FEDERAL COURT OF AUSTRALIA

Sarina v Fairfax Media Publications Pty Ltd [2018] FCAFC 190

ORDERS

THE COURT ORDERS THAT:

1.    The applicant be granted leave to appeal and the appeal be treated as being instituted instanter in the form of the draft notice of appeal annexed to the affidavit of Simon Maxwell sworn 1 May 2018, on condition that the applicant file and serve a notice of appeal in that form on or before 1 November 2018.

2.    The orders of the Court made 17 April 2018 be set aside and, in lieu thereof, it be ordered that:

(a)    The interlocutory application filed by the respondent on 12 October 2017 be dismissed.

(b)    The respondent pay the applicant’s costs of the interlocutory application.

3.    The respondent pay 75% of the costs of the application for leave to appeal and of the appeal.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THE COURT:

1    This is an application for leave to appeal and, if leave be granted, an appeal against the decision of the primary judge summarily to dismiss, pursuant to s 31A(2) of the Federal Court of Australia Act 1976 (Cth), the applicant’s, Clinton Sarina’s, proceedings in defamation against Fairfax Media Publications Pty Ltd in respect of the online publication of two articles, only in the period after 1 September 2016.

Background

2    Mr Sarina complained that Fairfax Media defamed him in articles that had been originally published on, first, 14 September 2009 (the first article), and, secondly, on 16 October 2010 (the second article). In his statement of claim, Mr Sarina claimed that four named individuals downloaded from Fairfax Media’s website the first and second articles in the Australian Capital Territory after 1 September 2016 so as to make Fairfax Media a publisher of those articles at the times of downloading.

3    The circumstances in which the primary judge came to his decision were as follows. Mr Sarina had previously sued Fairfax Digital Australia and New Zealand Pty Ltd and one of its journalists, Vanda Carson, as defendants in proceedings in the District Court of New South Wales that he commenced in 2014 claiming damages for defamation (the District Court proceedings). The publication complained of in the District Court proceedings also occurred as a result of persons allegedly downloading from the internet, on about 14 November 2014, an article originally published by the defendants on 19 October 2010 (the third article).

4    The pleadings in the District Court had proceeded to the point of a further amended statement of claim, a defence, a reply and the provision of particulars, at which time the parties to the District Court proceedings participated in a mediation. The outcome was that Mr Sarina and the defendants entered into a deed of release in February 2016. The deed, first, recited that Mr Sarina, as releasor, had brought defamation proceedings against the releasees in the District Court “over the publication of an article entitled McGurk’s Confidants Have Colourful Pasts on the website www.smh.com.au (the Article)”. The recitals next noted that the releasees (being the defendants) had denied liability for the claims made against them in the District Court proceedings and that, without admission, the parties had agreed to settle on the terms set out in the agreement, viz: the deed.

5    Clause 3 of the deed provided that, in consideration of the matters in cll 3.2 to 3.4, the releasees agreed to pay Mr Sarina $75,000, inclusive of his costs of the District Court proceedings, by 8 March 2016, and to remove the third article “from Fairfax internet sites by 11pm on 10 February 2016”. Mr Sarina was to file a notice of discontinuance of the District Court proceedings, as he did, and each party was to be responsible for their own costs of the District Court proceedings. Crucially, cll 3.4 and 4 provided:

3.4    The Releasor [Mr Sarina] hereby:

(a)    releases the Releasees (and any persons or entities associated with them) from all actions, suits, causes, debts, claims, liabilities, demands or proceedings whatsoever, whether arising in law, in equity, under statute or otherwise, which the Releasor has or, but for this deed, would or might have had against the Releasees (and any persons or entities associate with them), in respect of the Proceedings and/or the subject matter of the Proceedings, including in respect of the publication of the Article on any other website or wheresoever occurring;

(b)    covenants not to sue the Releasees (or any persons or entities associated with them) in respect of any of the matters the subject of the releases in paragraph 3.4(a) above.

4.    Bar to proceedings

This agreement may be pleaded in bar and defence to any proceedings issued by the Releasor arising out of or in any way related to the matters the subject of the releases and covenants in clause 3.4 above.

Clause 7 provided that the deed constituted “the entire agreement between the parties with respect to the subject-matter of the deed, and represents all of the terms on which the parties have settled the [District Court proceedings]”. Clause 14 provided that the deed would endure for the benefit of, among others, the related bodies corporate, subsidiaries of parent companies, licensees, successors and assigns of each of the parties.

6    As is now apparent, the publication, by downloading, of the first and second articles complained of occurred more than six months after the entry into the deed. Fairfax Media, the respondent in these proceedings, is a different corporation to the corporate defendant, Fairfax Digital, in the District Court proceedings. But it was common ground before the primary judge and the Full Court that Fairfax Digital and Fairfax Media were related companies or bodies corporate.

