Siemer v Ferrier Hodgson CA87/05

[2005] NZCA 408

IN THE COURT OF APPEAL OF NEW ZEALAND

CA87/05

BETWEEN  VINCENT ROSS SIEMER First Appellant

ANDPARAGON SERVICES LIMITED Second Appellant

ANDFERRIER HODGSON First Respondent

ANDMICHAEL PETER STIASSNY Second Respondent

ANDOGGI ADVERTISING LIMITED Third Respondent

Hearing:         2 November 2005

Court:            William Young, Chambers and Panckhurst JJ Counsel:          C S Henry and A Shaw for Appellants

J G Miles QC and M A Flynn for First and Second Respondents

Judgment:      13 December 2005

JUDGMENT OF THE COURT

A        The appeal is dismissed.

BThe first and second respondents are jointly entitled to costs of $6,000 plus usual disbursements from the appellants, whose liability is joint and

several.  We certify for second counsel.

SIEMER AND ANOR V FERRIER HODGSON AND ORS CA CA87/05 13 December 2005

REASONS

(Given by Chambers J)

Michael Stiassny – A True Story?

[1]      In early April this year, high on a building in central Auckland, a very large billboard appeared.  It proclaimed:

Michael Stiassny A True Story these words was a man’s face, by inference Michael Stiassny, and indeed easily recognisable as Michael Stiassny by those who knew him.

[3]      Many would have been intrigued by this billboard, especially since it was right next to a billboard for Vector Limited, a high-profile company in Auckland of which Mr Stiassny is the chairman.   At the time the Stiassny billboard appeared, Vector was engaged in sensitive negotiations with respect to refinancing an equity funding bridge which had been utilised when Vector had purchased a large shareholding in NGC Holdings Limited.  The proposed method of refinancing that bridge was the subject of some controversy at that time.

[4]      The  Stiassny  billboard  raised  questions.     What  was  behind  it?     Had Mr Stiassny himself caused its erection?  Anyone who keyed into the website would immediately have had at least that question answered, for the website contained a series of articles accusing Mr Stiassny of very serious misconduct.

[5]      The  person  responsible  for  both  the  billboard   and  the  website   was Vincent Siemer,  the  first  appellant  in  the  appeal  before  us.    Mr  Siemer’s  and Mr Stiassny’s  relationship  goes  back  to  2000.    At  that  time,  Mr  Siemer  was  a managing director of Paragon Services Limited, the second appellant.  Mr Stiassny

was appointed receiver of Paragon.  Mr Siemer was throughout the receivership very critical of various steps Mr Stiassny took as receiver, and, as the website’s contents show, continues to be.   Indeed, the contents suggest that Mr Siemer has become quite obsessive.

[6]      The  receivership  came  to  an  end  in  July  2001.     But  there  remained unresolved  issues  between  Mr  Siemer  and  Mr  Stiassny.    Mr  Stiassny’s  firm, Ferrier Hodgson, was still owed fees relating to receivership services.   Mr Siemer disputed those fees.  In the end, Mr Siemer and Mr Stiassny signed a compromise agreement,  dated  9 August 2001.    We  shall  return  later  to  the  details  of  the agreement.  But what is important for present purposes is to note that Paragon and Mr Siemer agreed not to comment to anyone on any matter arising in or from the receivership, and Mr Stiassny and Ferrier Hodgson made a similar commitment.  The agreement was supposed to be in full and final settlement of all issues between Mr Siemer and Mr Stiassny, but Mr Siemer has not been able to let matters rest.  He has made complaints about Mr Stiassny to the Institute of Chartered Accountants of New Zealand, of which Mr Stiassny, his partners, and a number of the staff of Ferrier Hodgson are members.   He has also lodged a complaint with the Serious Fraud Office.   Those complaints and the official reaction to them did not bring Mr Siemer the satisfaction he craved, with the consequence that he resolved on a new campaign via the internet, and to make sure people knew about the internet campaign, he leased space for his billboard.

[7]      Mr Stiassny was alerted to the presence of the billboard and then looked up the website.  He was horrified by what he read, as he considered the website contents to be grossly defamatory of him.   He immediately applied for an ex parte interim judgment against Mr Siemer and Oggi Advertising Limited, the third respondent. Oggi was included as a party as Mr Stiassny had found it owned the billboard space. Winkelmann J considered the application and granted the ex parte injunction on terms.  The injunction was a true interim injunction, as at the time it was granted Mr Stiassny and his legal advisors had not had time to prepare a statement of claim.

