Templar v Watt [2014] NSWSC 937

Supreme Court New South Wales

Medium Neutral Citation: Templar v Watt [2014] NSWSC 937 Hearing dates: 7 July 2014 Decision date: 11 July 2014 Before: McCallum J Decision: Defendants' application dismissed; plaintiffs to pay the defendants' costs of the application. Catchwords: DEFAMATION - whether the plaintiff has failed to comply with Court directions - whether the plaintiff has failed to prosecute proceedings with due despatch Legislation Cited: Defamation Act 2005 Civil Procedure Act 2005 Uniform Civil Procedure Rules 2005 Cases Cited: Bi v Mourad (2010) NSWCA 17) Hoser v Hartcher [1999] NSWSC 527 Templar v Britton (No 2) [2014] NSWSC 587 Category: Interlocutory applications Parties: Stephen Templar (first plaintiff) Audametrics Pt Ltd (second plaintiff) Phillip Watt (first defendant) Central Coast Local Health District (second defendant) Representation: Counsel: D W Rayment (plaintiffs) S Chrysanthou (defendants) Solicitors: City Attorneys (plaintiffs) Crown Solicitor's Office (NSW) (defendants) File Number(s): 2013/150908 Publication restriction: None

Judgment 1HER HONOUR: Mr Stephen Templar is an audiologist and the sole director and controller of Audametrics Pty Limited, which carries on the business of providing hearing tests. Until the events giving rise to these proceedings, Audametrics offered tests to children through public schools, predominantly in the Central Coast area of New South Wales. The proceedings arise out of an email sent by the first defendant, a doctor employed by the second defendant, in which the doctor expressed his "concerns about the unqualified support for this service within the public schools system". 2The letter set out the basis for the doctor's concerns together with information he had obtained about Audametrics through searches on the internet. Although the email was addressed to only one person within the Department of Education, the plaintiffs allege that its contents received wide circulation, including a warning letter sent to staff and principals of schools on the Central Coast allegedly resulting in a substantial downturn in the plaintiffs' business. 3The proceedings were commenced by statement of claim filed 15 May 2013 but have made little progress since that date, owing to the plaintiffs' repeated failure to bring forward a pleading in acceptable form. The defendants now move to have the proceedings dismissed on the grounds of failures to comply with directions of the Court and, alternatively, for failure to prosecute the proceedings with due despatch. 4I determined a similar application in related proceedings for defamation brought by the same plaintiffs against a school principal and a student support coordinator who evidently passed on the contents of the warning letter. In that application I dismissed the proceedings against the individual defendants but not against the State of New South Wales, which was sued as being vicariously liable for the conduct of the two individuals (see Templar v Britton (No 2) [2014] NSWSC 587). Although it is not recorded in my judgment, in that case the vicarious liability of the State for the conduct of the two individual defendants was acknowledged. 5The determination of the present application requires a detailed consideration of the course of the proceedings to date. As already noted, the proceedings were commenced by statement of claim filed in May last year. Directions were made a month later for the exchange of particulars and by letter dated 14 June 2013 the defendants made a request for further and better particulars from the plaintiffs. The plaintiffs did not respond to that request in accordance with the orders of the Court. The time for their doing so was extended by Rothman J on 1 July 2013. His Honour also granted leave to file an amended statement of claim by 22 July 2013. 6On 25 July 2013, the defendants wrote to the plaintiffs noting their failure to comply with the orders made by Rothman J. No reply was ever received to that letter. 7On 2 August 2013, the defendants wrote to the plaintiffs seeking a response to a request for particulars and the amended statement of claim. The plaintiffs responded on 5 August 2013 only by stating that they would notify a date by which they would comply with the orders of the Court. However, no such notification was ultimately given, despite three further requests from the defendants. 8On 16 August 2013, the defendants again wrote requesting information as to when the plaintiffs intended to comply with the orders of the Court. The plaintiffs responded that day by informing the defendants that they had briefed new counsel. It appears from the appearances before me and another judge since that date that the new barrister was Mr Rasmussen. 9On 26 August 2013 the defendants warned the plaintiffs that they were considering bringing an application to have the proceedings dismissed. The application was not, however, pressed at that stage. 10On 2 September 2013, I made an order for the provision of particulars and the service of an amended statement of claim by 16 September 2013. That order was complied with by the plaintiffs, indeed early. An amended statement of claim was served on 10 September 2013. Interestingly, that pleading appears to have been prepared more or less without regard to the original statement of claim, except to the extent that it retains a cause of action for defamation at the suit of each plaintiff, that is, Mr Templar and Audametrics. 11The amended statement of claim, however, also included claims against the first defendant, Dr Watt, for misleading or deceptive conduct (paragraph 9) and unconscionable conduct (paragraph 10). In addition, the amended statement of claim included a claim for injurious falsehood (paragraphs 11 and following). 