The summary judgment application

7    On 10 October 2017, Fairfax Media filed an interlocutory application seeking summary judgment pursuant to s 31A(2) and r 26.01 of the Federal Court Rules 2011. Fairfax Media contended that in cl 3.4(b) of the deed, Mr Sarina either had released it from the claim he made in this Court or, alternatively, was bound by his covenant not to sue in cl 3.4(b). Accordingly, it contended, cl 4 gave it a complete defence to Mr Sarina’s claim.

8    Before the primary judge, counsel for Mr Sarina, who was experienced in the field, the late C.A. Evatt, conceded that the release in cl 3.4 of the deed could be enforced by Fairfax Media, notwithstanding that it was not a party to the deed.

9    During the course of the interlocutory stages in the District Court proceedings, the defendants had sought particulars of Mr Sarina’s allegation that the publication of the third article (on 19 October 2010) had been actuated by express malice so as to defeat a number of pleas in the defence. When he answered the request for particulars, Mr Sarina relied on, among other things, the fact that when the defendants published the third article, they knew that what it stated as facts were rather mere allegations contained in a police fact sheet that had been handed up in court some days before that publication. The particulars asserted that the defendants had published the second article on 16 October 2010, in which they reported that the police fact sheet had been handed up in court the previous day and reported the allegations in it as allegations, not facts. The particulars asserted that in light of what they had published in the second article, the defendants knew that what they reported in the third article as facts should have been referred to as allegations. Thus, Mr Sarina’s particulars argued that by publishing as facts what the defendants had themselves reported only three days previously in the second article as allegations, they had been actuated by express malice in the publication of the third article.

The primary judge’s reasons

10    The primary judge compared, as Fairfax Media had invited him to do, various defamatory imputations relied on in both the District Court and Federal Court proceedings that Mr Sarina alleged had been conveyed by the first, second and third articles in order, so Fairfax Media contended, to demonstrate a degree of overlap between the subject matter of all three articles. His Honour set out a table that specified the pleaded imputations from each of the three articles and found:

From this comparison, and from an independent review of each of the three publications, it is apparent that the 19 October 2010 publication was the most extensive of the three. The 16 October 2010 publication was a publication which contained less material than that published on 19 October 2010 and the 14 September 2009 publication was an even less extensive publication. The 19 October 2010 publication, moreover, contained many statements which were not canvassed or repeated in the other two publications and statements relied upon in the District Court proceeding as being defamatory.

11    His Honour found that cl 3.4, read with cl 4, had a very wide operation which, in its ordinary and natural meaning extended to release Fairfax Media from any liability in respect of both the first and second articles even though it was not a party to the deed. That was because of Mr Sarina’s concession that it was entitled to the benefit of the deed. His Honour rejected Mr Sarina’s argument that the release in cl 3.4(a) was confined to the liability of the releasees and the related company, Fairfax Media, for publication of the third article. His Honour said, without referring to authority:

The contrary argument advanced on behalf of Mr Sarina by his Counsel is rejected. In particular, it is not considered that cl 3.4 is confined in its operation to a release from liability with respect only to the publication on 19 October 2010. That contrary argument is rejected because:

•    “the subject matter of the Proceedings”, as that phrase is employed in cl 3.4(a), is not to be confined to the article published on 19 October 2010 but extends to the content of that publication and the imputations identified in the Further Amended Statement of Claim as filed in the District Court. Taken to its extremity, Counsel for Mr Sarina did not resile from a submission that cl 3.4(a) would not operate as a release from liability and would not extend to the publication of exactly the same article as was published on 19 October 2010 save for the deletion of one or other paragraph. Such an artificial construction of cl 3.4 should not be readily embraced and is rejected; and

•    what was within the contemplation of the parties when the Deed of Release was executed in February 2016 extended well beyond the sole publication on 19 October 2010.

The reliance sought to be placed by Counsel for Mr Sarina upon the definitions effected in para A of the “Background”, it is concluded, does not displace the width of terminology employed in cl 3.4.

12    His Honour does not appear to have been referred to the decision in Dow Jones & Company Inc v Gutnick (2002) 210 CLR 575 at 600-601 [25]-[27] and 604-607 [36]-[44] in respect of the issue whether a subsequent publication gives rise to a separate cause of action in defamation. His Honour then reasoned that it was within the contemplation of the parties that the release in the deed would extend to the first and second articles, and sought to apply, as a general principle, the equitable principle of construction of releases in Grant v John Grant and Sons Pty Ltd (1954) 91 CLR 112 at 123-124 and 129-130. He held that the general words in cl 3.4 evinced the parties’ intention to release the defendants (releasees) from liability for all other publications “in respect of the District Court proceedings and or their subject matter” and that that result was within the contemplation of the parties at the time that they entered into the deed. He found that Mr Sarina was aware of the second article at the time of the District Court proceedings because of his reliance on it in the particulars to his reply.

