Hegarty v Craven[2016] QDC 91

DISTRICT COURT OF QUEENSLAND

1. [1]
   There are two applications before the Court for determination in relation to ongoing defamation proceedings. The plaintiffs are seeking an interlocutory injunction and the defendant is seeking a change of venue for the trial.

2. [2]
   The plaintiffs by originating application filed 8 February 2016 commenced Supreme Court proceedings against the defendant for defamation. They sought an injunction to prevent continued publication of allegedly defamatory statements. By order of Byrne SJA dated 19 February 2016, the proceedings were transferred to the District Court of Queensland at Brisbane. On that date his Honour granted an interim injunction requiring that certain words be removed from a website administered by the defendant and preventing the defendant republishing those words or words having the same effect. His Honour ordered the injunction continue in force until the plaintiffs’ application for an interlocutory injunction is heard and determined by the District Court.

3. [3]
   By application dated 24 February 2016 the defendant sought an order that the proceedings be transferred to Gympie or Maroochydore.

4. [4]
   On 7 March 2016 a District Court judge ordered that the proceedings continue as if started by claim and required the plaintiffs to file a statement of claim. The change of venue application was adjourned for hearing on a later date.

5. [5]
   The plaintiffs filed their statement of claim on 21 March 2016. At paragraphs 13 to 21 of the statement of claim it is alleged the defendant on or shortly after 22 January 2016 authored words which appear in attachment 1 to the statement of claim and caused those words to be uploaded to a website he created and maintains, www.readyflowersreview.hk. It is alleged that material on the website expressly mentioned both plaintiffs and, by its natural meaning, carried defamatory imputations in respect of each of the plaintiffs, namely that the first plaintiff controlled a company that ripped off its customers and that the second plaintiff was a company that ripped off its customers. It is further alleged that between 26 January 2016 and 11 February 2016, although certain amendments were made to the website, words on the site continued to have the same defamatory effect. On and from 11 February 2016 the defendant made amendments to the website complying with the orders of Byrne SJA in the Supreme Court of Queensland.

6. [6]
   The statement of claim seeks the following relief:

“1.general compensatory damages in the amount of $200,000, an amount that reflects the seriousness of the imputations, extent of the publication, and the harm, loss and damage caused by the imputations;

2. aggravated compensatory damages in the amount of $50,000 for the additional hurt suffered by the first plaintiff as a result of the matters set out in paragraph 24 above;

3. interest on any damages, pursuant to the Civil Proceedings Act 2011 (Qld), s 48;

4. a permanent injunction to restrain the defendant, whether personally or by his agents or otherwise howsoever, from continuing to publish, further publishing or causing to be published the same or similar words defamatory of the second plaintiff;

5. such further or other order as the Court deems appropriate; and

6. costs.”^[1]

7. [7]
   On 24 March 2016 the plaintiffs filed a further amended application for an order requiring the removal of defamatory material from the defendant’s website and restraining the defendant from republishing it until the proceedings have been finally determined or until further order.

8. [8]
   It now falls to me to determine the plaintiffs’ application for an interlocutory injunction and the defendant’s application for change of venue.

Application for interlocutory injunction

9. [9]
   The application for an interlocutory injunction is supported by two affidavits of Peter Hegarty, first plaintiff,^[2] and two affidavits of Lesley Moore, solicitor^[3].

10. [10]
    The following facts are provided by those affidavits. The first plaintiff and his wife, Deborah Hegarty, are directors of the second plaintiff, Ready Flowers Pty Ltd (“RFPL”) a company which until 1 February 2009 operated a business which received consumer orders for the supply of flower arrangements for delivery in Australia and worldwide (“the Ready Flowers business”). That business operates through a number of websites. Mr Hegarty in his affidavit of 4 March 2016 stated that in 2009 all business operations of the Ready Flowers business were transferred to Globe Valley Pty Ltd under agreement with Ready Flowers Limited (“RFL”) as part of the sale and transfer of the business of RFPL to RFL. Mr Hegarty attests that on and from 1 February 2009, RFPL sold the Ready Flowers business to RFL, a company registered in Hong Kong. Since that date RFL has operated the Ready Flowers business. He says that while he was a director and shareholder of RFL initially, he has since transferred his shares to his son, Thomas Hegarty, and he resigned as a director on or about 30 April 2010. On the evidence of Mr Hegarty, the continuing connection between RFPL and the Ready Flowers business since the sale to RFL is that RFPL licenses the domain www.readyflowers.com.au and the Ready Flowers website to RFL for a weekly license fee, and permits the Hong Kong Company to use RFPL’s financial infrastructure and merchant facilities for the conduct of transactions which RFL conducts in respect of the business. Mr Hegarty also discloses that he is involved with a business that operates the call centre for the Ready Flowers business. It gets paid for caller transactions processed by the call centre staff.