12On 16 September 2013 the defendants notified the plaintiffs of objections to the amended statement of claim and, in accordance with what was then the litigious pattern of the proceedings, the plaintiffs ignored that request. After being chased up, on 4 October 2013 the plaintiffs responded by including certain amendments to the pleading. The proceedings were back before me on 8 October 2013 when I made further orders for timetabling objections to the amended pleading. The defendants notified the plaintiffs of their remaining objections by letter dated 14 October 2013. 13Those three pieces of correspondence, namely, the letters dated 16 September 2013, the plaintiffs' response of 4 October 2013 and the defendants' further letter of 14 October 2013 assumed some significance in later dealings to which I will return. 14On 23 October 2013, the defendants wrote to the plaintiffs asking if they intended to amend in light of the objections that had been taken. No response was ever received to that letter. On 29 October 2013, the defendants filed a notice of motion seeking to strike out parts of the amended statement of claim. The proceedings came before me again on 2 December 2013, when the plaintiffs agreed to orders without argument, including agreeing to an order striking out the defamation claim at the suit of the second plaintiff. The reason for that concession was that the second plaintiff was not an excluded corporation within the meaning of the Defamation Act 2005. 15It is important to have regard to the terms of the direction I made by consent on that date. It was that paragraphs 2, 6(a) to (h) and (i) and the reference to the second plaintiff in paragraphs 5, 7 and 8 of the amended statement of claim be struck out. The plaintiffs were to file an amended pleading by 9 December 2013 but did not do so. 16On 3 February 2014, the proceedings came before Beech-Jones J who extended the time for compliance with that requirement to 7 February 2014. On that date, the plaintiffs served their further amended statement of claim. Contrary to the course to which they had consented on 2 December, however, the amended pleading removed all references to the second plaintiff from the amended statement of claim, including the references to it in those parts of the pleading which made the claims for misleading or deceptive conduct, unconscionable conduct and injurious falsehood. What appears to have occurred is that someone has gone through the pleading and simply undertaken the mechanical exercise of removing every reference to the second plaintiff as a plaintiff. 17The defendants responded to that pleading by observing that it did not include previously agreed amendments dealt with in the three letters to which I have referred. What follows is not said by way of any criticism of the defendants but only to explain the course of events. The letter did not point out that, contrary to what had been contemplated by the December order, the second plaintiff had been removed altogether from the pleadings, not simply from those paragraphs dealing with the claim in defamation. 18There had been no suggestion in the correspondence between the parties that the second plaintiff could not maintain any of the other claims. It was only from the claim in defamation by reason of the provision of the Defamation Act 2005 that it was precluded in respect of that claim. 19Unfortunately, the plaintiffs again ignored that correspondence. The proceedings came before me again on 7 April 2014 when I ordered the plaintiffs to file a second further amended statement of claim by 11 April. That order expressly referred to the three letters in which amendments had previously been discussed between the parties. On 17 April 2014, in purported compliance with my order, albeit late, the plaintiffs served their second further amended statement of claim. The amendment reversed what was later proved to be the inadvertent removal of the second plaintiff from the non-defamation causes of action. 20The defendants wrote to complain about their objections to the second further amended statement of claim on 24 April 2014 and no response was received to that correspondence. On 5 May 2014, the matter was listed, as had been foreshadowed by the defendants, for them to move to strike out the second further amended statement of claim. The plaintiffs asked to put on evidence in relation to that motion and, accordingly, it was stood over. However, inexplicably, no evidence was served within the period allowed. 21On 27 May 2014 the defendants, not unreasonably, formed the view that the time had been reached when they would move the Court to have the proceedings dismissed for breaches of directions or want of due despatch. After that notification, the plaintiffs served an unsworn affidavit explaining the inadvertence with which the second plaintiff had been removed from the pleading filed in February. 22The proceedings were then again in the defamation list on 2 June 2014 when the plaintiffs sought an opportunity to file evidence relating to the foreshadowed summary dismissal application. Orders were sought by Mr Rasmussen for the filing and service of both affidavits and submissions but again, inexplicably, the plaintiffs did not serve evidence within the time allowed. 23It goes without saying that that history records an unacceptable measure of delay and unacceptable breaches of the orders of the Court. 