Supreme Court New South Wales Medium Neutral Citation: Cleary v Kocatekin & Seven Network (Operations) Ltd [2012] NSWSC 692 Hearing dates: 13 June 2012 Decision date: 22 June 2012 Jurisdiction: Equity Division Before: Bergin CJ in Eq Decision: Claim against second defendant of inducing a breach of contract dismissed Catchwords: [INJUNCTIONS] - Restraint on publication of program in which first defendant breaches contract with the plaintiff - whether injunction should continue [INDUCING BREACH OF CONTRACT] -whether publisher was aware of contract - whether constructive knowledge - whether intention to induce breach of contract Cases Cited: Allstate Life Insurance Company v Australia and New Zealand Banking Group Ltd (1995) 58 FCR 26 Emerald Construction Co Limited v Lowthian [1966] 1 WLR 691 Fightvision Pty Ltd v Onisforou and Others; Tszyu v Fightvision Pty Ltd and Another (1999) 47 NSWLR 473 Hitchcock v TCN Channel 9 [2000] NSWSC 198 Northern Territory of Australia v Mengel [1995] HCA 65; (1995) 185 CLR 307 OBG Ltd v Allan; Douglas v Hello! Ltd; Mainstream Properties v Young [2008] 1 AC 1; [2007] UKHL 21 Short v The City Bank of Sydney (1912) 15 CLR 148 Category: Principal judgment Parties: John Cleary (Plaintiff) Kate Kocatekin (1st Defendant) Seven Network (Operations) Ltd (2nd Defendant) Representation: Counsel: M Lawson (Plaintiff) KP Smark SC (Defendants) Solicitors: Watkins Tapsell (Plaintiff) Addisons (Defendants) File Number(s): 2012/119933 Publication restriction: Nil Judgment Background 1The plaintiff, John Cleary, is a builder. He entered into a building contract with the first defendant, Kate Kocatekin and her husband pursuant to which he undertook to build a house for them (the Contract). A dispute arose in relation to work performed by the plaintiff and the payment of some of the plaintiff's invoices. The first defendant and her husband commenced proceedings in the Consumer, Trader and Tenancy Tribunal (CTTT) in November 2011 seeking orders that they should not be required to make any further payments to the plaintiff. The plaintiff, the first defendant and her husband settled the CTTT proceedings and entered into a Deed of Release dated 19 January 2012 (the Deed). It is not in issue that the construction of the house was not completed by the plaintiffs. 2Although there was a confidentiality order in relation to the Deed the parties have disclosed the relevant terms for the purposes of this litigation. Clauses 8 and 9 provide as follows: 8. CONFIDENTIALITY The terms of this Deed shall not be disclosed directly or indirectly by either of the parties in whole or part, except for the purposes of enforcement or as required by law. 9.NON DISPARAGEMENT Each party agrees not to disparage or otherwise bring into disrepute or otherwise cause any injury or potential injury or damage to the good name and standing of the other, either orally or in writing. 3Accordingly the parties to the Deed agreed that they would not disclose the terms of the Deed. However that did not prevent the parties to the Deed from disclosing facts and circumstances in relation to some aspects of the construction of the house, except if that disclosure had the effect of disclosing the terms of the Deed or was disparaging of the other party. 4On 10 April 2012 Bryan Seymour, a journalist employed by the second defendant, Seven Network (Operations) Limited (Seven), met with and interviewed the first defendant. Mr Seymour decided that he would do "a show" about the first defendant and her family in the hope of raising money to assist her to finish the construction of the house. 5On 14 April 2012 Mr Seymour attended the plaintiff's home where he spoke with the plaintiff's wife Mrs Tamsin Cleary. Mrs Cleary informed Mr Seymour that the plaintiff was out playing soccer. A conversation then occurred in which Mr Seymour advised Mrs Cleary that he was doing "a show" about the first defendant and the house constructed by the plaintiff. Mrs Cleary claimed in her affidavit that she advised Mr Seymour that "There is a legal agreement that has been signed and therefore John will have nothing to say". In his affidavit sworn on 8 June 2012 Mr Seymour denied that Mrs Cleary said those words or any words to that effect to him. 6After meeting with Mrs Cleary, Mr Seymour then went to the local soccer field where he found the plaintiff and conducted an interview with him. The transcript of that interview is in evidence. The following statements and exchanges (Mr Seymour's statements are in square brackets) are relied upon by the plaintiff in support of the contention that Seven had the requisite knowledge of the contract: I can't talk much about it. (p 16) The thing is that I've got, its been subject to legal proceedings which has been finalised. (p 17) [Yep, maybe you can get back to us with a statement if you want to talk to your lawyer or something.] (p 20) Yeah, I have to, see that's the thing, I'm not sure what I can and can't say so I'd rather just not say it... (p 20) [Yeah fair enough.] (p 20) Because you know I don't want to, I've got an agreement... (p 20) Well I can't tell you those things because I made an agreement. (p 23) [Oh okay...] (p 23) So even if, I'd love to tell you those things because then it would clear a lot of things up... (p 23) [Well...] (p 24) But I've got an agreement that I won't. (p 24) [If you can find a way of putting me in touch with someone who can