Southern Meats Pty Ltd v Zhi [2021] NSWSC 1120

Supreme Court New South Wales

Medium Neutral Citation: Southern Meats Pty Ltd v Zhi [2021] NSWSC 1120 Hearing dates: 31 August 2021 Date of orders: 31 August 2021 Decision date: 03 September 2021 Jurisdiction: Common Law Before: Fagan J Decision: Orders for abridgment of time for service of the summons and for an interlocutory injunction to restrain publication of injurious falsehoods until the first return Catchwords: CIVIL PROCEDURE — Commencement of proceedings — Summons — Abridgment of time – Interlocutory injunction TORTS — Economic torts — Injurious falsehood — Interlocutory injunction — Defendant restrained Cases Cited: AMI Australia Holdings Pty Ltd v Fairfax Media Publications Pty Ltd [2010] NSWSC 1395 Palmer-Bruyn and Parker Pty Ltd v Parsons [2001] HCA 69; 208 CLR 388 Category: Procedural rulings Parties: Southern Meats Pty Ltd (plaintiff) Da Cheng (Eddie) Zhi (defendant) Representation: Counsel: M Harris (plaintiff) J Drew Solicitor (defendant)

Solicitors: Johnson & Sendall (plaintiff) McGirr & Associates (defendant) File Number(s): 2021/247743 Publication restriction: No

Judgment 1. On 31 August 2021 the plaintiff applied for abridgment of time for service of its summons commencing these proceedings and for an early return date and an interim injunction to restrain the defendant from publishing statements concerning the business of the plaintiff or of its directors, employees or agents. The plaintiff intends to file in due course a statement of claim by which it will plead an action against the defendant for damages for injurious falsehood. Although the application before me was initiated ex parte, the defendant's solicitor had been given notice and he appeared to oppose the grant of interlocutory relief. At the conclusion of the hearing on 31 August 2021 I made the following orders: 1. Up to and including 8 September 2021, the defendant is restrained from making any statements concerning the plaintiff's business or that of any of its directors employees servants or agents whether by email or otherwise to any person or organisation within Australia or China 2. Abridge the time for service of the Summons that is to be filed herein to 5pm today 31 August 2021. 3. Order that the Summons and Affidavit of Morris Newton Owen sworn 30 August 2021 may be filed and served upon the defendant by sending those documents by email to the defendant's solicitor, Mr Justin Drew of McGirr &Associates at pfcmcgirr@mcgirrassoc.com. 4. The proceedings are to continue on pleadings and the plaintiff is to file and serve a statement of claim within 28 days of today's date. 5. The defendant is to file a defence by 19 October 2021. 6. The costs of the application today are reserved. 7. Direct that the Summons is to be made returnable before the Duty Judge at 10.00am on 8 September 2021. 1. These are my reasons having made those orders. The summary of facts that I now set out is taken from an affidavit on information and belief sworn by the plaintiff's solicitor. Email correspondence from the defendant is annexed to the affidavit, bearing dates between February and August 2021. The plaintiff relies upon the emails as proof of injurious falsehoods already published and as evidence from which the Court should infer that, if not restrained, the defendant will likely publish further such statements and cause significant damage to the plaintiff's business. Annexed to the affidavit are two pages of questions that have been put to the plaintiff by a journalist as a result of the defendant having made allegations to media organisations about the plaintiff's business. The two-page document incorporates answers that the plaintiff supplied to the journalist. I have relied upon those answers as stating at least part of the case that the plaintiff will make in these proceedings to establish that the defendant's allegations concerning it are false. 2. The plaintiff operates an abattoir at Goulburn and exports sheep meat products. Its general manager is Mr Craig Newton. Prior to November 2018 a significant proportion of its production went to China pursuant to an export/import license granted by an authority of the Chinese government. On 1 November 2018 the Chinese authority suspended the plaintiff's license on the ground that the labelling on a box of consigned goods recorded a different production date from that shown on the accompanying health certificate. The licence remained suspended into 2019. 3. On 14 May 2019, when the suspension had been in place for nearly 6 months, the defendant introduced himself to Mr Newton as a person who could recruit meat workers in China to work in the plaintiff's abattoir. The defendant also said he could help to achieve reinstatement of the plaintiff's China export licence. The defendant's then business partner was Chaoping (Steve) Chu. Mr Chu arranged a meeting in Beijing on 10 October 2019 between himself, Mr Newton and the certification director of the food safety bureau of China's General Customs Administration, Dr Wang Gang. The plaintiff says that the sole purpose and content of the meeting was that Dr Wang Gang was asked to advise what steps could be taken to expedite reinstatement of the licence. The plaintiff says that the defendant was present "as a silent observer" and that he did not then, or later, assist with having the suspension lifted. 