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- Unreported Judgment
DISTRICT COURT OF QUEENSLAND
Nine Network Australia Pty Ltd & Ors v Sheppard  QDC 164
NINE NETWORK AUSTRALIA PTY LTD
(ACN 008 685 407)
QCN CHANNEL NINE PTY LTD
(ACN 001 549 560)
QUEENSLAND TELEVISION LIMITED
(ACN 009 674 373)
District Court at Brisbane
8 August 2019
District Court at Warwick
6 August 2019
APPLICATION – CIVIL PROCEDURE – DEFAMATION – PLEADINGS – AMENDMENT – where applicants have applied to amend their defence in an action for damages for defamation - where application opposed by the plaintiff in that action – where the applicants produced a program that is said to be defamatory of the respondent – where applicants now wish to maintain the defence of justification but in reliance on an entirely new factual basis.
Hartnett v Hynes  QSC 225
Menegazzo v Pricewaterhousecoopers (A Firm) & Ors  QSC 94
s 25 Defamation Act 2005 (Qld)
R J Anderson QC and P J McCafferty QC for the applicants
A P J Collins for the respondent
MacPherson Kelley for the applicants
O’Shea Lawyers Pty Ltd for the respondent
- The applicants, whom I shall compendiously refer to for the purpose of the application as Channel 9, have applied to amend their defence in an action for damages for defamation. The application is strenuously opposed by the plaintiff in that action.
- The respondent is a disability pensioner. He is one of five children of his parents. His father, Thomas Sheppard was born on 30 July 1918. He died sometime after June 2011.
- On 19 July 2016 Channel 9 produced an edition of “A Current Affair” entitled “Inheritance Impatience”. It is said the program was defamatory of the respondent. He alleges in paragraph 13 of his amended statement of claim that the program represented:
- (i)that whilst his father was alive he dishonestly caused monies belonging to his father to be withdrawn from his father’s bank account for his benefit; and
- (ii)that he was an untrustworthy person.
- The applicants’ defence raises a number of issues and has been amended numerous times. The chronology of those amendments is usefully set out in an affidavit of the respondent’s solicitor. In response to an amended statement of claim of 28 June 2017 the applicants filed what is described as a further amended defence on 19 April 2018.
- In that pleading the applicants plead a defence of justification under s 25 of the Defamation Act and at common law, alleging the imputations pleaded, being the matters identified in subparagraphs (i) and (ii) of paragraph 3 hereof are substantially true. The particulars of truth are more detailed but in essence it was alleged in that defence that between 30 July 2009 and 16 December 2010 the respondent, on approximately 20 separate identified occasions, withdrew money in cash from his father’s account and paid at least some of it into his own account, for his own benefit, and not that of the father.
- It seems common ground that the respondent has at all times asserted that he was not guilty of any fraudulent conduct in relation to those transactions but for some reason a reply was not served until 14 May 2019. An amended reply was then served on 28 July 2019 but the amendments contained therein are not of significant relevance.
- The reply was filed and served subsequent to an order of His Honour Judge Smith, on 26 April 2019, setting a timetable for the conduct of the action including for the trial to be heard by me over five days commencing on 19 August. His Honour also made orders requiring the respondent to provide disclosure relating to the issues in dispute.
- The applicant asserts:
- (i)that not until the provision of the reply on 14 May 2019 did the respondent respond to the truth of the allegations contained in the defence; and
- (ii)that not until after disclosure on 16 July 2019 and consideration of those documents, did the applicants understand the respondent’s position in relation to the allegations of fraud made against him.
- The applicant now accepts, and the proposed 7th further amended defence reflects such acceptance, that the pleaded case of fraudulent misappropriation of the deceased’s funds is doomed to failure.
- The applicant however wishes to maintain the defence of justification but in reliance on an entirely new factual basis.