11. [11]
    Mr Hegarty’s affidavit attaches as Exhibit 3 a print out of content displayed on the website www.readyflowersreview.hk as it is said to have appeared on 4 February 2016. The website content describes RFL as a rip-off company operating out of Hong Kong. It says the Hong Kong Company operates from an Australian website that is still registered to RFPL. It also claims:

“It became apparent during the 6 years of Federal Court proceedings between Gordon Craven (self represented) and Ready Flowers Pty Ltd that Ready Flowers Pty Ltd (owned by the Hegarty family in Perth WA), also remains responsible for paying the Hong Kong based Ready Flowers Limited, Australian supplier florists and processing most or all of the credit card transactions for the Hong Kong based Ready Flowers Limited …”

The website content continues:

“In spite of these facts, the Court found that Ready Flowers Pty Ltd was not jointly responsible for the rip-off conduct thus causing Gordon’s case to be dismissed. However in spite of the wisdom of the Federal Court and in the context of what is exposed here providing an obvious connection between the rip-off Hong Kong Company (operated by the son Thomas Hegarty) and Ready Flowers Pty Ltd (operated by his parents Peter Hegarty and Deborah Hegarty), and the abundance of evidence to the Federal Court that Ready Flowers Pty Ltd has assisted Ready Flowers Limited to hold itself out to be an Australian business, it is reasonable to hold an honest opinion that Ready Flowers Pty Ltd has been involved in the rip-off.”

12. [12]
    A further version of the website tendered before me and exhibited to the affidavit of the respondent filed on 10 February 2016^[4]states:

“Ready Flowers Pty Ltd and its directors Peter and Deborah Hegarty have assisted and are accessories to Ready Flowers Limited holding itself out to be an Australian business by publishing at the AU domains licensed to Ready Flowers Limited, for example: “Ready Flowers Australia is 100% Australian owned and 100% Australian family operated company”, it is reasonable to hold an honest opinion that Ready Flowers Pty Ltd has been involved in  the rip-off by collusion and secrecy, the secrecy clearly demonstrated by Deborah (Debi) Hegarty a director & management consultant to Ready Flowers Pty Ltd lying (by omission) to the Australian Senate in response to the above video which is recorded in Hansard”.

Is the material defamatory?

13. [13]
    The common law test of defamation is preserved under s 6 of the Defamation Act 2005 (Qld) (“the Act”). The test is whether the published matter is likely to lead an ordinary reasonable person to think less of the plaintiff: Radio 2UE Sydney Pty Ltd v Chesterton (2009) 238 CLR 460 at 467.

14. [14]
    The website states that Ready Flowers Limited “is a rip-off company operating out of Hong Kong”. It goes on to state there is “an obvious connection between the rip-off Hong Kong Company (operated by the son Thomas Hegarty) and Ready Flowers Pty Ltd (operated by his parents Peter Hegarty and Deborah Hegarty)”. The passage goes on to refer to “the abundance of evidence … that Ready Flowers Pty Ltd and its directors Peter and Deborah Hegarty have assisted in and are accessories to Ready Flowers Limited holding itself out to be an Australian business”. The passage concludes “it is reasonable to hold an honest opinion that Ready Flowers Pty Ltd has been involved in the rip-off by collusion and secrecy…”.

15. [15]
    RFL was described as being a rip-off company. The Shorter Oxford English Dictionary (6^th Edition) relevantly defines “rip-off” as “(designating or pertaining to) a fraud, swindle, or instance of esp. financial exploitation”. The Macquarie Dictionary (1981) defines “rip-off” as “to overcharge, swindle”. It is apparent that if a company or person is so described, that is likely to lead an ordinary reasonable person to think less of it or them.

