manipulative conduct in the ordinary sense of the meaning of the word 'manipulative'.
Consequently, I essentially uphold the second plaintiff's grievances as expressed against the plea under par 11.1(b) of the Minute and its particulars.
That conclusion necessarily flows through to a like defamatory imputation response complained of by the second plaintiff, made towards the Second Publication under par 13.7 of the SOC where, essentially, the same rival considerations present again and the defendant seeks to incorporate the same (inadequate) particulars from under par 11.1 of the Minute. Those pleas under par 13.7(b) of the Minute, must fall correlatively.

Paragraphs 11.2 and 13.5 - First and Second Publications

As earlier seen, this imputation complained about as being defamatory by the second plaintiff from the First Publication under par 11.2 of the SOC, is that he:
11.2has treated multiple employees in a way that has resulted in claims of abusive behaviour being lodged against him.
With a small variation, the imputation is closely comparable to the imputation as raised by the second plaintiff under par 13.5 of the SOC

- which, as seen, is also challenged by par 13.5(b) of the Minute and which likewise, seeks to raise a similar Polly Peck response imputation to first show, and then to defend, by a plea of truth or substantial truth to that alternate imputation.
The plea in the Minute under par 11.2(b) reads:
(b)says further that in its natural and ordinary meaning, the following imputation arises from First Publication: that the second plaintiff, in his role as the managing director of the first plaintiff, acted abusively, and this imputation is true or, alternatively, substantially true.
The amended particulars proposed for this plea, say:
1.As to sub-paragraph 11.2(b), the defendant relies on the matters pleaded in paragraphs 64 to 69 where the second plaintiff acted abusively towards the defendant.
It is not necessary for the present purposes to assemble the contents of pleas across the ensuing pars 64 to 69 of the Minute. Scattered throughout that material, however, in a different context presenting under the heading 'Intentional infliction of mental harm', are numerous pleas referencing alleged conduct by various persons including by the second plaintiff - all said to be demeaning, threatening, aggressive, inappropriate, discomforting and/or insulting.
The second plaintiff is correct when he complains that the par 11.2(b) particulars are embarrassing, in so far as they do not precisely identify conduct towards the defendant said to be conduct where the second plaintiff has allegedly acted abusively. An attempted incorporation by reference of a wider plea of an indiscriminate amount of global conduct, including allegedly by the second plaintiff and others, is unclear and consequently embarrassing. Were this the only criticism raised, then I would likely grant leave to amend on a basis of allowing the defendant to isolate later the precise materials concerning the defendant and this alternate imputation.
Beyond that issue, however, a more structural objection is raised by the second plaintiff. This is that the defence plea, as proposed under par 11.2(b) of the Minute, raises a different genre of imputation against the second plaintiff's imputation complained of and the plea is therefore, impermissible under the criteria as explained by McLure P in Buckeridge v Walter.
In particular, the different character of the defence plea puts into focus a suggested in principle distinction, as between the second plaintiff's original imputation - that the second plaintiff was a subject of claims of abusive behaviour (i.e. by him) and the defendant's alternate imputation - that the second plaintiff acted 'abusively'. It also emerged during argument that the defence imputation ought to incorporate some further words, to the effect that the second plaintiff 'acted abusively towards the defendant as an employee' (see ts 39). Again, if that were the only deficiency, I would likely have granted leave to add the clarifying words. Nevertheless, I have assessed the attempted alternate imputation on that basis.
Even so, on my assessment the attempted alternate imputation does not meet the WA Newspapers v Elliott criteria. That is because the meaning it seeks to justify, by a plea of truth, or of substantial truth is, on analysis, substantially different from the original meaning alleged by the second plaintiff. In particular, I contrast the second plaintiff's plea as regards reference to multiple employees and the alternate plea

- which is only directed towards conduct against one employee, namely the defendant.
Moreover, as seen, the plaintiffs' original imputation complained of is framed in regard to 'claims' 'lodged' against the second plaintiff. There is a key differentiation, in my view, as between abusive behaviour resulting in a lodgement of claims with merely the second plaintiff being said to have 'acted abusively' - which is far too general and, in my view, is different in substance to the second plaintiff's founding defamatory imputation.
Consequently, the pleas seen under par 11.2(b) of the Minute with its particulars, carry this conceptual deficiency. They cannot, accordingly, be the subject of a grant of leave to amend in that form. Given all the proceeding prior defence attempts to execute some viable alternate imputation, my assessment is that these unsuccessful efforts have now gone on long enough. Accordingly, there will be no further leave to amend in respect of the second plaintiff's plea under par 11.2 of the SOC.