- In summary, the proposed seventh further amended defence of the applicant asserts:
- (i)that the respondent’s father, between 2003 and 2011, lived a moderately frugal lifestyle (see paragraph 20(a) of the seventh further amended defence);
- (ii)his only source of income over that period was a Veteran Affairs special rate disability pension paid fortnightly into his CBA account (“a pension account”) (see para 20(c) of the pleading);
- (iii)that over that period the respondent controlled and operated that account and also a CBA savings account, both of which were his father’s accounts;
- (iv)that over that period the respondent assisted his father with activities of daily living but had asserted that all transactions on his father’s accounts were expressly authorised by or for the benefit of his father (see para 20(ee)(iii) of the proposed pleading);
- (v)that the father suffered dementia which was in an advanced state by March 2010 (para 20(hh)) of the proposed pleading;
- (vi)that although the father’s savings account was accessible by use of a debit card the father did not, and indeed could not use it (para 20(ii)(i) of the proposed pleading)
- (vii)that from 14 July 2009 to 3 June 2011 the debit card was used by the respondent to make withdrawals from, or purchases on, that card (para 20(ii)(ii) of the proposed pleading). Particulars of those transactions are set out in Schedule A of the pleading. They total, I was told, some 263 transactions involving $32,763.43.
- I interpose that the Schedule appears to show:
- (i)very regular purchase transactions at supermarkets such as Coles, Big W, Woolworths and at Bunnings and elsewhere;
- (ii)that such transactions were frequent, often on the same or consecutive days or only days apart;
- (iii)that such transactions were at numerous stores in different northern Brisbane suburbs – Albany Creek, Chermside, Strathpine, Everton Park, Kallangur, Margate, Carseldine, Aspley, Warner, Stafford, Caboolture, North Lakes, Petrie, Lawnton, Bald Hills, Stafford Heights, Brendale, Kippa-Ring and elsewhere;
- (iv)that from 10 November 2010 purchases were often associated with significant cash withdrawals from the account.
- It is said by the applicants that such a pattern of purchases and withdrawals is inconsistent with the respondent’s own case as pledged in his reply (see para 20(ii)(iii) of the proposed seventh further amended defence). In particular the pleading asserts the respondent had alleged in his reply that the deceased had habitually withdrawn cash fortnightly from his pension account and used it for living expenses and that he habitually visited only Woolworths at Strathpine and not other shopping centres.
- I note also that in a letter of 26 July 2019 the respondent’s solicitors wrote to the applicant’s solicitor (part of Exhibit F to the affidavit of Samantha McGeoch, at page 54 of the exhibit thereto) as follows:
“…there is no process whereby money simply was taken by our client for no apparent reason from his father let alone fraudulently.
What occurred, and what should have been obvious, was that the deceased, being an elderly gentleman had limited physical capabilities in respect of being able to drive to the bank etc. He was also not sophisticated in respect of paying bills on the internet or otherwise by credit card. His banking practices were the same as they would have been at an earlier time.
He obviously didn’t know how to operate a bank account in the traditional manner. What occurred is that our client paid various accounts on behalf of his father from time to time as and when they arose.”
- In support of the application senior counsel submitted that the explanation for the delay in identifying the proposed defence now sought to be relied on was that the applicants reasonably believed the respondent had engaged in fraudulent conduct in relation to the approximately 20 cash transactions earlier referred to. That belief, having been reasonably arrived at on the basis of information provided by two of the respondent’s siblings and the applicants and their legal advisors perusal of the deceased’s bank statements and financial documents, was not disabused until very recently. Only on the provision of the reply in May 2019 and on receipt of disclosure on 16 July 2019 (sometime after the time for disclosure proceeded by Smith DCJ’s orders) were the applicants reasonably aware of the then respondent’s defence to the pleaded case. It was said on behalf of the applicants that in such circumstances their failure to appreciate that the respondent was arguably fraudulent on the basis now proposed in the seventh further amended defence was entirely understandable.
- In my view that argument is not particularly persuasive. It is true that the original program said to be defamatory of the respondent did refer to money transactions as originally pleaded. It also referred to debit card transactions on the deceased’s bank account. It is surprising – though of course I acknowledge it is always far easier in retrospect – that the current proposed allegations were not part of the original justification defence.
