Federal Court of Australia

Gould v Jordan [2020] FCA 1191

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to r 30.01(1) of the Federal Court Rules 2011 (Cth), the following questions be heard and determined separately from, and prior to, all other questions arising in the proceeding:

(a)    whether the Applicant was identified by the impugned statements, as pleaded at [3] of the Statement of Claim filed on 3 October 2017 (the Statement of Claim);

(b)    if the Applicant was identified by the impugned statements, whether those statements were reasonably capable of conveying, and did in fact convey, the imputations pleaded at [3(a)] and [3(b)] of the Statement of Claim.

(c)    whether any imputations conveyed by the impugned statements were defamatory of the Applicant;

(d)    whether the Respondent has established the defence of publication of a public document under s 28 of the Uniform Defamation Act (the UDA), as pleaded at [5(c)] of the Amended Defence filed on 15 July 2020 (the Amended Defence);

(e)    whether the Respondent has established the defence of fair report of proceedings of public concern under s 29 of the UDA, as pleaded at [5(d)] of the Amended Defence;

(f)    whether the Respondent has established the defence of qualified privilege (reply to attack), as pleaded at [5(e)] of the Amended Defence;

(g)    if the Respondent has established the defence of publication of public documents under s 28 of the UDA, whether the Applicant has established that the impugned statements were not published honestly for the information of the public or the advancement of education, as pleaded at [2] of the Reply filed on 22 July 2020 (the Reply);

(h)    if the Respondent has established the defence of fair report of proceedings of public concern under s 29 of the UDA, whether the Applicant has established that the impugned statements were not published honestly for the information of the public or the advancement of education, as pleaded at [3] of the Reply; and

(i)    if the Respondent has established the defence of qualified privilege (reply to attack), whether the Applicant has established that the publication of the impugned statements was actuated by malice, as pleaded at [4] of the Reply.

2.    The matter is adjourned to the Case Management Hearing at 2:15pm (ACST) on 2 September 2020, with liberty to the parties to appear by video link.

3.    There be liberty to the parties to apply.

4.    Costs be reserved.

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

REASONS FOR JUDGMENT

WHITE J:

1    This is a judgment on an application pursuant to r 30.01 of the Federal Court Rules 2011 (Cth) (the FCR) for an order that certain questions in these defamation proceedings be heard and determined separately from other issues.

2    The applicant is Mr Gould. The respondent is the Commissioner of Taxation, Mr Jordan. Mr Gould sues in respect of statements made by Mr Jordan to the National Press Club on 5 July 2017 when responding to a question from a member of the audience. It is common ground that the words spoken by Mr Jordan were:

It intrigues me, if I can give another example, this Hua Wang Bank case.

It was a Wickenby case

It involved one promoter with over $350 million dollars we’ve collected.

They formed this Samoan bank and did all these transactions to hide profits.

And you had the principal of that scheme appearing before the House of Reps committee on tax disputes giving evidence and being cited saying how difficult and awful of the tax office.

You had his barrister appearing on one of the major radio stations in Sydney … saying they are like the Gestapo, the whole lot should be sacked and sent out.

And the Federal Court said it was the most disgraceful behaviour they have ever seen.

They referred the matter for money laundering, insider trading and tax evasion of the worst kind.

Confirmed by the Full Federal Court.

Confirmed by the High Court.

So here’s one side, they’re actually going to have the gall to appear before an inquiry to say how bad we are in terms of the way we handle disputes.

The other side is the court found that it was the most disgraceful behaviour they had ever seen involving money laundering, … tax fraud and insider trading of Australian shares.

So you know sometimes there is two sides to a story and I can’t always tell the other side.