16. [16]
    The respondent in his affidavit filed 3 March 2016 described the components of the rip-off description to be:

“  •The admissions, causing allegations of secrecy, duplicity and collusion;

•The misleading representations causing consumers to be misled;

•The hundreds of consumer complaints;

•Contents of a Consumer Alert speech in the Australian Senate (per my affidavit no.1 exhibit marked “1E”).”

17. [17]
    In addition the respondent alleged as follows:

“(i)I believe that the particulars below show how the    Ready Flowers business holds itself out to be an Australian business when in fact it is a Hong Kong business owned and operated by the Hong Kong registered Ready Flowers Ltd; and

2. (ii)
   To hold itself out to be an Australian florist when it    is not.”

18. [18]
    It seems that the respondent relies upon two aspects as demonstrating the truth of the rip-off allegations. Firstly, that the Ready Flowers business holds itself out to be an Australian business so as to deceive Australian consumers into believing they are making their purchases from an Australian business when that is not the case. Supplementary to this first aspect is an allegation that consumers are deceived into believing they are dealing with a local florist when that is not the case.

19. [19]
    Secondly, the respondent appears to rely upon the volume of consumer complaints as supporting the description of RFL as a rip-off company.

20. [20]
    I view the assertion that “it is reasonable to hold an honest opinion that Ready Flowers Pty Ltd has been involved in the rip-off by collusion and secrecy” as likely to lead an ordinary reasonable person to think less of that company. The further assertion that “Ready Flowers Pty Ltd and its directors Peter and Deborah Hegarty have assisted and are accessories to Ready Flowers Ltd holding itself out to be an Australian business” is likely to lead an ordinary reasonable person to think less of that company and its director Peter Hegarty.

21. [21]
    In my opinion the published words are capable of being defamatory. I do not understand Mr Craven to challenge that conclusion. Rather, he submits that defences of justification and honest opinion are available. He submits that evidence in his Affidavit no. 3 filed on 3 March 2016 demonstrates he can produce evidence to support those defences.

Applicant’s submissions

22. [22]
    The applicants for the interlocutory junction (plaintiffs in the action) submit they have a strong prima facie case and the balance of convenience weighs in their favour. They submit that the material before the court does not suggest the defendant has a reasonable prospect of defending the action and that if the court does not award the injunction sought any benefit to be gained through the proceedings will be substantially lost. It is further argued that damages will not be an adequate remedy, particularly as a defendant lacks means. It is submitted that any inconvenience flowing to the respondent from the granting of the proposed interlocutory orders will be minimal.

23. [23]
    The applicants refer to the observations of Hunt J in Church of Scientology of California Inc v Reader’s Digest Services Pty Ltd where His Honour said:

“…I conclude that a defendant is not required on an application such as this to lead the evidence upon which he relies to establish the defences asserted. In some cases, particularly where such defences are not clear from the matter complained of itself, or from the circumstances of its publication as established by the plaintiff, or otherwise, it will advisable for a defendant to produce some evidence to permit the Court to say that those defences have some prospect of success. Even then, the evidence need not be such that the defence is hereby proved; all that is needed is sufficient to suggest the defence in a manner and with circumstances which show that there is a case for consideration by a jury or by the trial judge, as the case may be…”^[5]

24. [24]
    In summary it is accepted by the applicants that the court must have regard not only to the strength of the claim but also the strength of the defence in deciding whether to create an injunction.

25. [25]
    The applicants rely upon a decision of the Federal Circuit Court of Australia in Craven v Ready Flowers Pty Ltd and Anor [2015] FCCA 538 which found that RFL operates the Ready Flowers business and that RFPL is not carrying out that business. The applicants submit:

“the falsity of the imputations has been established judicially, and it is not open to the defendant to maintain that they are true.”^[6]

26. [26]
    The applicants argue that the defence of honest opinion is not available to the defendant as the statements on the Craven website are clearly declaratory and not an expression of opinion. Furthermore, relying upon s 30 of the Defamation Act, they submit there is evidence of malice on the part of the respondent. It is argued that his persistence with the imputations and in view of the findings of the Federal Circuit Court demonstrates prima facie knowledge of the falsity of the imputations or reckless indifference to their truth or falsity.