13    His Honour reasoned that, because the deed provided that the defendants would take down only the third article, and it did not mention the second article, Mr Sarina must have appreciated that he would not be able to sue on the contents of the second article. The primary judge drew the same inference in respect of the first article. His Honour then reasoned that the first article was within the contemplation of Mr Sarina at the time he signed the deed of release, even though it had not been mentioned during the course of the District Court proceedings. He found that that conclusion was reinforced by Mr Sarina’s failure to give evidence, relying on Jones v Dunkel (1959) 101 CLR 298. Accordingly, his Honour found, the deed was effective to release Fairfax Media from liability in the proceeding below. He ordered that the proceeding be dismissed and that Mr Sarina pay Fairfax Media’s costs.

The proposed appeal

14    Mr Sarina applied for leave to appeal, and we heard the application for leave together with the argument on the appeal. Fairfax Media argued that the primary judge’s reasons were correct. It contended that the subject matter of the District Court proceedings, referred to in the recitals to the deed, included not merely the third article but each of the first two as well. In particular, Fairfax Media emphasised that the second article was part of the “subject matter” of the District Court proceedings by reason of its inclusion in Mr Sarina’s particulars of malice. It submitted that necessarily it must be inferred that the parties to the deed were aware that the second article would remain on the Fairfax group’s websites and be available for downloading. They contended that, likewise, because it would have been inevitable that Mr Sarina or his lawyers had searched those websites for other material concerning him for the purposes of bringing and prosecuting the District Court proceedings, and so would have found the first article.

15    Fairfax Media argued that the primary judge was correct to have accepted the argument it had put to him to rely on Grant 91 CLR 112 in support of the proposition that Mr Sarina’s knowledge and intentions, or lack thereof, in respect of the first and second articles at the time that he entered into the deed, would have been admissible and relevant evidence. It argued that his failure to give evidence that he was not aware of one or both of those or did not intend that the deed would release any claims he had in respect of those articles, justified the primary judge’s inference that he knew and intended that the release would extend to both the first and second articles. Fairfax Media contended that it would have made no sense to reasonable persons in the position of a publisher, such as the Fairfax group, to settle proceedings in respect of only the third article and leave itself exposed to subsequent proceedings being brought on the first or second articles based on subsequent publications by downloading from the group’s websites. It submitted that it must have been in the contemplation of the parties at the time of entry into the deed that everything would be the subject to the release that was the subject of, or somehow related to, the third article the subject of the District Court proceedings.

Consideration

16    Section 31A(2) is apposite to be applied where, as it provides, there is no reasonable prospect of an applicant succeeding in a claim. Kiefel CJ, Bell, Keane, Nettle and Gordon JJ said in Trkulja v Google LLC (2018) 356 ALR 178 at 183 [22]:

in Spencer v Commonwealth [(2010) 241 CLR 118] this Court considered whether the test for summary judgment prescribed by s 31A of the Federal Court Act 1976 (Cth), namely, that the court is satisfied that the other party has “no reasonable prospect of successfully prosecuting the proceeding or … part of [it]”, differs from the test espoused in Dey and General Steel. All members of the Court except Heydon J emphasised that the power to dismiss an action summarily should not be exercised lightly [at [24] per French CJ and Gummow J, [60] per Hayne, Crennan, Kiefel and Bell JJ] but Hayne, Crennan, Kiefel and Bell JJ added that the evident legislative purpose revealed by the text of s 31A would be defeated if its application were read as confined to cases of a kind falling within the test in Dey and General Steel [at [56], [60]].

17    In the present context, the deed provided for settlement of the District Court proceedings that it described in recital A as being “over the publication of” the third article and expressly provided that the Fairfax group would take down that article from its websites. The deed said nothing about any other article or publication by the defendants/releasees. The words of cl 3.4(a) described past liabilities or actions that, as at the date the deed was entered into, might have been available to Mr Sarina as being the subject of his release.

18    As Newnes, Murphy JJA and Mazza J said in Scaffidi v Perpetual Trustees Victoria Ltd (2011) 42 WAR 59 at 65 [14], at common law, a release is a discharge under seal of an existing obligation or right of action. They added that a release of a cause of action, once accrued, had to be by deed under seal, for which no consideration was required.

19    That effect of a release accords with the likely ordinary and natural meaning of cl 3.4(a). The concluding words in cl 3.4(a), “in respect of the Proceedings and/or the subject matter of the Proceedings, including in respect of the publication of the Article on any other website or wheresoever occurring”, are apt to capture the controversy in the District Court proceedings concerning the publication of the third article at any time up to the date of the deed or wherever (i.e. in print or online) any such publication by then had occurred. Moreover, cl 7 of the deed provided that the deed comprised the entire agreement of the parties and dealt exhaustively with all matters in respect of the subject matter of the deed.