3    It is uncontentious that the “Hua Wang Bank case” to which Mr Jordan referred in these statements was the litigation which was the subject of the judgment at first instance of Perram J in Hua Wang Bank Berhad v Commissioner of Taxation [2014] FCA 1392; (2014) 100 ATR 244 (HWBB v CoT) delivered on 19 December 2014, the subject of the judgment of the Full Court on appeal in Bywater Investments Ltd v Commissioner of Taxation [2015] FCAFC 176, (2015) 236 FCR 520, and the subject of the judgment of the High Court of Australia in Bywater Investments Ltd v Commissioner of Taxation [2016] HCA 45, (2016) 260 CLR 169. Mr Gould was identified in the judgment of Perram J as the individual who exerted ultimate control over five corporate entities and, in particular, Hua Wang Bank Berhad. Perram J concluded his judgment at [485] with the following direction:

… I direct the Registrar to forward a copy of these reasons to the Commonwealth Director of Public Prosecutions, the Australian Securities and Investments Commission and the Australian Federal Police. The facts I have found strongly suggest widespread money laundering, tax fraud of the most serious kind and, possibly in some instances, insider trading. The conduct revealed in this case is disgraceful.

4    Mr Gould contends that Mr Jordan’s statements were made of and concerning him and conveyed the following defamatory meanings (or meanings not substantially different from them):

(a)    he had engaged in the worst kind of money laundering;

(b)    he had engaged in the worst kind of insider trading; and

(c)    he had engaged in the worst kind of tax fraud.

5    Mr Gould alleges that, by reason of Mr Jordan’s statements, he has been brought into hatred, ridicule and contempt, has been gravely injured in his character and reputation, and has suffered hurt and embarrassment. He claims damages, including aggravated damages.

6    By his Amended Defence, Mr Jordan admits making the statements impugned by Mr Gould but does not admit that those statements were published “of and concerning” Mr Gould. He denies that the impugned statements were reasonably capable of conveying, and did in fact convey, the first and second imputations pleaded by Mr Gould and does not admit that his statements were defamatory of Mr Gould.

7    Mr Jordan then raises a number of substantive defences. These are:

(a)    justification, relying on s 25 of the Uniform Defamation Act (the UDA);

(b)    contextual truth, relying on s 26 of the UDA. As part of this defence, Mr Jordan alleges that, if the impugned statements did convey the imputations pleaded by Mr Gould, they also conveyed the imputation that Mr Gould is dishonest (the Contextual Imputation) and that that imputation is substantially true;

(c)    publication of a fair summary of a public document, relying on s 28 of the UDA. Mr Jordan alleges that the impugned statements were a fair summary of, or a fair extract from, the judgment of Perram J in HWBB v CoT;

(d)    fair report of proceedings of public concern, relying on s 29 of the UDA. Mr Jordan again relies upon the HWBB Judgment;

(e)    qualified privilege at common law by reason that the impugned statements were a proportionate response to attacks on him and the Australian Taxation Office (ATO); and

(f)    the failure of Mr Gould to accept a reasonable offer to make amends, relying on s 18 of the UDA.

8    Mr Jordan has provided substantial particulars to his defences of justification and contextual truth. They extend over 150 pages.

9    In addition, Mr Jordan denies that Mr Gould has suffered any damage as a result of the impugned statements and alleges that, if he did, the damages to which he may be entitled are mitigated by a number of matters, which it is not necessary to identify for present purposes.

10    By his Reply filed on 22 July 2020, Mr Gould joins issue with the Amended Defence. He alleges specifically:

(a)    the defence of publication of public documents for which s 28 of the UDA provides is not available to Mr Jordan because the impugned statements were not published honestly for the information of the public or the advancement of education (s 28(3) of the UDA);

(b)    similarly, the defence of fair report of proceedings of public concern for which s 29 of the UDA provides is not available to Mr Jordan because the impugned statements were not published honestly for the information of the public or the advancement of education (s 29(3) of the UDA); and

(c)    the defence of qualified privilege is not available to Mr Jordan because the impugned statements were predominantly actuated by malice.

11    Although the proceedings were commenced in October 2017, pleadings in the action have only just been closed. There are two principal reasons why that is so.