Submissions by respondent

27. [27]
    The respondent commenced his submissions by reference to the judgment in Bonnard v Perryman [1891] 2 Ch 269 at 283 where Lord Coleridge CJ said:

“the subject-matter of an action for defamation is so special as to require exceptional caution in exercising the jurisdiction to interfere by injunction before the trial of an action to prevent an anticipated wrong.”^[7]

28. [28]
    The respondent submits that the applicants’ action does not have a real prospect of success. The respondent points out that his website refers to RFL, the Hong Kong Company, as being responsible for the rip-off conduct. He contends that there is an obvious connection between RFL and RFPL and because of that connection RFPL has assisted RFL to hold itself out to be an Australian business and is therefore involved in the rip-off conduct. The respondent argues that this is different than stating that RFPL is a rip-off company or that the first applicant is operating a rip-off company.

29. [29]
    The respondent emphasises that the grant of an injunction would deny his freedom of speech, he asserts that the evidence outlined in his affidavit supports defences of justification and honest opinion, and that his reliance upon Hansard and a Consumer Alert speech to the Senate is covered by further defences.

The legal test

30. [30]
    The High Court in Australian Broadcasting Corporation v O'Neill^[8]approved the principles to be applied by a court when considering an application for an interlocutory injunction. These principles are as follows:

“… in all applications for an interlocutory injunction, the Court will ask whether the plaintiff has shown that there is a serious question to be tried as to the plaintiff’s entitlement to relief, has shown that the plaintiff is likely to suffer injury for which damages will not be an adequate remedy, and has shown that the balance of convenience favours the granting of an injunction.”^[9]

31. [31]
    The High Court emphasized that in applying those principles, courts must exercise caution in defamation cases, giving particular regard to the public interest in maintaining the right of free speech.

Defence of justification

32. [32]
    In the circumstance that the respondent’s comments are clearly capable of being defamatory, the plaintiffs’ prospects of success very much depend upon the strength of any defence raised by the respondent defendant. Under s 25 of the Defamation Act 2005 it is a defence to the publication of defamatory matter if the defendant proves the defamatory imputations carried by the matter are substantially true.

33. [33]
    In the exercise of a discretion whether to grant an injunction the Court should, in a case such as this, consider the strength of both the plaintiffs’ case and the strength of any available defences.

34. [34]
    The truth of an allegation of being involved in “rip-off conduct” will depend upon what is understood by the term “rip-off” and whether there is evidence implicating the plaintiffs in such conduct.

35. [35]
    The term “rip-off” has an ordinary English meaning connoting a fraud or a swindle. It is to be doubted whether the evidence relied upon by the respondent is capable of supporting a conclusion that RFL was engaged in defrauding or swindling consumers. The fact that RFL is registered as a company in Hong Kong does not prevent it being 100 per cent Australian owned. It is also doubtful whether the model for engagement of florists utilised by RFL would mislead consumers into believing they were dealing directly with a local florist. It is common place for nationally or internationally based internet sites to provide a service of directing consumers to locally based suppliers. Accommodation sites are a commonplace example. Internet users would be aware such a site is not hosted by a local supplier. Furthermore, consumer discontent with the quality of service provided may of itself be insufficient to justify a description of the provider as being a “rip-off company” in the sense of it acting fraudulently or by way of swindling the customer.

36. [36]
    Even if it is accepted that there is evidence capable of establishing RFL was engaged in defrauding or swindling consumers, the respondent faces a further difficulty in demonstrating the truth of his allegation that the first and second plaintiffs are involved in the “rip-off conduct” of RFL.

37. [37]
    The applicants submit that the falsity of the imputations has been established judicially by the Federal Circuit Court. I am not persuaded by that submission. The reasons for judgment of the Federal Circuit Court are not admissible in this court as proof of the judge’s findings of fact. Furthermore, the decision of the Federal Circuit Court, related to an issue for decision arising under Commonwealth legislation. Nevertheless, although the decisions in the Federal Courts may not be relied upon as proof of the facts found by those Courts, it will still be difficult for the defendant to go behind the corporate veil to establish responsibility on the part of the plaintiffs in these proceedings for the acts or statements of RFL. The mere fact that RFPL, and the first plaintiff as a director of that company, supplied financial and internet resources to RFL as part of a business arrangement between the companies, is not sufficient to support a conclusion of fact that the plaintiffs are “involved” in the alleged “rip-off conduct” of RFL.

