FEDERAL COURT OF AUSTRALIA

Finnegan v Washington [2020] FCA 601

ORDERS

THE COURT ORDERS THAT:

1.    The applicant has leave to file an amended statement of claim in the same form as the minute of proposed amended statement of claim that the applicant emailed to the Court on 25 March 2020.

2.    The applicant must pay the respondents' costs thrown away by reason of the amendments, if any.

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

REASONS FOR JUDGMENT

JACKSON J:

1    Mr Finnegan claims that each of the respondents is liable to him for defamation. He alleges that they made defamatory statements in a particular channel in a Slack workspace, which broadly speaking is a kind of Internet conversation board. It is pleaded that members of the public can join or be invited to join a Slack channel.

2    The respondents complained that the statement of claim did not adequately plead the element of publication of the defamatory statements. After correspondence between the parties, Mr Finnegan has produced a minute of proposed amended statement of claim which adds to the plea of publication, by way of what are described as further particulars. The respondents do no oppose leave to amend in terms of the minute, but seek their costs thrown away by reason of the amendments, if any. Mr Finnegan opposes that order and seeks an order that any costs incurred by reason of the amendments be costs in the cause.

3    The court has an unconfined and unfettered discretion in relation to costs: Federal Court of Australia Act 1976 (Cth) s 43(2), s 43(3); and Kazar (Liquidator) v Kargarian; In the Matter of Frontier Architects Pty Ltd (In Liq) [2011] FCAFC 136; (2011) 197 FCR 113 at [4]. The usual practice is to require any party seeking the indulgence of an amendment to a pleading to pay the costs thrown away by reason of that amendment: Laing O'Rourke (BMC) Ltd (formerly Barclay Mowlem Construction Ltd) v Dampier Port Authority [2007] WASC 87 at [39]. But that is but one of a number of guides to the appropriate orders which may be made: Stanley v Layne Christensen Company [2006] WASCA 56 at [54] (Wheeler JA, Steytler P and Pullin JA agreeing). At [55] Wheeler JA enumerated relevant factors, including that generally, it will be possible for a party to avoid the need to seek amendment by accurately formulating its pleading or otherwise complying with the rules in the first place. Her Honour also noted that where 'amendments are not substantial, or where they serve simply to further clarify an otherwise broadly satisfactory pleading, it may be appropriate simply to order costs in the cause'.

4    Mr Finnegan advances several reasons why the usual practice should not be followed here to make him liable for the respondents' costs thrown away. He submits that the statement of claim used the term 'publication' in the sense employed in the context of the law of defamation, to mean communication to a third party. So the gravamen of the existing pleading has always been that the statements were published to the members of the Slack channel, so the amendments will merely clarify a broadly satisfactory pleading. Mr Finnegan says that the amendments are not material, no new cause of action will be introduced, and no claim will be abandoned.

5    Mr Finnegan also relies on the fact that the respondents have elected not to oppose the amendments. And he submits that the changes will not require the respondents to incur additional costs reworking or revising their defences, that they have not submitted a claim for costs thrown away, and that it is not open to them to claim costs for preparing a new defence in response to what he says are merely new particulars.

6    For their part, the respondents maintain that the present pleading (before the proposed amendments) is deficient as, they say, it fails to plead the necessary elements of publication. The first respondent says that he may be required to amend his defence as a result of the amendments to the statement of claim and the third respondent says he will be required to do so. The third respondent submits that this is because of Mr Finnegan 'in effect, starting again in pleading his case' which 'he should have got right in the first place'.

7    Hence the parties' submissions agitate the question of whether the statement of claim as it presently stands is adequate. It is regrettable that the gains in the efficient conduct of the matter which the parties have achieved by resolving the pleading issue through correspondence are eroded by the need to determine the dispute in any event for the purposes of an ancillary question of costs. But in the end it is not necessary to go into the question in detail. While it would not be appropriate in the present context to speak in terms of onus of proof, I proceed on the basis that it is for Mr Finnegan to persuade me that there is some reason to depart from the usual rule as to costs thrown away. For the following reasons, I am not so persuaded.

8    I do accept that no cause of action of a different kind to the existing causes of action has been introduced and no claim has been abandoned. The solicitors for the third respondent are overstating the position when they say that Mr Finnegan has started again in pleading his case. But there is cause for doubt about the sufficiency of the present pleading, before the proposed amendments. Damage by publication is the focus of the law and it is the publication of a libel which is the actionable wrong. Harm to reputation is done when a defamatory publication is comprehended by the reader, the listener, or the observer. It is a bilateral act so that every communication of defamatory matter founds a separate cause of action: see Dow Jones & Co Inc v Gutnick [2002] HCA 56; (2002) 210 CLR 575 at [25]-[27]. When pleading a defamation case, it is usually necessary to specify the identity of the persons to whom publication is alleged to have been made, because that is important to the defendant in almost every defamation action, although in the case of widespread publication such as in a newspaper, different considerations may apply: see Lazarus v Deutsche Lufthansa AG (1985) 1 NSWLR 188 at 191-193 (Hunt J).

9    The statement of claim as it presently stands does not identify with any clarity to whom it is alleged the publication was made. Mr Finnegan pleads that the particular Slack channel has 300 members, but the number of active users may be smaller than that, and since it appears to be necessary to join a Slack channel, I am not presently satisfied that posting a comment on a channel is akin to unrestricted publication on the World Wide Web.

10    Mr Finnegan points to the fact that there is a schedule to the pleading showing screen captures of relevant parts of the Slack channel, from which it appears that users of the channel other than the respondents were active on it. But it is insufficient to leave it to the respondents to go through that to work out to whom it is alleged the statements were communicated. The question is not whether the respondents have adequate knowledge of the facts, but knowledge of what the applicant alleges are the facts, as that is the case they must meet: see Lazarus at 191B. Whether or not the pleading would have survived a fully argued strike out, the concerns about it were legitimately raised and I am not convinced that it was 'broadly satisfactory'.

11    In not opposing the amendments the respondents may be taken to accept that the proposed amendments will remedy these deficiencies, adequately if not entirely. But that does not indicate any sort of concession about the merits of the existing statement of claim. And it is not to the point that the respondents have not claimed any costs thrown away; the occasion to do that, if an order permitting it is made, would be at a final assessment of costs before a registrar. Also, it is premature for Mr Finnegan to argue that it is not open to the respondents to claim the costs of preparing a new defence. After the respondents are served with the amended statement of claim they will be permitted, under r 16.55 of the Federal Court Rules 2011 (Cth), to file and serve an amended defence within 28 days. Whether the changes to any amended defence so filed are justified, and whether they have resulted in costs thrown away, will fall to be considered at any costs assessment after that.

12    Mr Finnegan has amended the statement of claim to address legitimate concerns raised by the respondents. I am not persuaded that he has established any reason to depart from the usual rule that a party amending a pleading must pay costs thrown away in any event. An order to that effect will be made.

Associate:

Dated:    6 May 2020