4. On 18 November 2019 an assistant secretary in the Commonwealth Department of Agriculture made representations on behalf of the plaintiff to have the suspension lifted. Two weeks later, on 3 December 2019, the licence was reinstated. Over the 13 months of suspension the plaintiff suffered a downturn in revenue of more than $19 million compared to prior comparable trading periods. The plaintiff says that reinstatement was achieved through the efforts of Mr Newton, other personnel of the plaintiff, the Commonwealth Department of Agriculture, and Mr Chu. 5. At some time in late 2019 or early 2020 the defendant and Mr Chu ended their business association. The plaintiff did not proceed with the recruitment of Chinese meat workers through the defendant. Instead, during 2020 it used Mr Chu's services in that regard. Mr Chu has alleged that in 2020 and 2021 the defendant published imputations defamatory of him to the effect that he brought Chinese workers into Australia unlawfully. Such imputations of Mr Chu are conveyed by emails sent to the plaintiff and others during 2021, as described below. Mr Chu also alleges defamatory publication in other media. Earlier this year Mr Chu commenced proceedings against the defendant in this Court claiming damages for the alleged defamation. 6. Mr Newton has provided a statutory declaration sworn on 20 April 2021 for use by Mr Chu in the defamation proceedings. This states that the plaintiff ceased to do business with the defendant as a result of his failure to pay for meat that was processed and sold to him between July and September 2019 and because of "continued empty promises and misinformation" in connection with lifting the licence suspension. I infer that the defendant must have published an imputation that misconduct of Mr Chu caused the plaintiff to end its business relationship with the defendant and that the relevance of Mr Newton's statutory declaration is to disprove that imputation. 7. From early February to late March 2021 defendant sent to the plaintiff and others a series of emails airing his grievance that the plaintiff had engaged the recruitment services of Mr Chu rather than his own services in that field. On 8 February 2021 the defendant wrote to the plaintiff in the following terms (errors are as in the original text, in this and in all subsequent quotations): I went all the length to help Southern meets to get back its liscence but you guys turned your back on me without any hesitation. I started a small labour business with [one of the plaintiff's personnel] and treated him like a brother, he has kept me completely in the dark and deals with the people in secrecy I have introduced to him. The email continued with a threat that the defendant would contact Dr Wang, Dr Bi and a journalist from The Age. As will be seen below, this threat was carried out over subsequent months. 1. Also on 8 February 2021 the defendant sent an email to Mr Newton and other personnel of the plaintiff asserting the following: craig promised that he would do the labour business with us […] [Mr Chu] has gone behind my back of me to exclude me from the labour supply. 1. On 9 March 2021 the defendant emailed a journalist at The Age of Melbourne, with copies to the plaintiff's personnel, claiming that in October 2019 he had treated Mr Newton "with my ultimate hospitality" in Beijing, including "meeting and dining with Dr Wang Gang". He said that his hospitality and assistance was repaid as follows: [Mr Newton] promised me to work together closely. Then [Mr Newton] turned round shafted me with 0 hesitation. 1. On 26 March 2021 the defendant wrote to the plaintiff's personnel, with a copy to Dr Wang, in the following terms: Dr Wang Gang who has kindly assisted Southern meats suspension lifting is formally under investigation by the anticorruption section of the Chinese customs. This is a strategic mistake made by the management of Southern meats by choosing to work with [Mr Chu] who the management has no knowledge about his business. 1. From early April 2021 the defendant expanded the list of addressees for his emails, to include the Commonwealth Department of Foreign Affairs and Trade ("DFAT"); the Australian Broadcasting Commission ("ABC"); Nine News; Dr Wang Gang and another Chinese official, Dr Bi. In an email of 1 May 2021 the defendant addressed Dr Bi as the chief director of the food safety bureau of China General Customs, suggesting that Dr Bi has taken over the position that Dr Wang Gang held in 2019. 2. I will now summarise the emails upon which the plaintiff will found its action for injurious falsehood. As earlier observed, the plaintiff claims that it has already suffered damage to its business as a result of the dissemination of these emails and it says that they evince an intention on the part of the defendant to continue publishing more material in the same vein. All of the emails were addressed or copied to Mr Newton and/or other personnel of the plaintiff. In the summaries below I have identified some of the additional recipients to whom the emails were either addressed or copied: 1. 2 April 2021, copied to Mr D Merrilees of DFAT, The Age, the ABC, Dr Wang Gang. The email asserts that a few weeks earlier had requested the plaintiff to pay fees in respect of 15 Chinese workers. It states that the defendant has since found out that the plaintiff paid the fees to Mr Chu. The email continues: This is what I call blatant lying. Southern meets has a culture of lying and this is something I am totally concerned […] How can you say you have proper governance on behalf of your stakeholders if you are lying to your supplier and the press? I strongly recommend the Board of Directors to address this lying culture of Southern meats and I will table my further evidence about a lying culture. 1. 11 April 2021, addressed to the Group Chief Executive of the plaintiff's parent entity ("the CEO"), with copies to The Age and the ABC. The email contains the following concerning meat workers recruited from China and employed in the plaintiff's abattoir: [All] the Chinese workers supplied by [Mr] Chu have used false information in their visa applications without their, the workers, knowledge. None has 3 years of meat works experience in China required by the rules. They are all plucked from the streets and trained a few weeks without any exception. More fraud to be revealed shortly. I sincerely wish you as the CEO of a public company will act to rectify the problem instead of trying to hide it. 1. 