38. [38]
    On the material currently before the court I am not persuaded that the respondent has sufficient prospects of making out a defence of justification by proving the involvement of the plaintiffs in “rip-off conduct”.

Defence of honest opinion

39. [39]
    Section 31 of the Defamation Act 2005 provides:

“(1)It is a defence to the publication of defamatory matter if the defendant proves that –

1. (a)
   the matter was an expression of opinion of the defendant rather than a statement of fact; and

2. (b)
   the opinion related to a matter of public interest; and

3. (c)
   the opinion is based on proper material.

…

3. (4)
   A defence established under this section is defeated if, and only if, the plaintiff proves that –

1. (a)
   in the case of a defence under subsection (1) – the opinion was not honestly held by the defendant at the time the defamatory matter was published; or

….

3. (5)
   For the purposes of this section, an opinion is based on proper material if it is based on material that –

(a)is substantially true; or

…”

40. [40]
    The applicants submit that the statements on the respondent’s website are not an expression of opinion but merely declaratory. Furthermore, it is submitted that the statements are not based on proper material in that the matters are not substantially true.

41. [41]
    While it is often difficult to distinguish between opinions and statements of fact, in my assessment the respondent’s comments about the involvement of the applicants bears the hallmarks of an expression of opinion.^[10]The respondent’s web page sets out the factual matters and the trail of reasoning that led to the conclusion that “it is reasonable to hold an honest opinion that Ready Flowers Pty Ltd has been involved in the rip-off by collusion and secrecy”. In my view that conclusion is an expression of opinion.

42. [42]
    It remains necessary that the opinion be based on material that is substantially true. The applicants submit the respondent was aware from the Federal Circuit Court and Federal Court judgments that there was a respectable body of opinion holding that RFPL was not proven to have carried on the RFL internet business.^[11]  However, those findings related only to the company RFPL and not to the person Mr Peter Hegarty. Judge Jarrett in his reasons for judgment recognised that whether Mr Hegarty might in some way be seen to be tacitly approving the representations made by the Hong Kong company by taking no action to have them changed or taken down was not litigated in the matter before him.^[12]Nevertheless, even without reliance on the Federal Court judgements, the respondent will find it difficult, for the reasons set out above, to persuade a jury that the material he relies upon provides a proper basis for the opinions he expressed.

43. [43]
    I do not consider the plaintiff has more than minimal prospects of succeeding in establishing the defence of honest opinion. Furthermore, in addition to proving the truth of the material supporting his opinion, the respondent will still need to prove the opinion was honestly held and not activated by malice.

44. [44]
    In summary I am satisfied that the plaintiffs have shown that there is a serious question to be tried as to their entitlement to relief, although the defendant has limited prospects of succeeding on a defence.

Balance of convenience

45. [45]
    In determining whether an injunction should be issued it is relevant to consider the impact on the parties. Caution should be exercised in a defamation case so as not to constrain legitimate freedom of speech. On the other hand this is not a case where damages, should the plaintiffs be successful, will be an adequate remedy. The defendant is declared bankrupt and has failed to satisfy costs orders made against him.^[13]The material before me indicates that the plaintiffs have a commercial interest in the success of the RFL website as their business provides services to that company. The respondent has provided material indicating activity by way of hits upon his website. The continued publication of defamatory material upon that website has the potential to impact on the plaintiffs financially. It is relevant to have regard to the fact that unless an injunction is granted, the statements complained of will in all likelihood continue to be published on the live medium of the internet.^[14]The material is published in electronic form on a website maintained by the respondent and can be readily removed by him.

46. [46]
    The plaintiffs have shown there is a serious question to be tried and that damages will not be an adequate remedy. I also find that the balance of convenience weighs in favour of granting an injunction to restrain publication of statements claiming the plaintiffs are implicated in “rip-off” conduct.

47. [47]
    Bearing in mind the need to approach the grant of an interim injunction in a defamation matter with caution and to minimise constraint on freedom of expression, I intend to narrowly focus the injunction on restraining publication of words alleging involvement in “rip-off conduct” as opposed to restraining the general contents of the respondent’s website.