12    The first is that, at the request of both parties in November 2017, the Court stayed the taking of any further steps in the proceedings pending the conclusion of the prosecution of Mr Gould in the District Court of New South Wales (Proceeding No 2016/00278181) for the offence of attempting to pervert the course of justice, contrary to s 43(1) of the Crimes Act 1914 (Cth). The initial trial of the applicant took place between 30 July 2018 and 23 August 2018 but the jury was unable to reach a unanimous verdict. A retrial took place in November 2019. On 26 November 2019, Mr Gould was found guilty of the offence of attempting to pervert the course of justice. He has not yet been sentenced for that offence. On 28 July 2020, Mr Gould lodged an application for leave to appeal against his conviction and that application remains to be determined.

13    The second principal reason for the time lapse is the period taken by Mr Jordan to prepare his amended defence after Mr Gould confirmed, on 6 February 2020, that he would pursue the proceedings. After the judgment in Jordan, Commissioner of Taxation v Second Commissioner of Taxation [2019] FCA 1602 delivered on 27 September 2019, the Second Commissioner of Taxation provided to Mr Jordan’s solicitors a substantial volume of “protected tax information” relating to the affairs of Mr Gould for the purpose of their use in the these proceedings. The Court has been informed that it has taken Mr Jordan’s legal representatives a considerable time to marshal and analyse the documents to prepare the Amended Defence. As noted earlier, the Amended Defence was filed on 15 July 2020.

14    The pleadings closed on 22 July 2020 when Mr Gould filed his Amended Reply. No other interlocutory or timetabling steps have been taken since then.

15    By his Interlocutory Application filed on 22 July 2020, Mr Jordan seeks an order pursuant to r 30.01(1) of the FCR that the following questions be heard separately from, and prior to, any other questions in the proceeding:

(a)    Whether the Applicant was identified by the matter complained of, as pleaded at paragraph 3 of the Statement of Claim.

(b)    If the Applicant was identified by the matter complained of, whether the matter complained of was reasonably capable of conveying, and did in fact convey, the imputations pleaded at paragraphs 3(a) and (b) of the Statement of Claim.

(c)    Whether any imputations conveyed by the matter complained of were defamatory of the Applicant.

(d)    Whether the Respondent has established the defence for publication of public document under section 28 of the Defamation Act, as pleaded at paragraph 5(c) of the Amended Defence.

(e)    Whether the Respondent has established the defence of fair report of proceedings of public concern under section 29 of the Defamation Act, as pleaded at paragraph 5(d) of the Amended Defence.

(f)    Whether the Respondent has established the defence of qualified privilege (reply to attack), as pleaded at paragraph 5(e) of the Amended Defence.

(g)    whether the matter complained of was reasonably capable of conveying and did in fact convey, the contextual imputation pleaded at paragraph 5(b) of the Amended Defence.

(h)    If the Respondent has established the defence for publication of public documents under section 28 of the Defamation Act, whether the Applicant has established that the matter complained of was not published honestly for the information of the public or the advancement of education, as pleaded at paragraph 2 of the Reply.

(i)    If the Respondent has established the defence of fair report of proceedings of public concern under section 29 of the Defamation Act, whether the Applicant has established that the matter complained of was not published honestly for the information of the public or the advancement of education, as pleaded at paragraph 3 of the Reply.

(j)    If the Respondent has established the defence of qualified privilege reply to attack, whether the Applicant has established that the publication of the matter complained of was actuated by malice, as pleaded at paragraph 4 of the Reply.

16    Given Mr Jordan’s application to have the substantive defences referred to in (d), (e) and (f) heard and determined in advance of his other defences, I will refer to them collectively as “the Preliminary Defences”.