24The defendants' application invokes the Court's power under s 61 of the Civil Procedure Act 2005 and, alternatively, the power under 12.7 of the Uniform Civil Procedure Rules to dismiss proceedings if a plaintiff does not prosecute them with due despatch. Section 61(3) of the Act provides: 61(3) If a party to whom such a direction has been given fails to comply with the direction, the court may, by order, do any one or more of the following: (a) it may dismiss the proceedings, whether generally, in relation to a particular cause of action or in relation to the whole or part of a particular claim, (b) it may strike out or limit any claim made by a plaintiff, (c) it may strike out any defence filed by a defendant, and give judgment accordingly, (d) it may strike out or amend any document filed by the party, either in whole or in part, (e) it may strike out, disallow or reject any evidence that the party has adduced or seeks to adduce, (f) it may direct the party to pay the whole or part of the costs of another party, (g) it may make such other order or give such other direction as it considers appropriate. 25The principles to be applied in determining an application to dismiss proceedings for want of due despatch were summarised at length but not exhaustively in the judgment of Simpson J in Hoser v Hartcher [1999] NSWSC 527 as follows: (1.) the ultimate question is whether, on balancing the prejudice to the respective parties by making or not making an order, justice demands that the action be dismissed: Stollznow v Calvert (1980) 2 NSWLR 749 at 751 F (Court of Appeal); Razvan v Berechet, unreported Court of Appeal, 23 February 1990; Vilo v John Fairfax and Sons Ltd, unreported, 19 November 1995, per Sperling J; (2.) the discretion should be exercised only in a clear case where it is manifestly warranted; Razvan, per Kirby P; as is generally the case with discretionary decisions, each case depends upon its own facts. Rigid formulae should not be applied to the exercise of the discretion: Stollznow v Calvert at 751 D; (3.) any explanation offered by the plaintiff for the delay in proceeding must be considered: Burke v TCN Channel Nine Pty Ltd, unreported, 16 December 1994, per Levine J; (4.) personal blamelessness on the part of a plaintiff (as distinct from any tardiness or other fault on the part of his/her/its legal representative) is relevant: Stollznow, p73. (5.) a defendant who takes no steps to secure progress in the proceedings, or to activate an apparently inactive plaintiff or who stands by in the hope that the passage of time will ensure the quiet death of the proceedings or that the longer delay will strengthen the case for striking out, runs the risk that that very behaviour will operate to his/her/its disadvantage. A defendant has two choices: to attempt to prod the plaintiff into action, or to stand by, doing nothing, trusting that time will bring about the slow death of the action. Either choice represents something of a gamble, dependent upon future events that the defendant is unable with any degree of confidence to predict. If the defendant opts for the former course, of prodding the plaintiff into action, it may succeed in doing so, precluding an application to strike out. On the other hand, if the plaintiff remains inert, the defendant's case for striking out strengthens with passing time. If the defendant chooses the latter option and takes no action, the plaintiff may take no further steps, or may take no further steps until such irremediable prejudice is caused to the defendant that the application to strike out will succeed; if, however, some other event galvanises the plaintiff into action the defendant, having done nothing to progress the matter, can hardly be heard to complain of the plaintiff's earlier inactivity: Calvert v Stollznow, 1 April 1980, Ritchie's Supreme Court Procedure, (NSW) Vol 2, para13,022, per Cross J (at first instance); and in the Court of Appeal per Moffitt J, p753; Vilo, p10; McBride v Australian Broadcasting Corporation, unreported 6 November 1998, per Levine J; Bass v TCN Channel Nine Ltd, unreported 25 July 1997, per Levine J; Hart v Herron, unreported, 3 June 1993, Court of Appeal per Priestley JA; (6.) delay between the date the cause of action arose and the commencement of the proceedings may be a relevant factor: Calvert v Stollznow, per Cross J; Burke v TCN. But in my view, this circumstance must be treated with some caution. The weight that can be accorded to that delay is limited. Where an action is commenced within the period provided for by an applicable statute of limitations, it would not ordinarily be appropriate to take that period into account. However, if a plaintiff has delayed significantly in the commencement of the proceedings, and that delay is followed by further lethargy in the advancement of the proceedings, the effect of the initial (but permissible) delay is compounded. The real question is not the length of the delay, but the impact that delay has upon the defendant's capacity properly to defend the plaintiff's claim. That will be a question of fact in each case. While there may be some prejudice presumed by reason of the passage of time, much will depend upon the nature of the proceedings, and the identification of the issues involved in the litigation. Where, for example, at the close of pleadings it can be seen that there are disputed questions of fact dependent upon the oral evidence of witnesses, or their recollections, the prejudice will plainly be greater than in cases that depend essentially upon the application of legal principle to largely undisputed facts, or upon disputed questions of fact that will be resolved by reference to documentary or other objective evidence not likely to be affected by the effluxion of time; (7) the