The same reasoning and conclusion carries over to the attempted plea of justification of the alternate meaning as is seen under par 13.5(b) of the Minute. That plea fails to engage, as a matter of concept, with the necessary WA Newspapers v Elliott criteria to be accepted as a potential defence, albeit it is phrased somewhat differently, as 'was abusive towards multiple employees'. But the same conceptual deficiency, manifests. Likewise, the particulars given are embarrassing, because save for the defendant and a person identified at par 1(b) of the particulars, the other employees contended as falling within the description of 'multiple employees' are not precisely identified under par 1(c) of the particulars. That leaves the plaintiffs to speculate about who is the subject of that alternate imputation as framed. That is an unacceptable position.
Likewise, given what is now a long term problematic history of all prior attempted defences, there should be no leave to replead further, against the imputation in par 13.5 of the SOC.

Paragraph 11.3 - First Publication

This challenge by the second plaintiff concerning an 'is a liar' imputation, is the subject of the plaintiffs' outline of supplementary submissions, filed 19 October 2022.
Here, I would allow the defence plea as is seen under the Minute at par 11.3(b) contending that the imputation of the plaintiff is true or, alternatively, substantially true, to remain. The given defence particulars provide, in effect, three instances in which it is said that they can support the plea of truth or substantial truth made to the imputation. The challenge of the second plaintiff, in effect, was that three instances were not enough to rise the level of arguable justification of his imputation pitched at the general trait level of 'liar'.
On my assessment, however, it is for the triers of fact at a trial to reach their conclusion as to whether the three instances of conduct, as particularised, should be so assessed. In other words, the alleged deficiency is not clear enough towards this aspect of the Minute to contend that this defence plea, is unarguable. This pleaded contention in the Minute can be the subject of a grant of leave to amend, as is sought.

Paragraph 11.4 - First Publication

The plaintiffs' imputation complained of under par 11.4 of the SOC is that the second plaintiff 'conducts himself in a way that has caused damage to the mental health of multiple employees of the first plaintiff'.
The proposed defence plea against that imputation, in respect of which leave to amend is sought, seeks to plead truth to an alternate imputation. The alternate imputation sought to be proven by the defendant, under par 11.4(b) of its Minute, is that:
... the second plaintiff, in his role as the managing director of the first plaintiff, acted abusively, and has caused the defendant to suffer mental health problems, …
During the course of in person arguments, counsel for the defendant sought to adjust this defence plea - so that it would read instead that:
... the managing director of the first plaintiff conducts himself in a way that has caused damage to the mental health of the defendant.
(see ts 43)
Particulars given to that attempted defence read:
1.As to sub-paragraph 11.4(b), the defendant relies on the matters pleaded in paragraphs 64 to 69 where the second plaintiff acted abusively towards the defendant and caused him to suffer mental health problems.
The second plaintiff resisted leave for this amendment initially on the basis that it was a rolled up plea, and was unclear. However, the amended clarification since provided by counsel for the defendant, is now accepted to have resolved that problem. So, the basis of the residual objection, essentially, is at the conceptual level. That is, that the alternate plea is of a different character to the plaintiffs' imputation and therefore cannot be viewed as a subset like plea - even if it is viewed as formulated in the as revised terms, since propounded by counsel for the defendant.
The second plaintiff also complains of the suggested embarrassing nature of the particulars relied upon concerning the direction to effectively fish within pars 64 to 69 of the Minute. Specifically, a need to forage across all that content towards locating what the defendant is actually raising defensively here, in terms of him acting abusively towards the defendant and so, causing him to suffer mental health damage, is said to be unacceptable. I agree. This is far too vaguely assembled as a plea. The objection, which essentially is a grievance of embarrassment through a lack of clarity, must be accepted.
More substantively, however, the required evaluation at the conceptual level is whether the alternate plea is within the parameters of the imputation under par 11.4 of the SOC.
In this instance, I am of the view that as it was reformulated during the hearing by counsel for the defendant, the plea now, at least arguably, does meet those parameters, as a matter of concept. The particulars, however, as formulated, are embarrassing and need to be revised. Consequently, I disallow the current plea seen under par 11.4(b) of the Minute, grant leave in respect of the plea as it came to be reformulated by counsel for the defendant during the hearing as stated above and then grant leave, in principle, for an amendment in such terms once the supporting particulars are appropriately clarified - to address the embarrassment deficiency presently manifesting. Consequently, this is not a plea in the Minute where I close off all further opportunity for future amendment and rehabilitation.