explain to me things that I need to understand. Maybe your solicitor can talk to me off the record, you know to help me understand what I need to know because I genuinely would like to do that.] (p 24) Well I can't talk about it, I'd love to be able to sit down and go bang, bang, bang but I can't. (p 24) Look I'll have to sit down and show you the figures and show you, but I can't because I made an agreement that it's confidential. (p 25) [Well talk to your lawyer and see if you can do that off the record confidentially with me because this has happened in a way that doesn't breach the agreement.] (p 25) Yeah well I wouldn't know. (p 25) [Have a chat and do that, maybe that's a solution.] (p 25) Yeah I don't know, I don't know enough about it. (p 25) 7After the interview with the plaintiff was concluded, Mr Seymour conducted a further interview with the first defendant. He advised her that the plaintiff had informed him that he had "done a deal its finalised so he can't talk about it". The transcript of that interview does not suggest that the first defendant informed Mr Seymour that there was any constraint upon her talking to him. 8On 16 April 2012 Mr Seymour wrote to the plaintiff by email thanking him for speaking with him on 14 April 2012 and seeking a written response to a series of questions. Those questions related to the building works and the various claims made by the first defendant in respect of those works. Mr Seymour advised the plaintiff that it was expected that the story would be broadcast, "sometime this week". 9On the same day the plaintiff's solicitors wrote to Seven advising as follows: We inform you that the matter for which you have attempted to interview our client has been the subject of legal proceedings in the Consumer Trader and Tenancy Tribunal and that all parties involved signed a deed of release which includes a confidentiality clause and a non-disparagement clause. It is clear that Kate Kocatekin has breached the terms of the deed of Release in approaching you and talking to you about the content of the legal proceedings. It is also clear by the nature of your conduct towards our client and the leading questions that you have put to our client both on Saturday and in your email today that she has disparaged our client which is in breach of the terms of the deed of release. Proceedings commenced 10The plaintiff's solicitors sought an undertaking from Seven that it would not proceed to air the program. The undertaking was not provided and on 18 April 2012 Seven was restrained by Court order from publishing the proposed program until further order. The matter was listed for urgent final hearing on 13 June 2012 when Mr M Lawson, of counsel, appeared for the plaintiff and Mr KP Smark SC appeared for the defendants. 11The plaintiff seeks damages from the first defendant for breach of contract and an injunction restraining Seven from publishing the program in which the first defendant disparages the plaintiff or alternatively an injunction restraining Seven from publishing those parts of the program in which the the first defendant disparages the plaintiff. The first defendant admits disparaging the plaintiff in her interview with Mr Seymour and breaching clause 9 of the Deed. The first defendant also accepts that the plaintiff's claim for damages should be stood over for hearing on a later date. 12The only claim against Seven, as pleaded in the Statement of Claim (SOC) and propounded at trial, was that between 10 April 2012 and 16 April 2012 Seven "became aware of the existence of" the Deed (par 27 SOC) and that (par 29 SOC): To the extent that the Second Defendant was aware of the existence of the Deed, or was sufficiently informed on the nature of the Deed or the obligations created by Clause 9 such that a person acting reasonably would have concluded that the First Defendant was disclosing information in breach [of] contract, prior to the First Defendant making any relevant disclosure that was, or is: a. Disparaging of the Plaintiff; b. Brought the Plaintiff into disrepute; and/or c. Otherwise caused injury or potential injury or damage to the good name and standing of the Plaintiff, then the Second Defendant induced and/or sought to induce the First Defendant to breach its contract with the Plaintiff. The Evidence 13Mrs Cleary's affidavit in which she recounted the conversation with Mr Seymour was sworn on 6 June 2012. She was cross-examined about the first time that she informed the plaintiff's solicitors of the conversation she alleged she had with Mr Seymour as follows (tr 6): Q. Do you remember going somewhere to swear this affidavit? A. I wrote the affidavit the next day at home and then it was given to the solicitors, I imagine on the 14th. Q. The 14th of what month? A. Of whatever - sorry, of whatever you - sorry. I am not aware of when it went to the solicitor but I wrote the affidavit the next day at home. 14It was suggested to Mrs Cleary that she did not have any clear recollection of this alleged statement being made to Mr Seymour. Mrs Cleary gave evidence that she had a "very distinct recollection" of it (tr 6). In re-examination Mrs Cleary gave evidence that she wrote the whole of the affidavit on the following day after she met with Mr Seymour at her home. Although Mr Seymour denied the conversation, I am satisfied his recollection in this regard is faulty. Mrs Cleary's evidence was quite clear and I am satisfied that her recollection is to be preferred over that of Mr Seymour. 