[8]      Mr Siemer quickly applied to have the ex parte injunction rescinded.  That application was heard by Ellen France J on 28 April this year.   She delivered a

reserved decision on 5 May: Ferrier Hodgson v Siemer HC AK CIV2005-404-1808. She rescinded the ex parte interim injunction, and put in its place a more limited injunction.  That injunction was against both Mr Siemer and Paragon, which by this time had been added as a further defendant.  That came about because Mr Stiassny discovered, some time after he got the interim injunction, that there was another website which also contained defamatory material.    That website was  Ellen France J granted Mr Stiassny and his firm an interim injunction directing Mr Siemer, Paragon, and their servants, contractors or agents:

a)Not to publish in any form any information containing allegations of criminal or unethical conduct or as to improper personal enrichment on the part of the plaintiffs in relation to their conduct of the receivership of Paragon Oil Systems Limited; any claim that the plaintiffs deliberately over-charged Paragon Oil Systems Limited in the sum of $10,000; together with information as to the fact of complaints made by Mr Siemer and/or Paragon Oil Systems Limited to ICANZ or to the Serious Fraud Office; and including any information obtained by Mr Siemer or Paragon Oil Systems Limited in the course of discovery in any proceedings pending further order of the Court; and

b)     Not to reinstate the billboard.

[9] The Stiassny interests in their statement of claim relied on two causes of action. The first was breach of contract, relying on the compromise agreement to which we have referred. The second cause of action was in defamation. Ellen France J decided that the injunction was warranted on the basis of defamation. She did not need to make a definitive finding on the contract cause of action, because she considered that “the appropriate balance” had been struck by “the form of the orders made in relation to the defamation cause of action”: at [80]. If the contract cause of action justified a broader injunction, then in her view damages would be an adequate remedy for any publication which fell outside the terms of the injunction but within the broad sweep of the contractual promise not to comment at all on matters relating to the receivership.

[10]     Mr Siemer and Paragon have now appealed against Ellen France J’s decision. Although Oggi remains listed as a party to this proceeding, it took no part on the appeal.

Issues on the appeal

[11]     The first issue on the appeal is whether the Stiassny interests can seek to uphold  the  High  Court  injunction  on  the  contract  cause  of  action.    Before  us, Mr Miles QC, for the Stiassny interests, sought to rely on the contract cause of action as well as defamation.

[12]     The second issue, if the Stiassny interests can pursue the injunction on the contract  cause  of  action,  is  whether  there  is  a  seriously  arguable  case  for  an injunction on that cause of action.

[13]     The third issue relates to the balance of convenience.

[14]     The fourth issue is whether the injunction based on the defamation cause of action was properly made.

[15]     We shall discuss those issues in that order.

An injunction based on the contract cause of action: procedural question

[16]     Mr Henry, for the Siemer interests, raised a technical point as to whether the Stiassny interests could rely on the contract cause of action, given that the Stiassny interests had not filed a memorandum under r 33 of the Court of Appeal (Civil) Rules 2005, advising that they intended to support the decision appealed against on other grounds.

[17] We do not think there is anything in this point for two reasons. First, it is not absolutely clear that Ellen France J did find against the Stiassny interests on the contract cause of action. She said that the Stiassny interests had “clearly shown there is a serious question to be argued” on the contract cause of action: at [77]. She appears to have considered, on balance of convenience grounds, that no wider injunction was required than that which she had already determined to give on the defamation cause of action. That is not to say that she would not have given an injunction on this cause of action if it stood alone. In short, this is not a case where

the judge found definitively against the Stiassny interests on the contract cause of action; Her Honour’s findings were tentative because it was unnecessary to form a definite view given her decision on the other cause of action.

[18]     Secondly, in any event, this court’s powers on an appeal are broad: Court of

Appeal (Civil) Rules, r 48.

Seriously arguable case in contract

[19]     The text of the compromise agreement is as follows:

1.      Ferrier Hodgson & Co will release all company records and drawings (which are the only company property remaining in our hands) to you.

2.      Paragon will not comment to any party on any matter arising in or from the receivership including the fact of this settlement.

3.      Ferrier  Hodgson  &  Co  will  not  comment  to  any  parties  in relation to the receivership except as required by the Court or otherwise by law.

4.      You will settle any obligation of the Company to Mr Clark such that Mr Clark will have no claim against Ferrier Hodgson & Co, and also settle the invoices attached such that the creditors will have no claim against Ferrier Hodgson & Co.

5.      Neither  Ferrier  Hodgson  &  Co  nor  Paragon  will  have  any further claim against each other in relation to any matter arising from the receivership whether known at this time or unknown.

References to Ferrier Hodgson & Co, and to Paragon, include references to their respective directors, employees, servants or agents.

[20]     There is clearly a very strong argument that Mr Siemer and Paragon have breached clause 2 of that agreement, as Ellen France J thought too.

[21]     We asked Mr Henry what answer there could be to the claim in contract. Mr Henry   responded   that   the   agreement   “was   brought   to   an   end”   by Ferrier Hodgson’s breach of clause 1.  He submitted that Ferrier Hodgson had not released “all company records and drawings” to Paragon.   The Stiassny interests dispute that.  He submitted that the Siemer interests had given notice of cancellation of the contract, either by a letter written by Mr Siemer on 13 December 2001 or by

letter dated 15 January 2002 by Brookfields, at that time Paragon’s lawyer.   The

Stiassny interests dispute that the contract has been cancelled.

[22]     We are not in the position, of course, to determine whether Mr Henry’s argument is right.  Our sense of the case at this stage is that the Siemer interests will find it difficult to establish that the contract was cancelled.   Our reasons for that preliminary view are these.

