Sydney Security Services Pty Ltd v iGuard Australia Pty Ltd (No 3) [2017] NSWSC 633

Supreme Court New South Wales

Medium Neutral Citation: Sydney Security Services Pty Ltd v iGuard Australia Pty Ltd (No 3) [2017] NSWSC 633 Hearing dates: 5 May 2017 Decision date: 05 May 2017 Jurisdiction: Common Law Before: McCallum J Decision: Plaintiff granted leave to re-plead the statement of claim to address the matters addressed in this judgment Catchwords: INJURIOUS FALSEHOOD – pleadings – where plaintiff pleads only hearsay version of offending email – whether precluded from pleading claim until application for preliminary discovery made – whether representations capable of being conveyed Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW), r 5.3(1) Category: Procedural and other rulings Parties: Sydney Security Services Pty Ltd (plaintiff) iGuard Australia Pty Ltd (first defendant) Christopher James Clifford (second defendant) Representation: Counsel: A Hughes (plaintiff) L Barnett (defendants)

Solicitors: MN Lawyers & Associates (plaintiff) Finn Roache (defendants) File Number(s): 2016/365352

Judgment 1. HER HONOUR: These are proceedings for injurious falsehood commenced originally by summons, filed on an urgent basis, seeking injunctive relief. The application for injunctive relief having been determined, I ordered that the proceedings continue on pleadings. 2. A statement of claim was filed on 7 February 2017. The defendants have raised a number of objections to that pleading. The first objection relates to paragraph 5 of the pleading, which makes the following allegation: At a date unknown to the plaintiff, but prior to on or about 10 August 2016, the first defendant published a statement to John Holland Group Pty Ltd to the effect that the plaintiff and Sargent Security are "the same company". 1. Ms Barnett, who appears for the defendants, identified the only particulars provided by the plaintiff in respect of that allegation, which go no further than to reveal that the plaintiff became aware of the alleged representation by means of a telephone conversation in which an employee of the plaintiff was told the information had been conveyed by email. 2. The plaintiff does not appear to hold a copy of the email in question. Ms Barnett submitted in those circumstances that the pleading of that representation should be struck out and that the plaintiff would have to take additional steps to obtain a copy of the email before re-pleading that allegation, such as an application for preliminary discovery. 3. I do not accept that aspect of the submission. In my view, the information that was available to the plaintiff before the proceedings were commenced was enough to plead the representation: cf r 5.3(1) of the Uniform Civil Procedure Rules 2005 (NSW). For that reason, an application for preliminary discovery may well have failed. I do agree, however, with Ms Barnett's submission that the material pleaded at this point is inadequate. The plaintiff has information as to the existence and (to some extent) the content of the email but should endeavour to obtain a copy on subpoena. Leave will be granted to the plaintiff to issue a subpoena to the entity identified. 4. The second objection relates to paragraphs 6 and 7 of the statement of claim, which plead injurious falsehood by two separate emails. The representations alleged to be made by those emails were provided in particulars at page 112 of a bundle of correspondence provided by Ms Barnett to the Court. The first two representations are that Sydney Security is the same as Sargent Security and that Sydney Security is related to Sargent Security. The significance of those representations was that Sargent Security was then in liquidation; the burden of the alleged falsehood is that Sydney Security was a "phoenix company" (an entity to which an insolvent company has transferred its assets but not its liabilities). 5. The two pleaded representations are alleged to be conveyed by an email headed: "Subject: As discussed - Sydney Security & Sargent Security". The body of the email states: "As discussed with Chris today, please find attached extract from the Deloitte report regarding Sargent Security/Sydney Security". The report itself plainly concerns Sargent Security (Aus) Pty Ltd (in liquidation). 6. Ms Barnett submitted that the representations are not reasonably capable of being conveyed by the bare words set out above and that to draw those representations would give too much work to do to the ampersand in the subject line and the slash in the covering email. 7. Regard must also be had, however, to the fact that the whole purpose of the email was to attach a report about Sargent Security (Aus) Pty Ltd (in liquidation). 8. The test for determining whether a representation is capable of being conveyed in a case of injurious falsehood is the same as, or at least for present purposes sufficiently similar to, the test for whether an imputation is capable of being conveyed in proceedings for defamation. 9. In my view the ordinary reasonable reader could reasonably understand the whole of the communication to convey an allegation or representation that the two entities, Sargent Security and Sydney Security, were the same entity, or at least related to each other in some way. That objection is rejected. 10. The next objection is to paragraph 7. During the course of argument, it has been revealed that the representations pleaded in respect of that paragraph of the statement of claim arising from a separate email will need to be revisited, counsel for the plaintiff evidently having overlooked a relevant part of the email. The defendants do not oppose leave to re-plead in that circumstance. 11. Finally, the defendants object to paragraph 13 of the statement of claim, which alleges that the second defendant is a joint tortfeasor in the conduct of the first defendant, iGuard, in publishing the emails. Certainly, there would appear to be enough in aspects of the material that has been put before me to suggest that the second defendant may well be the source of the representations complained of and may well have participated in the process by which those representations came to be made, if it be found that they were made, in the relevant emails. 12. Mr Hughes, however, properly conceded that the existing pleading requires clarification in that respect. 13. For those reasons, the plaintiff should have leave to re-plead the statement of claim to address the matters addressed in this judgment.