17    The principles relating to the exercise of the Court’s discretion to order a separate trial are settled. The starting point is that, in the ordinary course, all issues of fact and law should be determined at the one time: Spirits International BV v Federal Treasury Enterprise (FKP) Sojuzplodoimport [2011] FCAFC 69; (2011) 91 IPR 438 at [148]. The separate determination of issues in a trial is an exceptional course which should be embarked upon only when its utility, economy, and fairness to the parties are beyond question: Tepko Pty Ltd v Water Board [2001] HCA 19; (2001) 206 CLR 1 at [170] per Kirby and Callinan JJ with whom Gaudron J agreed on this topic. The principles were summarised recently by Gilmour J in State of Western Australia v Galati [2017] FCA 236 at [9]-[14]. They include:

(a)    the usual position is that all issues of fact and law should be determined at the one time in the one proceeding, and an order for a trial of a separate question under r 30.01 involves a departure from the norm;

(b)    the judicial determination of a separate question must involve a conclusive or final decision based on established or agreed facts for the purpose of quelling a controversy between the parties;

(c)    when the issue is one of mixed fact and law, it is necessary that the question be precisely formulated and that all of the facts which are, on any arguable view, relevant to the determination of the question have been identified as agreed facts or facts which are to be determined in the hearing;

(d)    a factor supporting an order for the trial of a separate question is that its determination may contribute to the saving of time and cost by substantially narrowing the issues for trial, or even to the disposal of the action;

(e)    the prospect of there being significant overlap between the evidence adduced on the hearing of the separate question and at a later trial, especially if it involves the calling of the same witnesses, is a factor counting against separate trials; and

(f)    it is for the parties seeking to have a question determined separately to demonstrate that there should be a departure from the ordinary course.

See also Robson (trustee of Bankrupt Estate of Musgrave) v WJM Investments Pty Ltd, in the matter of WJM Investments Pty Ltd [2018] FCA 2048 at [27]-[35] and Thunder Studios Inc (California) v Kazal (No 8) [2018] FCA 1995 at [21]-[25].

18    An important factor militating against the making of an order for the trial of separate questions is the inappropriateness of the one judge being asked to hear and determine disputed issues of fact involving an assessment of the credibility and reliability of the same witnesses in more than one trial in the one action. The experience of the courts has been that splitting the issues in the one action for separate determination with a view to shortening proceedings and saving costs not uncommonly results in a prolongation of the resolution of the proceedings and the incurring of additional costs. As counsel for Mr Gould submitted, it is not always possible to foresee all of the difficulties which trials of separate issues may produce.

19    It is also appropriate to keep in mind the caution sounded by Kirby and Callinan JJ at [168] in Tekpo v Water Board that the attractions of trials of issues rather than of cases in their totality are often more chimerical than real. The appropriateness of exercising caution in defamation proceedings in which a defence of qualified privilege is raised is also indicated by the statement of Dixon J in Guise v Kouvelis (1947) 74 CLR 102 at 116 (to which counsel for Mr Gould referred):

The difficulty attending most questions of privilege is only too well recognised. Whatever advantages may be found in “broad” or “flexible” categories or tests of responsibility or immunity, they are not felt by a judge who wants to be guided in his decision. But the very width of the principles governing qualified privilege for defamation makes it more necessary, in deciding how they apply, to make a close scrutiny of the circumstances of the case, of the situation of the parties, of the relations of all concerned and of the events leading up to and surrounding the publication.

(Emphasis added)

20    The general approach in this Court in relation to defamation actions is that all issues should be dealt with in the one trial: Goodfellow v Fairfax Media Publications Pty Ltd [2017] FCA 1152 at [27]-[28]. However, there may be exceptional cases, as there are in other practice areas in the Court, in which an order for separate trials may be appropriate: Triguboff v Fairfax Media Publications Pty Ltd [2018] FCA 845 at [22]-[28]. The power to order separate trials is nevertheless exercised sparingly.