20    Where, in a deed (or agreement) a clause provided one party with a release in wide or general words, the common law principle of construction restricted the otherwise wide or general operation of those words by construing the release clause as operating upon only the subject or occasion to which the deed (or agreement) read as a whole referred: Grant 91 CLR at 123-124 per Dixon CJ, Fullagar, Kitto and Taylor JJ. Thus, where, as often occurs, a deed recited that the parties have had a particular dispute, but the clause creating the release did not expressly confine its operation to the dispute mentioned in the recitals, the principles of construction at common law read down the wide words of the release to apply only to the dispute in the recitals. Indeed, Dixon CJ, Fullagar, Kitto and Taylor JJ explained (Grant 91 CLR at 124 and 131) that the common law principle was that a written instrument expressed in general terms (be it a deed or statute) had to be construed having regard to the circumstances to which the instrument must have intended to apply. This in substance accords with the modern principles applicable to the construction of contracts and deeds. As Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ said in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at 179 [40] (and see also Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 240 CLR 45 at 52-53 [10] per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ):

This Court, in Pacific Carriers Ltd v BNP Paribas [(2004) 218 CLR 451], has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction [Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at 461-462 [22]. (emphasis added)

21    However, where one of the parties to a release sought to rely upon its wide and general words, equity considered whether it would be unconscientious for that party to enforce such a meaning by examining each party’s actual knowledge and intention at the time of entry into the release: Grant 91 CLR at 124-125. In other words, as Dixon CJ, Fullagar, Kitto and Taylor JJ held (at 129-130), equity will restrain a party seeking to enforce a wide or general release where it would be unconscientious for that party to do so in all of the circumstances. In such a case, the court will examine the knowledge and intention of both releasor and releasee as to the subject matter on which the release would operate.

22    Here, prima facie, the words of the deed do not appear to support the wide view of the operation of the release taken by the primary judge. In particular, in our opinion, the words are not so clear that there is no reasonable prospect that, at trial, Mr Sarina would be found to be bound by the wide and general words of cl 3.4(a), even if, which was a point not taken below, but is now sought to be taken in this appeal, the deed could not bind Mr Sarina in respect of publications by Fairfax Media, because it was not a party to the deed. Indeed, the better view is that the release is confined solely to the releasees’ liability to Mr Sarina in damages for defamation arising from the publication of the third article, as claimed in the District Court proceedings.

23    The deed did not refer expressly to any other publication. It would be most unusual that, where parties enter into a deed to resolve a defamation proceeding dealing with the publication of one article that, without mentioning any other article, the release in that deed should be construed as releasing the publisher or, indeed, someone not a party to the deed but related to the publisher, from liability for other publications, including ones that might occur after the entry into the deed, unless the words of the deed were unmistakably clear, which at least, prima facie, the words of the deed here certainly are not. In those circumstances, it could not be said that there was no reasonable prospect of Mr Sarina successfully defending any plea, not yet articulated, that the deed somehow precluded him from bringing a proceeding in this Court against Fairfax Media in respect of its alleged publication, after the date of the deed, of the first and second articles.

24    Whether or not Fairfax Media will be able to establish some form of plea in bar or other exculpation from liability based on the terms of the deed is a matter for trial. This is particularly so, having regard to the caution which the High Court has expressed as to summary disposal of issues.

Conclusion

25    For these reasons, Mr Sarina should be granted leave to appeal, a notice of appeal should be filed in the form of the draft notice of appeal, the appeal should be allowed, and the orders made by the primary judge on 17 April 2018 should be set aside. In lieu thereof, we will order that Fairfax Media’s interlocutory application filed on 11 October 2017 be dismissed.

26    During the interlocutory stages of the application for leave to appeal, Mr Sarina failed to comply with part of the timetable. He was ordered to pay, on an indemnity basis, Fairfax Media’s costs of having the application relisted to regularise the preparation of the appeal. Subsequently, Mr Sarina’s written submissions raised some new subject matters, including what he said was a question of law to go behind the concession made by the late Mr Evatt, that effectively no point was to be taken about the capacity of the deed to bind Fairfax Media. Again, having regard to the decision to set the primary judge’s orders aside, that issue will be a matter for trial. But, we are satisfied that some additional and unnecessary costs were caused by the forensic change of stance that Mr Sarina adopted and which required Fairfax Media to respond in some detail in its written submissions.

27    In all of the circumstances, we are of opinion that the costs of the application for leave to appeal and appeal fairly would be dealt with by ordering Fairfax Media to pay Mr Sarina 75% of his costs of the application for leave to appeal and the appeal.

Associate:

Dated:    7 November 2018