Paragraph 11.6 - First Publication

Here, the imputation under par 11.6 of the SOC is that the second plaintiff:
11.6defrauds the shareholders of the first plaintiff;
In exchange of submissions between the parties during the course of the hearing, I was advised the defendant no longer seeks to support that attempted defence under par 11.6(b) of the Minute, by reference to an attempt to justify an alternate plea. Consequently, leave in that respect is refused.
The disputed issue was clarified, however, to make it explicit that proposed particulars to that alternate plea under par 11.6 of the Minute were to be moved - so as to become particulars to the defence plea under par 13.4 of the Minute - concerning the Second Publication. There was no objection to that foreshadowed course of proposed amendment - which may then be so executed, in the next iteration of the defence pleading.

Paragraph 13.3 - Second Publication

The plaintiffs' natural and ordinary meaning defamatory imputation complained of under par 13.3 of the SOC from out of the Second Publication is that the second plaintiff, in his role as managing director of the first plaintiff:
13.3engaged in misleading or deceptive conduct by misrepresenting to shareholders of the first plaintiff the first plaintiff's intellectual property position;
By way of attempted defence under par 13.3 of the Minute, the defendant seeks to raise an alternate imputation for the purposes of a plea of truth or substantial truth. The defendant's proposed plea under par 13.3(b) of the Minute reads in terms:
... that in its natural and ordinary meaning, the following imputation arises from Second Publication: that the second plaintiff, in his role as the managing director of the first plaintiff, mislead the defendant as to the first plaintiff's intellectual property position, and this imputation is true or, alternatively, substantially true, further or alternatively, if the plaintiffs' pleaded imputation does arise, the imputation is true or substantially true.
So seen, not only does the defendant seek to raise an alternate imputation to justify as true or substantially true, he also pleads a direct response of truth or substantial truth to the plaintiffs' imputation.
During the course of arguments at the hearing, counsel for the defendant accepted that the alternate imputation must to be augmented, to now read 'misled the defendant as a shareholder of the first plaintiff as to …' (see ts 45).
I have evaluated the disputed matter on that evolved basis.
Particulars that follow under par 13.3 of the Minute seek to rely upon what was said at a meeting in October or November 2018 at the first plaintiff's facility, when it is alleged the second plaintiff told the defendant, a Mr Hession, that all intellectual property used by the first plaintiff was 'developed and owned in-house'.
The defendant's contention that he was misled as a shareholder or, indeed, that the first plaintiff engaged in misleading and deceptive conduct by a representation to the shareholders about the first plaintiff's intellectual property position, essentially, is said to emerge out of something that happened later on 10 September 2020 - under par 1(c) of the particulars to par 13.3 of the Minute. At this time, the first plaintiff's shareholders were told in a presentation to them that the first plaintiff had paid $200,000 to the second plaintiff for an 'intellectual property payment'. The concluding particular to that plea reads:
(d)the first plaintiff did not own or develop all of the intellectual property it used, as the first plaintiff had a licence to use the second plaintiff's intellectual property.
I am of the view that the attempted plea of truth or substantial truth directed at the second plaintiff's imputation under par 13.3 of the SOC, is not even arguably, sustainable. The second plaintiff's imputation of misleading and deceptive conduct is as seen addressed to the first plaintiff's shareholders, generally. Particulars given under par 1(b), however, refer only to what the second defendant was personally told at some meeting in October or November 2018 – namely that intellectual property used by the first plaintiff was developed and owned in-house. That responsive assertion does not extend beyond what the defendant himself was told. Albeit the defendant was also a shareholder, the plea is not wide enough to support a plea of truth or substantial truth to the plaintiffs' imputation.
A remaining question is whether the adjusted, alternate plea, is conceptually acceptable? Here, as now revised, I accept it is