15Mr Seymour was cross-examined in relation to the statements made by the plaintiff during the interview in which the plaintiff referred to an agreement. Mr Seymour accepted in his cross-examination that he did not ask for a copy of the agreement. He was cross-examined as follows (tr 14): Q. When Mr Cleary said those words to you, you understood, didn't you, that Mr Cleary was saying that he was a party to an agreement that prevented him talking about the very thing you wanted to talk with him about? A. No. Q. You understood he was asserting he had an agreement, didn't you? A. Yes. Q. You understood that he raised the issue of the agreement in the context of him asserting that he couldn't speak with you about the things you wanted to speak with him about? A. He said that. ... Q. And he told you that he wasn't sure whether he could respond to the questions that you were putting to him, that's correct, isn't it? A. Yes. Q. And in that context he mentioned this agreement? A. Yes. 16Mr Seymour agreed that he did not ask the plaintiff what the agreement was, nor did he ask him who were the parties to the agreement (tr 14). He was further cross-examined (tr 15-16): Q. He said to you at this point in the interview, "Oh, I'm not willing to talk about it because I signed an agreement saying that I wouldn't talk about it so I can't talk about it with you". A. He said that. Q. He said that to you? A. Yes. Q. At that point in time you were in no doubt, were you, that the agreement to which Mr Cleary had earlier referred was an agreement he believed prevented him talking about the very things that you wanted to question him about? A. No. Q. There was no ambiguity to your mind about Mr Cleary's assertion on this occasion, was there? A. There was. Q. He was saying to you, first of all, there is an agreement in place, that was clear to you, wasn't it ? A. Yes. Q. And he was saying to you that he could not talk about the things you wished to talk with him about because of that agreement, that's correct, isn't it? A. He did. Q. You understood at the time, didn't you, that agreements are typically between two or more people? A. Yes. Q. And you believed in all likelihood that the agreement to which Mr Cleary was referring was an agreement that he had with Mrs Kocatekin, didn't you? A. Yes. ... Q. You knew Mrs Kocatekin was in all likelihood also a party to this agreement? A. Yes. Consideration 17It is not in issue that for the plaintiff to establish that Seven induced the first defendant to breach her contract with the plaintiff it must be proved that Seven was aware that the conduct sought to be induced was in fact a breach of contract. Seven "must have induced or procured the doing of what" it "knew would be a breach of contract": Short v The City Bank of Sydney (1912) 15 CLR 148 per Isaacs J at 160; Fightvision Pty Ltd v Onisforou and Others; Tszyu v Fightvision Pty Ltd and Another (1999) 47 NSWLR 473 at [160]. Inducing a breach of contract is an 'intentional tort'. The requisite knowledge is an aspect of the intention: Allstate Life Insurance Company v Australia and New Zealand Banking Group Ltd (1995) 58 FCR 26 at 43. Seven must know of the contract and sufficient of its terms to know that what it induced or procured the first defendant to do would be in breach of the contract. 18As Lord Hoffmann said in OBG Ltd v Allan; Douglas v Hello! Ltd; Mainstream Properties v Young [2008] 1 AC 1; [2007] UKHL 21 at [39]: To be liable for inducing breach of contract, you must know that you are inducing a breach of contract. It is not enough that you know that you are procuring an act, which, as a matter of law or construction of the contract, is a breach. You must actually realise that it will have this effect. 19Ignorance of the precise terms of the contract does not establish absence of intent to procure its breach. Reckless indifference or wilful blindness may in some circumstances satisfy the requirement of intention: Northern Territory of Australia v Mengel [1995] HCA 65; (1995) 185 CLR 307 at 342; Emerald Construction Co Limited v Lowthian [1966] 1 WLR 691; Fightvision Pty Ltd v Onisforou and Others; Tszyu v Fightvision Pty Ltd and Another at 512. As Lindgren J said in Allstate Life Insurance Company v Australian and New Zealand Banking Group Ltd (1995) 58 FCR 26: Although "reckless indifference" and "wilful blindness" are not synonymous with "intention" or "knowledge" (cf Richardson & Wrench (Holdings) Pty Ltd v Ligon No 174 Pty Ltd (1994) 123 ALR 681 at 693-4 per Burchett J), they may, in the matrix of facts of a particular case, contribute to [or] give rise to a finding of intention or knowledge. (at 37) ... Although an alleged tortfeasor must have 'a fairly good idea' that the contract benefits another in the relevant respect, knowledge of the contract may be sufficient for the purpose of grounding the necessary intention to interfere with contractual rights although the precise term breached is not known. (at 43) 20The plaintiff submitted that Mr Seymour was aware that there was a contract that was probably restraining the plaintiff from discussing the dispute about the construction of the first defendant's house. It was submitted that Mr Seymour was recklessly indifferent in not obtaining a copy of the Deed or asking to be advised of the terms of the Deed. It was submitted that in those circumstances such reckless indifference amounts to the requisite intention. 