48. [48]
    It is unnecessary to make a specific order for removal of words from the respondent’s website as the proposed order will necessarily require the respondent to remove any words communicating the restrained subject matter.

49. [49]
    There will be an order, in the terms set out at the end of this judgment, restraining publication until further order.

Application for change of venue

50. [50]
    The applicant seeks an order under the Uniform Civil Procedure Rules 1999 (“UCPR”) for the proceedings to be transferred to Gympie or Maroochydore. By affidavit filed on 24 February 2016 the applicant states that he is a permanent resident of Gympie and that travel to Brisbane is lengthy and parking in Brisbane is costly. His sole source of income is the age pension and he says he is unable to afford travel expenses from his pension funds.

51. [51]
    The application states that it is brought under r 35(1)(a) of the UCPR. The applicant is misguided in relying upon that rule which only applies if a person decides to start a proceeding other than in a central registry of a court. These proceedings have already been commenced in the Brisbane Registry which is a central registry of the District Court.

52. [52]
    The structure of Part 6 of the UCPR which is entitled “Where to Start a Proceeding” is relevant to the source of power that I must exercise. Rule 33 provides that a proceeding in a court may be started in any central registry of the court. Rules 34, 35 and 38 only apply to proceedings commenced or being commenced other than in a central registry.

53. [53]
    The relevant rule for the purpose of this application is r 39 which provides:

“(1)This rule applies at any time a court is satisfied a proceeding can be more conveniently or fairly heard or dealt with at a place at which the court is held other than the place in which the proceeding is pending.

3. (2)
   The court may, on its own initiative or on the application of a party to the proceeding, order that the proceeding be transferred to the other place.”

54. [54]
    It is necessary that I consider whether proceedings should as a matter of fairness be heard at a location closer to the defendant’s residence.

55. [55]
    The plaintiffs oppose the application. They are legally represented by Brisbane practitioners. It is apparent that a trial in Gympie or Maroochydore would generate higher legal costs. Information placed before me by the plaintiffs indicates costs would be significantly increased by fees for travel time. The plaintiffs, if successful, could not expect to recover these costs from the defendant given that he is bankrupt and has outstanding unpaid costs orders.

56. [56]
    The cost and inconvenience to the applicant is a relevant consideration. However, conduct of the trial at Gympie would be highly inconvenient given the limited circuits to that location and less adequate court facilities. Adequate facilities are available for conduct of the trial at Maroochydore but it would be less convenient to hold the trial there than at Brisbane, particularly as it would still involve significant additional legal costs being incurred. Also, a trial at Maroochydore would still involve travel by the applicant. It is clear that the proceeding can be more conveniently heard at Brisbane.

57. [57]
    In my view, if the cost of travel or parking in Brisbane would so impact on the applicant’s ability to defend the action that it would be unfair to proceed in that city, that would override the considerable justifications, on the basis of cost and convenience, for refusing the application to transfer. The costs of travel and parking for the applicant will be relatively modest, even having regard to his straitened circumstances. I am not persuaded that those costs would be outside his means or such as to prevent him adequately conducting his defence. In all the circumstances I do not consider it would be unfair to require the matter to proceed in Brisbane where it is presently pending.

58. [58]
    The application for a change of venue will be refused.

Order

59. [59]
    The orders of the Court will be:-

Upon the plaintiffs giving the usual undertaking as to damages:

1. The defendant’s application to transfer the proceeding to the District Court at Maroochydore or Gympie is dismissed.

2. The defendant is restrained, until further order, from publishing:

1. (a)
   Any matter of and concerning the first plaintiff that imputes or implies the first plaintiff:

1. (i)
   Is or was involved in rip-off conduct;

2. (ii)
   Is or was involved in a rip-off business;

3. (iii)
   Is or was involved in rip-off conduct by a company; or

4. (iv)
   Assists or assisted a company involved in rip-off conduct.

2. (b)
   Any matter of and concerning the second plaintiff that imputes or implies the second plaintiff:

1. (i)
   Is or was involved in rip-off conduct;

2. (ii)
   Is or was involved in a rip-off business;

3. (iii)
   Is or was involved in rip-off conduct by another company; or

4. (iv)
   Assists or assisted another company involved in rip-off conduct.

3. The costs of both applications are reserved.