- once the clarification is added as to a misleading of the defendant as a shareholder of the first plaintiff.
There is a further problem, however, in that there is, on my assessment, a conceptual chasm between what I will assume might be proved concerning what was said to the defendant on or around October or November 2018 and a disclosure in the presentation of September 2020 - concerning an intellectual property payment to the second plaintiff.
I do not evaluate the October/November 2018 statement about intellectual property being developed and owned in-house as being necessarily inconsistent with an intellectual property payment to the second plaintiff, as disclosed at the 10 September 2020 presentation.
A temporal gap of almost two years is significant. Moreover, the loose terminology of intellectual property being owned 'in-house', bearing in mind the close relationship and control of the first plaintiff by the second plaintiff as managing director and shareholder, could be assessed as being consistent with in-house ownership of the intellectual property used by the first plaintiff.
In all the circumstances, I would not grant leave for the defence plea under par 13.3 of the Minute, as is attempted. Here, bearing in mind all the prior history of unsuccessfully attempted pleas in the past, I would not only disallow leave to amend in the form as is presently sought (as revised at the hearing), but I would also not entertain any further attempted amendments, by way of augmentation to the defence concerning the plea under par 13.3 of the SOC.

Conclusions

These reasons, together with my further ex tempore reasons given during the hearing - dealing with honest opinion attempted defences raised in respect of pars 13.1, 13.6 and 13.8 of the Minute, indicate that the second plaintiff has been substantially successful on the present application towards resisting the amendments as identified and, prima facie, should receive its costs of the contested application and hearing opposing leave.
Orders implementing these reasons can be a subject of conferral over the ensuing 7 days as between the parties and, to the extent that there is any disagreement, I will, if necessary, resolve any issues on the papers, in due course.