21Seven submitted that the plaintiff has not proved that it had either actual knowledge of the non-disparagement clause, or that it was recklessly indifferent or wilfully blind to the existence of the contract so as to prove the requisite intention. It was submitted that all the interview between the plaintiff and Mr Seymour revealed was that there was or might be some impediment to the parties talking about the dispute. It was submitted that Seven did not have the requisite degree of knowledge until after the interviews were concluded on 16 April 2012 when a letter from the plaintiff's solicitor was received, or subsequently when Mr Seymour saw a copy of the Deed. It was submitted that this was "too late". 22The plaintiff submitted that Mr Seymour's response to the information that the plaintiff provided to him (and the information provided to him by Mrs Cleary) about the existence of an agreement was to suggest on two occasions that the way "around" it was to have Mr Cleary or his lawyer talk to him "off the record". The plaintiff submitted that once Mr Seymour learned of the existence of the agreement (and that the effect of some of its terms was to require silence from Mr Cleary on the very subject that Mr Seymour was questioning him about), he should have realised that the agreement had the potential to require the first defendant to similarly remain silent about such matters. 23There was no requirement for silence generally. The Deed required the plaintiff and the first defendant not to disclose directly or indirectly the whole or part of the Deed. That meant that the plaintiff and the first defendant agreed to keep confidential the terms of the Deed. One such term was that neither was to disparage the other. The discussions that Mr Seymour had with the plaintiff establish that what he was trying to understand was the extent to which the plaintiff was truly constrained. He went to the extent of suggesting that someone might speak to him about it "off the record", if that be necessary, or otherwise help him to understand the nature of the restrictions. Indeed when Mr Seymour returned to the first defendant after his interview with the plaintiff, he said that the plaintiff had claimed that he had "done a deal its finalised so he can't talk about it". The first defendant did not inform Mr Seymour that any such agreement prevented her from speaking to him about the matters in the interview. 24I am not satisfied that Mr Seymour's faulty recollection in relation to his conversation with Mrs Cleary impacts adversely on Seven. Mr Seymour accepted that the plaintiff advised him of the existence of an agreement a number of times. The fact that Mrs Cleary also informed him of the existence of an agreement does not take the matter further. I construe Mr Seymour's requests of the plaintiff to have someone assist him in understanding what he needed to know as a request to assist him so that he did not cause the plaintiff to breach any agreement. Indeed Mr Seymour specifically mentioned finding a way to discuss matters "in a way that doesn't breach the agreement". 25I am satisfied that Mr Seymour and thus Seven were aware that there was a contract and that such a contract was probably a contract between the plaintiff and the first defendant. I am also satisfied that Mr Seymour was aware that the contract probably restricted what the plaintiff and the first defendant could say about the construction of the house. However I am not satisfied that Mr Seymour was recklessly indifferent or wilfully blind as to its terms. The evidence establishes that Mr Seymour and Seven were intent on not breaching whatever agreement was in place, rather than inducing the first defendant to breach the agreement. Accordingly I am satisfied that the plaintiff's claim against the second defendant of inducement of breach of contract fails. 26I discussed with Mr Smark SC what the position is in respect of the intention to publish the story in circumstances in which Seven now knows that there is a non-disparagement clause in the Deed. Quite properly Mr Smark submitted that there is no separate application for an injunction as pleaded and accordingly equity would not intervene. Mr Lawson placed some reliance upon a passage from the interlocutory judgment of Austin J in Hitchcock v TCN Channel 9 [2000] NSWSC 198 at [18] in which his Honour decided to impose a restraint upon the respondent from "assisting" a breach of contract (the disclosure of certain information). This does not really assist the plaintiff as the case is presently pleaded. However it is clear that Seven advised the plaintiff that it wanted to make sure that there was no breach of contract. Now that Seven is aware that the first defendant's conduct was in breach of her contract not to disparage the plaintiff, I am minded to hear further argument as to whether it is willing to edit the story. I intend to list the matter for further directions in respect of any further argument and continue the injunction until further order. Orders 27The claim against the second defendant of inducement of breach of contract is dismissed. The injunction is continued until 5pm on 17 July 2012. The matter is listed for further directions and/or argument at 10am on 17 July 2012. ***************** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 02 July 2012