- I might add however that I do not find the failure to have raised these matters at that time was a conscious tactical decision of the applicants. Rather it is a case where the matter was overlooked. That is of course not fatal to the application but is a relevant consideration.
- The principles that apply in the consideration of whether or not to allow a late amendment to a pleading, as is here sought, were considered by Applegarth J in Hartnett v Hynes  QSC 225 and were set out in the parties’ submissions, particularly an attached schedule to the submissions of the respondent. I will not set those considerations out in full but will refer to a number of relevant considerations.
- In that case His Honour said at :
“The entitlement of a party to amend pursuant to UCPR 378 and the power of the Court to disallow an amendment made under that rule are subject to the overriding purpose of the rules which is to facilitate the “just and expeditious resolution of the real issues in civil proceedings at a minimum of expense” and the requirement that the rules be applied with the objective of avoiding undue delay, expense and technicality and facilitating the purpose of the rules. Each party impliedly undertakes to the Court and to the other parties to proceed in an expeditious way and the Court may impose appropriate sanctions if a party is in breach of the implied undertaking.”
- So too in Menegazzo v Pricewaterhousecoopers (A Firm) & Ors  QSC 94 His Honour said at :
“In determining whether the proposed amendment is appropriate, regard should also be had to the principles discussed in Aon Risk Services Australia Ltd v Australian National University and r 5 of the UCPR. The purpose of the rules is to facilitate the just and expeditious resolution of the real issues in civil proceedings at a minimum of expense. Principles have developed governing amendments for which leave is required.27 They include the principle that an application for leave to amend a pleading should not be approached on the basis that a party is entitled to raise an arguable claim, subject to payment of costs by way of compensation. An application to amend will not be acceded to without adequate explanation or justification, including an explanation for any delay in applying for the amendment. The interests of justice require consideration of the prejudice caused to other parties if the amendment is allowed. This includes considering the strain litigation has on litigants and the distress caused by delay and proposed changes to a case. These may be greater where there is no adequate explanation for why the changes were not made sooner.”
- The respondent in particular relies on:
- (i)The fact that the matter is set down for trial to commence on 19 August and that listing was made on 26 April 2019, by agreement between the parties and in circumstances where the applicant had clearly stated that their defence – which is now largely to be abandoned – was the defence that the applicant proposed to run at trial.
- (ii)The fact that after receiving the reply on 14 May 2019, and in circumstances in which the applicants and their then solicitors had the deceased’s bank statements from, it may be inferred, early in 2018, did not raise the current proposed defence until the delivery of the proposed seventh further amended defence of 31 July 2019.
- (iii)The applicants already delaying the matter by reason of earlier iterations of their defence and unsuccessfully appealing a decision of Her Honour Judge Rosengren striking out part of their defence.
- (iv)What are said to be circumstances of significant prejudice to the plaintiff. He is said to be a disability pensioner who has suffered significant psychological distress by reason of the nature of the allegations against him, allegations which are now to be largely abandoned and replaced by new allegations of fraudulent conduct.
- (v)The fact such conduct as is now to be relied on ought to have been pleaded upon receipt and consideration of the deceased’s bank accounts from early 2018, especially in circumstances where, in the original broadcast, the applicants referred to debit card transactions on the deceased’s account (see, as an example, paragraph A.5 in Sch A to the amended statement of claim which was said to refer to such highlighted transactions).
- (vi)The fact that any costs order that may be made as a condition of allowing any amendment to the defence will or may give the respondent only limited relief and may not be made in a timely way.
- (vii)The wasting of time and resources on investigating the original allegation of fraud.
- (viii)The potential for the respondent to now have to thoroughly investigate entirely new allegations of fraud which ought have been made by early 2018 and which might result in delay of the trial due to commence on 19 August.
- It was said also that the applicants have provided no plausible excuse for their delay in identifying the defence on which they now intend to rely. I have dealt with that matter earlier.