27 April 2021, copied to Mr Merrilees of DFAT, The Age and the ABC. The email incorporated a draft of a letter that the defendant said he proposed to write to Dr Bi, including the following (emphasis added): Southern Meats's Chinese license was previously suspended and later reinstated on the 2nd of December 2019 after the private meeting of Southern meats' manager Craig Newton with Dr Wanggang. As I was involved with the meeting and know all the details, I would like to report to you that lifting of the license's suspension was done in a corrupted and intransparent way under the behind scene manipulation of Australian businessman Steve Chu who has worked with Dr Wanggang in a few other certification power for favors and money transactions. As a participant of meat export from Australia to China, may I request the food safety bureau of China general Customs to launch an official investigation into this matter? […] This is also important for the anti-corruption campaign led by President Xi now in China. 1. 30 April 2021, addressed primarily to the CEO and also to, amongst others, to Mr D Merrilees of DFAT, The Age, the ABC, Dr Wang Gang: Dr Wanggang is under investigation in China by the Chinese customs internal discipline agency and Mr Steve Chu is officially under the investigation both by the taxation Department and the boarder force audit team. […] the 13 workers they [ie the plaintiff] have just employed were sent to Australia with fraudulent visa applications which falsely stated that they had 3 years of related work experiences. […] All these workers pay close to 100,000 Aud to the agent to have their visas done and this is totally against the Australian immigration law […]. […] From an ethical point of view, Mr Craig Newton has also failed miserably for cutting his supplier off in dealing directly with his supplier's supplier with any discussion and consultation. […] As I have previously advised that I will send a letter to Honourable Dr Bi general director of Food safety bureau of China general customs to brief him the events related to Southern Meats's license suspension lifting, I am still in the position to do so if there is no letter of apology from Southern meats for the mistreatment of me. 1. 1 May 2021, to Dr Bi with copies to Southern meats personnel, Mr D Merrilees of DFAT, The Age, the ABC and Dr Wang Gang. This email substantially followed the text of the draft that had been sent to the plaintiff on 27 April 2021. The words that have been highlighted in bold in the draft word as quoted at item (3) above were modified in the letter sent to Dr Bi, as follows: … the lifting of the Southern meats' license's suspension was done in a corrupted and intransparent way under the behind scene manipulation of Australian businessman Steve Chu who has collaborated with Dr Wanggang in a few other certification power for favors and money transactions such as [Establishment] 90 Narasell Pty Ltd and milk powder plant Est 1957 Nutritional Choice Australia Pty Ltd. Southern meats has made a secret deal with Steve Chu to supply Chinese workers to Southern meats Pty Ltd in exchange for his assistance in lifting the license suspension. This deal benefits Steve Chu greatly amount to 6 million RMB. 1. 10 May 2021, to the plaintiff's personnel with copies to Mr Merrilees of DFAT, The Age, the ABC and Dr Wang Gang: Steve Chu collected 400k Rmb from each your new Chinese workers after getting their visa with fabricated 3 year work experiences. I will today contact the meatworks union to protest against the fraudulent behaviour of Steve Chu and the lack of due diligence of Southern meats relating to the recruitment of these 13 overseas workers! 1. 15 May 2021, addressed to the CEO with copies to Mr Merilees of DFAT, The Age, the ABC, Nine News and Dr Wang Gang: I want to help you get out of this China license suspension lifting and labour supply mess quickly. Here is what you should and need to do: Because I have sent indisputable evidence of Craig Newton blatant lying to the public, he needs to resign or being sacked. […] You must believe that Steve Chu is now officially under the federal government multiple agency highest investigation! It is true! Do you really want to be in bed with such a low person? 1. 28 July 2021, addressed to the CEO with copies to Mr Merrilees of DFAT, the Commonwealth Department of Agriculture, The Age, the ABC, Nine News and Dr Wang Gang: I have heard evidence by [Mr Chu's] own admittance how your Chinese license was regained and I will send it to Chinese Authorities and the Australian Authorities if you on behalf of Southern meats do not immediately apologise in public to me. 1. On 20 August 2021 counsel for the plaintiff and for the defendant were engaged in discussions to bring to an end the defendant's campaign of disseminating statements damaging to the plaintiff. While the discussions were taking place the defendant sent to the CEO an email that included the following: […] I have been in communication with Mr Guo of Chinese General customs about the Beijing meeting and the events related to the lifting of license suspension. Upon request, I can even give you a copy of conversation recording. My demand to Southern meats has always been consistent: Craig Newton must apologise to me in writing for his bad behaviour and retract his false statutory statements which has been circulating on social media. I hope you will agree to my demand, otherwise I will go ahead having a meeting with the Chinese Authorities to further disclose the information I have been withholding I am sure Southern meats' Chinese license will not benefit from such disclosures. 1. The reference in this email to Mr Newton's "statutory statements" appears to be to the statutory declaration that was provided for use by Mr Chu in his defamation proceedings, as referred to at [7] above. The plaintiff is unaware of who, if anyone, has circulated the statutory declaration on any social media.