[23]     First, the contract did not specify a date by which Ferrier Hodgson had to release the company records and drawings.  A court will not readily conclude that a party who has not fulfilled a time-unlimited obligation has repudiated the contract, unless the other party has first given a warning or notice of the non-fulfilment and of the consequences of a failure to remedy the breach.  We asked Mr Henry whether any such warning or notice had been given in this case.  He replied that the Siemer interests relied on Mr Siemer’s letter of 13 December 2001.  We have difficulty in seeing how that letter could be construed as a warning or notice.  On the contrary, it purported to be a notice cancelling the contract – and indeed, Mr Henry relied on it as one of two potential notices of cancellation.  We have real doubt as to whether the Siemer interests will be able to establish that Ferrier Hodgson repudiated the agreement.

[24]     Secondly,  there  must  be  a  real  question  as  to  whether  the  extent  of Ferrier Hodgson’s breach of clause 1 (assuming there was a breach) was such as to entitle the Siemer interests to cancel.

[25]     Even if it was seriously arguable that the contract remains on foot, Mr Henry submitted that damages would be an adequate remedy.  We disagree.  If the Stiassny interests are able to establish a breach of contract, an injunction is highly likely to be the remedy, and probably an injunction in somewhat broader terms than that which is currently in place.    The whole point of clause 2 of the agreement was to prevent further public complaints by Mr Siemer.  It robs the clause of any efficacy to say that the only remedy for breach is damages, as that remedy would always have been available for defamatory utterances under the tort of defamation.

[26]     We have no doubt that there is a seriously arguable case in contract.

Balance of convenience

[27]     The next issue is balance of convenience, or, as May LJ described it in Cayne v Global Natural Resources PLC [1984] 1 All ER 225 at 237 (CA), the “balance of the risk of doing an injustice”.

[28]     In this regard, Mr Henry’s principal complaint was that Ellen France J had failed to take into account Mr Siemer’s right to freedom of expression.   It is not correct to say that Ellen France J failed to take into account that aspect.

[29]     Consider  first  the  injustice  if  Mr  Stiassny  is  refused  an  interlocutory injunction but it is later held at trial that he was entitled to injunctive relief.   The likelihood is that Mr Siemer will, in the year or so until trial, continue with his campaign of denigration of Mr Stiassny.  Indeed, it is likely that the campaign will be  enhanced  as  he  would  consider,  with  some  justification,  that  the  courts  are unlikely to restrain him, at least prior to trial and probably post-trial as well.  The prospect of damages is unlikely to be a restraint on Mr Siemer, as our sense of the case is that Mr Siemer genuinely believes in the allegations he is making against Mr Stiassny.

[30]     The injustice to Mr Stiassny in these circumstances will be substantial, and indeed it is quite likely that his professional reputation will be seriously harmed.

[31]     Now  let  us  take  the  other  side:  suppose  we  confirm  the  grant  of  the interlocutory injunction but at trial it is held that the injunction should not have been granted.  The only detriment in that event will be that Mr Siemer will not be able to comment further on Mr Stiassny’s conduct pending trial.  We do not consider that is a particular detriment to Mr Siemer in the circumstances of this case.   It is not suggested that this is a case where the plaintiff is trying to suppress a continuing investigation of wrong-doing.   Mr Siemer’s complaints have really been just a regurgitation of past grievances, first to various regulatory bodies and then, when they failed to act as Mr Siemer wanted them to, to the public at large.

[32]     We consider that the risk of doing an injustice to Mr Stiassny if we wrongly refuse  an  interlocutory  injunction  easily  outweighs  the  risk  of  doing  harm  to Mr Siemer if we wrongly injunct him pending trial.

[33]     The balance of convenience and the overall justice of the case support the continuation of the injunction granted in the High Court.  Mr Miles advised that he did not seek a wider injunction than that which Ellen France J had awarded. Accordingly, an injunction in that form will be maintained.

Defamation cause of action

[34]     Because of the finding we have made on the contract cause of action, we find it unnecessary to pronounce on the High Court decision to grant an interlocutory injunction on the cause of action in defamation.  We consider this part of the appeal raises some very difficult issues,  particularly on the current state of the pleadings. The law as to prior restraint has really developed on the basis of some unstated assumptions: the defendant in most of the cases has been a responsible news media organisation with a keen sense of its vulnerability to substantial damages awards if its  continuing  investigation  of  and  publication  of  a  plaintiff’s  alleged  misdeeds cannot ultimately be justified.  Whether the law in this area should apply with its full rigour in circumstances such as present in this case may be a matter for debate.  But it is a debate which should be postponed until it arises in a case where its resolution will be crucial.

Result

[35]     The challenge to the injunction granted in the High Court fails.

[36]     The Stiassny interests are entitled to costs on the normal one day basis.

[37]     We also record that one of the members of the bench received unsigned correspondence   after   the   hearing   relating   to   a   matter   in   dispute.      That correspondence should not have been sent.  It has not been taken into account.

Solicitors:

Dennis Gates, Whangaparaoa, for Appellants

McElroys, Auckland, for First and Second Respondents