- The applicants submit that an important consideration, highlighted by Justice Applegarth in the passages earlier referred to, is the just and expeditious resolution of the real issues in dispute. It was submitted that if the amendment was not allowed such a just resolution could not be achieved since the issue of the respondent’s honesty would not be determined on any proper basis.
- I accept that is an important issue in this case. Without the amendments the applicants have, it seems to me, lost the critical aspect of their defence. Whilst it is difficult to assess it does seem to me the allegations raise a real question to be answered because of the apparent inconsistency between the particular transactions identified in Sch A to the seventh further amended defence, and the content of the respondent’s reply (and of the letter from his solicitors, passages of which I earlier referred to.)
- Senior counsel submits also that whilst the respondent refers to the difficulties he will have preparing for trial in the limited time available before the trial – less than two weeks – it was not submitted that preparation was not achievable or that the trial would have to be adjourned.
- In particular, it was said that the people who might assist the respondent are his sister Margaret, and other trusted family friends. The very limited number of such persons significantly limits the enquiry that needs to be made, it was submitted, and suggests a fair trial is very achievable. I note that whilst the respondent’s solicitor and the respondent in their affidavits refer to difficulties they might have, neither deposes to the fact that enquires they might have in preparing a defence to the new allegations made to date – bearing in mind the seventh further amended defence was delivered on 31 July 2019 – have presented unexpected or insurmountable hurdles.
- The resolution of the question is not free from uncertainty. There is I think, much to be said for the view that the applicants, who it might be inferred have significant financial resources, ought have pleaded the current defence some 18 months ago, perhaps in conjunction with the now to be abandoned defence.
- But if the amendments were now not to be allowed, the trial will be determined without the applicants having any real opportunity of persuading a jury that the respondent was in fact, dishonest and untrustworthy. The real issue in the dispute would, in fact, never be appropriately determined.
- The question in my mind is whether the applicants should be precluded from having that issue appropriately determined by reason of their conduct of the matter and because of the effect of such conduct on the respondent, both financially and psychologically.
- Ultimately, it is in my view, appropriate to allow the proposed amendments, but to make orders designed to protect the respondent from undue financial hardship. It is, in my view, appropriate to order, subject to any further submissions of counsel about the form of such an order, that the applicants should pay the respondent’s costs thrown away by reason of the amendment, to include all costs reasonably associated with the applicants’ now abandoned allegations of fraud. Those costs should be determined by me in a broad brush way and paid to the respondent’s solicitors prior to the commencement of the trial. In the absence of such payment, the amendments allowed by reason of this order be struck out. I note Mr O’Shea, in paras 6 and 7 of his affidavit, estimates the time he and counsel have spent in perusals and consideration of the relevant but abandoned allegations.
- In making this decision, I am conscious of the respondent’s affidavit and his statements that it has been difficult locating documents and remembering facts from long ago, which I take to be a reference to the period of about 2010/11 when the impugned transactions were incurred. I am also conscious of the strain of litigation and his need for professional psychological counselling as outlined in his affidavit.
- I note that in the affidavits of both Mr Sheppard and Mr O’Shea, it is said that the new amendments will cause substantial additional hours of work, but it is not said that that will preclude the respondent from being ready for trial.
- The affidavit of the applicant’s solicitor Mr O’Shea, sets out in para 2 a useful chronology relating to the pleadings and related steps in the proceedings. It is clear that the applicant did not plead truth until April 2018, despite earlier defences and did not plead truth in reliance on the current basis, as I have said, until July 2019. It is also clear that the applicants have pleaded other matters which have either been abandoned or struck out at various times and, as I have earlier indicated, a decision of Judge Rosengren striking out part of the applicant’s defence was the subject of an unsuccessful appeal.
- The affidavit, in paragraph 17 and following, also refers to the difficulty facing the respondent in now recalling details of the 263 impugned transactions identified in the schedule to the seventh further amended defence.