onus lies on the defendant to establish any prejudice upon which reliance is placed. The disappearance or death of witnesses, the fading of their recollections, or the destruction of records, are some obvious examples of the kind of prejudice that might arise; (8) prejudice to a defendant caused by delay has to be balanced against prejudice to a plaintiff deprived of an otherwise valid claim; delay in the commencement of proceedings by a plaintiff is sometimes taken as evidence contra-indicating prejudice to the plaintiff in the sense that he/she/it has evinced no interest in his/her/its own case: Burke, supra. Such an inference may be contra indicated by explanatory evidence; in this regard the plaintiff's personal responsibility for the delay is an important factor as is any explanation provided for the delay; (9) what the defendant has (or has not) done by way of preparation for trial may be a factor. This is a distinct question from that concerning any steps taken (or not taken) by the defendant in prompting the plaintiff to action. A defendant who has not interviewed witnesses, taken statements or collected documents, after being served with the claim, has a less meritorious complaint about the effect of prejudice caused or presumed by reason of delay: McBride v ABC, unreported, 6 November 1998, per Levine J; (10) the plaintiff's prospects of success is a relevant factor. If it appears that the prospects are minimal, the discretion is more likely to be exercised in favour of the defendant. Conversely, where the plaintiff's case is strong (absent the kind of prejudice to the defendant to which I have referred) it is less likely that justice will be done by striking the action out: Razvan, per Kirby P; (11) the exercise of the discretion to strike out should not incorporate any element of punishing a tardy plaintiff, or of excluding one who may appear to have some unworthy characteristics: Razvan, per Kirby P. The ultimate aim of a court is the attainment of justice: The State of Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146. To adapt the words of the High Court in that case, discretions such as that presently invoked ought not to be used to supplant the overall aim of the attainment of justice. 26As more recently noted by the Court of Appeal, since the date of that the decision part 6 of the Civil Procedure Act 2005 has come into force and it is necessary to pay close attention to the terms of the Act (see Bi v Mourad [2010] NSWCA 17). There is a strong hint in that case that the principles stated in Hoser might now be regarded to state the position too generously in some respects in favour of a delinquent litigant. That said, it must be recognised that under the Civil Procedure Act the Court must ultimately be guided by the dictates of justice, and that is a principle which finds articulation in some of the considerations identified by Simpson J in Hoser v Hartcher. 27An explanation has been offered by the plaintiffs for the breaches in the present case. An affidavit was ultimately sworn by the plaintiffs' solicitor, Mr Williams, in which he contritely accepts responsibility for the delay and acknowledges that the breaches have been unacceptable. By way of explanation, Mr Williams explains his lack of experience in the technical field of defamation, the fact that he is a busy sole practitioner (I should say that is explained in a letter rather than in the body of the affidavit) and by implication, although he does not say so expressly in the affidavit, his reliance upon counsel to assist him to comply with the directions of the Court. 28Mr Williams' separate affidavit explained the inadvertence with which the second plaintiff was removed from the February pleading. 29I should observe one peculiarity or curiosity in that respect, which is that, so far as the evidence reveals, that pleading was not settled by counsel and, as I have said, the correspondence asserts that Mr Williams operates as a sole practitioner and plainly a busy one. In that context, it is odd that a letter to the defendants from Mr Williams dated 3 July 2014 asserts: We agree that the plaintiffs' lack of compliance with timetables is unsatisfactory but until the problems with the further amended statement of claim were identified by you in March, we were unaware that the pleading had failed to include the agreed amendments and that it had inadvertently dropped the corporate plaintiff from all causes of action. 30It is unclear from the material before me on the strength of that assertion whether it was Mr Williams who prepared the February pleading inadvertently dropping the corporate plaintiff or some other person. Unlike the position in Templar v Britton, Mr Rasmussen has not sworn an affidavit in these proceedings and I am, to a degree, left to speculate as to where the responsibility lies or lay as between Mr Williams and Mr Rasmussen. 31In any event, perhaps it does not matter. The short point is that legal representatives have taken responsibility for the delay and I accept, as submitted by Mr Rayment on behalf of the plaintiffs, that this appears to be a case in which the plaintiffs themselves are not personally to blame for the delay. 32The history I have recited will reveal that the delay is plainly unacceptable but I also accept, as submitted by Mr Rayment, that it is not egregiously so. These proceedings were commenced later than the proceeding in Templar v Britton. The material to which I have referred has, as was the case in Templar v Britton, led me to two important conclusions. One is that notwithstanding the absence of any evidence from Mr Rasmussen, it is plain enough from the course of the correspondence that Mr Williams was relying on Mr Rasmussen in respect of the conduct of the proceedings as he plainly was in the other proceedings. 