Costs

A further contested aspect of the application hearing concerned the plaintiffs' application for special costs orders pursuant to the liberty which I granted under orders 11 and 12 of my previous orders of 7 September 2022 - for the plaintiffs to seek leave to obtain special costs orders beyond scale limits that would otherwise apply by the Legal Profession (Supreme and District Courts) (Contentious Business) Determination 2020 and Legal Profession (Supreme and District Courts) (Contentious Business) Determination 2022.
A costs order enhancement application was supported by the plaintiffs' outline of submissions filed 6 October 2022 (folio 42). This application is supported by three affidavits. There are two affidavits relied upon from Jasmine Ashleigh Sims both filed 6 October 2022, albeit both sworn 7 September 2022 (folios 44 and 45).
There was a further affidavit by Patrick Connor McCarthy filed and sworn 6 October 2022 (folio 43), which essentially contained a draft bill of costs for purposes of a taxation under attachment PCM-1 to that affidavit.
The costs order enhancement application of the plaintiffs - is opposed by the defendant. Through his lawyers of record, the defendant relies upon his outline of submissions filed 14 October 2022 (folio 48).
Essentially, the costs issue is to be resolved on the papers despite its brief mention during the special appointment on 21 October 2022.
It is not necessary to traverse in any great detail back to the circumstances of pleading detritus which lead to my strikeout orders of 7 September 2022.
In summary, the defendant had been seeking to amend its defence and file a counterclaim. However, various iterations of proposed defence plea documents had been late in emerging and then later, when they did, were objected to by the plaintiffs on the basis of multiple suggested misconceptions - including against many of the attempted pleas of justification, honest opinion and, indeed, attempted pleas of bad character. This resulted in my strikeout orders that ultimately, at the 7 September 2022 hearing, were essentially not resisted then - on a basis that there was, in effect, a frank acceptance by newly engaged counsel for the defendant of such pleading deficiencies, albeit this acceptance only emerged very late.
The issue that presents then concerns costs orders beyond the scale limits - a position foreshadowed by counsel for the plaintiffs on 7 September 2022 and reflected under my then orders 12 and 13. Those orders envisaged an application to lift particular scale limits under the 2020 and 2022 scales, and for maximum hourly and daily rates for practitioners and counsel to be removed. My leave granted for such an application as to costs was, in fact, taken up by the lawyers for the plaintiffs on 6 October 2022, by that letter communication to the Court (folio 41).
The defendant's resistance position essentially submits that scale limits are adequate and that the well-known tripartite criteria concerning unusual difficulty, complexity and importance, are not met here. The emphasis of the defendant's costs order resistance position, however, is that, at the end, there was no need for substantive arguments on 7 September 2022, by reason of the (in effect, 'surrender') stance as communicated on behalf of the defendant at that time, effectively conceding deficiencies, but seeking further leave to correct the defence and counterclaim.
The particular scale limits that are sought to be adjusted are scale items 10, 27 and 32 - viewed by reference to the draft bill of costs attached to Mr McCarthy's affidavit at PCM-1.
As regards scale items 27 and 32, the amounts claimed respectively on behalf of the plaintiffs are $19,850 and $5,700. Those amounts may be contrasted to the maximum allowed under the scale of $15,575 and $4,600 respectively.
Concerning those two items, I am not satisfied that the allowances under the scale are likely to be inadequate, in all the circumstances. On my assessment, the real argument is over a significant difference as between the amount claimed under scale item 10 of $33,656.25 versus a maximum scale limit of only $13,410.
Notwithstanding a legitimate submission by the defendant over the substantive need for contested arguments ultimately being avoided at the hearing, by reason of the stance of the defendant to accept the current deficiencies and to seek further leave to amend, I am of the end view that it is relatively obvious here that a substantial amount of high-level specialist work was required and wasted in the preparation phase for those looming arguments. That is demonstrably reflected in the careful and extensively prepared written submissions that were prepared and exchanged from the plaintiffs' lawyers in anticipation of those looming contested pleading arguments.
Moreover, the work of the plaintiffs in clearly explaining under those relatively lengthy written submissions the many pleading deficiencies as manifested in what was then being attempted under the defence plea iterations, was causatively responsible in the end for rendering it self-evident to the defendant's lawyers, finally, that there were serious problems in their pleading - which were effectively indefensible.
Having needed myself to peruse all that written material filed on behalf of the plaintiffs in anticipation of the disputed hearing, my assessment is that the level of scale remuneration would indeed be likely inadequate, notwithstanding that ultimately the hearing did not need to be heard as a contested one - as regards the defendant's pleading deficiencies that were, essentially, accepted late at that time and became the subject of orders that day. Still, the amount of preparatory work required from the plaintiffs would have been considerable - on my assessment of the scale and content of written submissions that would otherwise have been relied upon at that hearing.
Based on my own assessment of the level of work involved on the part of the plaintiffs' legal team by reference to preparations for that chambers hearing, my view is that the fees sought by the plaintiffs' lawyers under the rates attributed to lawyers, clerks and counsel in a specialist defamation action, are not so high as to be viewed as unusual or unreasonable. I am not surprised by the aggregate amount as is claimed on behalf of the plaintiffs' lawyers in excess of $30,000. If the scheduled hearing had proceeded on a disputed basis, then no doubt the amount would have been much greater.
Consequently, I am in the end persuaded that scale item 10 for chambers work is, in the circumstances, likely to be inadequate and further, that the complexity and importance of the matters that were to be raised upon that contested hearing in a defamation action, albeit ultimately not necessary to be argued, support an upward adjustment to the scale limits by expansion.
In the circumstances, I would vary that scale limit to increase it to $30,000. I am not persuaded to remove the scale limit for item 10 entirely. Otherwise, the scale limits remain.
Consequently, there should be an order which will issue upon publication of these reasons increasing the scale limit under item 10 of the scale, in accordance with orders 11 and 12 of my orders of 7 September 2022, for the purposes of any taxation of the plaintiffs' costs against the defendant that is conducted.
For completeness however, I point out that the variation by way of an increase to the scale limit concerning item 10, simply opens the scope for a taxing officer in due course to fix an appropriate amount at a taxation of the costs and wholly within the unaffected discretion of the taxing officer, operating in the regime of that revised scale ceiling amount.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
PP
Research Associate to the Honourable Justice K Martin
13 DECEMBER 2022