- I interpose that to recall such transactions, even if pleaded in 2018 after receipt of the bank statements, would have been equally as difficult. It appears to me however, that the issue may be determined not by minute examination of each transaction – for who could expect to accurately recall such matters after even a short time and who could be expected to have the receipts of such transactions – but by resort to more general evidence about the nature and frequency of the deceased’s shopping expeditions. An explanation of how and why he might go to the stores and locations earlier referred to and how he generally used his debit card, or cash, when shopping and whether the respondent, his sister Margaret and identified others might be involved in such activities would, it seems to me, be the critical evidence. It does not seem to me an unduly onerous task to garner evidence of that kind from the very limited number of potential witnesses that I have referred to.
- In the circumstances, subject to argument about the form of the orders, I will allow the application to amend the pleading in terms of the proposed seventh further amended defence. I will also hear argument about an appropriate order as to costs in order to provide appropriate financial security for the respondent having regard to the work thrown away by reason of the now abandoned allegations.
- Having resolved to determine the matter in this matter, and indeed having dictated my judgment, I was advised that the respondent’s solicitor had ascertained that the respondent’s sister, Margaret, was likely to be a critical witness but had recently had surgery and had been told by her surgeon she was not to go out (e.g. shopping) until he reviewed her on 6 September 2019.
- In a subsequent affidavit that solicitor, Mr O’Shea, said that Margaret Sheppard has advised him she used to take her father shopping to Bunnings, Coles, Woolworths and elsewhere frequently, and that he there used his debit card with her help to both purchase items and to withdraw cash. Her evidence relevant to the proceedings is such that counsel for the respondent in submissions in support of his application to re-open the respondents’ application to amend the defence to allow evidence of her condition to be given, said that her evidence “if accepted, effectively destroys any allegations of fraud…”
- The application to reopen is opposed on the grounds:
- That no satisfactory explanation is given as to why the evidence was not led when the matter was before me on 6 August 2019;
- Her evidence is unlikely to have a material bearing on the application for leave to amend.
- I do not accept either submission. In my view, the time frame in which the matter unfolded is a good explanation of why that evidence was not before me. It is outlined fulsomely in Mr Collins’ supplementary submissions.
- Whilst some of her evidence, as outlined in Mr O’Shea’ further affidavit, may certain inadmissible opinion evidence, much of what she says does, on its face, provide an explanation for the extensive debit entries on the deceased’s bank account.
- In my view, the application should be re-opened to allow Mr O’Shea’s affidavit to be read.
- In my view, two things in particular arise from that evidence. The evidence of Ms Sheppard, if consistent with what Mr O’Shea recounts, illustrates the point I made in my originally dictated judgment about what I believed would be the nature of the evidence that might be called by the respondent. It illustrates why, in my assessment, it was always very likely that the respondent would be able to prepare for trial despite the late amendments.
- Second, it seems Ms Sheppard’s inability to attend court is because of the risk of infecting her surgical incision if she does so. Accepting, in the absence of definitive evidence from her surgeon, that is so it seems to me this is an appropriate case in which she should give evidence by way of an audio-visual link from her home. This can be done by simply downloading a program such as ‘Cisco Jabber’ onto a computer and utilising that to allow her evidence to be given by audio-visual link. My experience is that evidence in that way is entire acceptable for assessment by a jury.
- In my view the further evidence of Mr O’Shea strongly supports my view that the applicants should be given leave to amend their defence as previously stated.
- I will also order that Margaret Sheppard can give evidence at the trial by way of an audio-visual link from her home.
- That will of course require that the parties arrange for a computer having a suitable program available for her use and that they give thought to what documents might need to be shown to her when giving her evidence.
- I direct the parties to prepare orders reflecting these reasons. I will also hear argument about any consequential orders, including orders concerning costs, next Thursday 15 August 2019 at a time to be arranged with my Associate.
- Published Case Name:
Nine Network Australia Pty. Ltd. & Ors v Sheppard
- Shortened Case Name:
Nine Network Australia Pty. Ltd. & Ors v Sheppard
 QDC 164
08 Aug 2019