33The second consideration is that, as I have already observed, I am not persuaded that there is any basis for apprehending that any real responsibility for the default lies at the feet of the clients. 34The principles in Hoser v Hartcher point to the strength of the claim as a relevant consideration, including a consideration as to whether a claim would be statute-barred if the proceedings were dismissed. In the present case, the defamation claim would be statute barred if the claim was dismissed. However, as submitted or at least suggested by Ms Chrysanthou during argument in the present case, that does not appear to be the strongest aspect of the plaintiffs' claims, since the email appears likely to be amenable to a qualified privilege defence, leaving aside any consideration of malice. 35The other claims brought by the plaintiffs would not be statute-barred if the proceedings were dismissed at this stage. Finally, by reference to the considerations in Hoser v Hartcher I would note that it was there said that the exercise of the discretion to dismiss proceedings for want of due despatch should not incorporate any element of punishing a tardy plaintiff or of excluding one who may appear to have some "unworthy characteristics". 36As already observed those remarks were made prior to the introduction of the Civil Procedure Act which expressly imposes sanctions for breach of directions of the Court. However, I would accept that the position remains that the exercise of those powers should not be punitive but rather should be undertaken in accordance with the dictates of justice. 37In Templar v Britton I was of the view that the position had been reached where the individual defendants to the plaintiffs' claims should no longer have to endure the interminable delay that they had had to face to the date of that judgment, even to bring the matter to the stage of having a properly pleaded claim against them. To a degree, the breaches in the present case are in some respects less serious. In part that is because the defendants in the present proceedings have been more tolerant. What happened in the other case was that the defendants brought on objections to the pleadings with the result that the plaintiffs were expressly ordered, with the benefit of a reasoned judgment, to address defects in the pleadings. That gave the failure to attend to compliance with those orders an air of contumeliousness which is probably not present in this case. 38However, my conclusion in that case that the point had been reached where the individual defendants should no longer have to face the delay to which they were being subjected was informed by the fact that the defendant accepted vicarious liability for the individual defendants and, having regard to the way in which the matter was pleaded, there could really be no issue about that acceptance. 39In the present case, the claims pleaded in paragraphs 9 and 10 of the further amended statement of claim allege misleading or deceptive conduct and unconscionable conduct only on the part of the first defendant. It is possible that complications may arise if he is allowed out of the proceedings at this stage and, therefore, the balance of possible prejudice to the plaintiffs is different. Further, the prejudice of keeping an individual defendant in the proceedings at this stage is assumed. I was prepared to assume the existence of prejudice in the other decision but the fact is that there is no evidence of any actual distress or specific prejudice being encountered by Dr Watt in the present proceedings. 40With some equivocation, I have accordingly reached the view that, notwithstanding the extraordinary history I have recited, it would at this point of the proceedings be too extreme a sanction to dismiss the proceedings as against either defendant. 41A separate issue argued was whether the second further amended statement of claim should be struck out on the basis that it went further than the concessions allowed or acknowledged in the three letters to which I have referred. Mr Rayment submitted that on any objective construction of that correspondence the plaintiffs reasonably understood that the order made in April permitted them to reverse the inadvertent deletion of the second plaintiff from the February pleading. Whether or not that is so, I am persuaded by his submissions that it would be reasonable to allow the plaintiffs to file a corrected version of that pleading at this stage. The corrected version marks up the amendments from the previous pleading which had not occurred in the form filed. 42The correspondence reveals that, in anticipation of the present application, the plaintiffs acknowledge that they should bear the costs of it. That concession was made in correspondence attempting to persuade the defendants not to press the application but, in my view, it plainly follows from the circumstances I have recited that the plaintiffs must bear the cost of the present application even though they have been successful in resisting it. Their success in resisting it does not so much reflect success in the event, since the defendants have at the very least achieved a situation of establishing unacceptable delay, unacceptably explained breaches of orders of the Court and the benefit of the clearest warning to the plaintiffs that any further default is unlikely to be met with as indulgent a response. The orders are that: (1) The defendants' application be dismissed. (2) The plaintiffs pay the defendants' costs of the application.