21    Mr Jordan submits that the separate determination of the matters identified in his Interlocutory Application is appropriate in this case for three principal reasons:

(a)    each of the Preliminary Defences will, if upheld, be a complete defence to Mr Gould’s claim with the effect that, if established, an order for the dismissal of the proceedings will be appropriate. That is to say, this is not a case in which a trial will still be required even if the separate questions are resolved in Mr Jordan’s favour. As a related point, Mr Jordan contends that he has a sound basis on which to argue that they will be established;

(b)    the success of any one of the Preliminary Defences would obviate the need for the lengthy and expensive trial which his defences of justification and contextual truth will entail. That is plainly so. The extensive particulars indicate the substantial breadth of the factual issues raised by the defences of justification and contextual truth. Mr Jordan’s solicitors have estimated that a hearing of all issues in the action will take approximately 4-6 weeks and require the Court to receive a substantial amount of documentary material (estimated at over 10,000 pages). Accordingly, a considerable amount of time and resources for both the Court and the parties will be saved if a trial on the defences of justification and contextual truth is not required;

(c)    most of the issues identified in the Interlocutory Application for the first stage of the trial do not involve contested facts and may be heard and determined without the need for oral evidence. The parties are now agreed that it will not be necessary to call any witnesses at the first trial and that it may be completed in no more than three days.

22    Subject to some qualifications, Mr Gould does not oppose the orders sought by Mr Jordan. He also accepts that, in the event that any of the issues in the first trial are resolved against him, the dismissal of the action will be appropriate.

23    Exercising the caution which the authorities indicate is required, a number of matters in combination indicate that this is one of the exceptional cases in which an order pursuant to r 30.01(1) for separate trials is appropriate.

24    First, the issues raised by the Preliminary Defences appear, subject to one qualification, to be separate and distinct from the issues raised by the defences of justification and contextual truth.

25    The qualification concerns proposed issue (g), namely, whether the impugned statements were reasonably capable of conveying and did in fact convey, the contextual imputation that Mr Gould is dishonest. There is an obvious inter-relationship between that issue and the issues in the second stage of the trial. However, it seems appropriate to deal with that issue in the first stage of the trial because of its potential inter-relationship with the question of whether Mr Jordan’s response to the attack on him and the ATO (if that is what his statements were) was proportionate.

26    Secondly, for the reasons already indicated, this is a case in which the Court can be satisfied that the trial of all the issues raised by Mr Jordan’s defences of justification and contextual truth will be substantial. There will be a considerable saving to the parties in trial preparation and in Court time in the event that Mr Gould’s claims are dismissed by reason of the success of any one or more of the Preliminary Defences. That said, I do not consider that it should sensibly be contemplated that the trial of a defamation action should take some 4-6 weeks. Should a trial of the defences of justification and contextual truth become necessary, the Court’s expectation (which has been emphasised to the parties) is that a cooperative and sensible approach should reduce and confine the issues raised by those defences requiring the Court’s determination, and therefore the evidence which will be needed and the length of time required for the trial. However, at this stage I am satisfied that the circumstance that a trial of all issues in the action is likely to be lengthy, complex and expensive makes it desirable that the Court decide some issues ahead of others, consistently with the principles outlined above, given that it may bring about an earlier determination of the litigation.

27    Thirdly, subject to one matter, both parties are confident that the Court will not be embarrassed or compromised in its ability to hear the second stage of the trial (should that be necessary) by reason of delivery of the judgment in the first stage. As already indicated, parties expect that, subject to some possible evidence concerning the issue of whether Mr Jordan’s statements identified Mr Gould, the trial of the separate issues in the first stage will be documentary. It is not even certain that there could be admissible evidence on the issue of identification because, by reason of the form of Mr Jordan’s defence, he may be deemed to have admitted Mr Gould’s allegation that the statements were made of and concerning him – see r 16.07(2) of the FCR. That matter need not be addressed further as Mr Jordan now formally admits that at least one person who heard the impugned statements understood the reference to the “principal of that scheme” to be a reference to Mr Gould and has stated that he will not be seeking leave to amend the Amended Defence so as to withdraw the deemed admission. In any event, the parties are satisfied that there will be no witnesses who will give evidence in both stages of the trial, should the second stage become necessary.

28    I noted that the form of [3(c)] of the Amended Defence may also mean that Mr Jordan is to be taken to have admitted that, if his statements were reasonably capable of conveying the imputations pleaded in [3(a)] and [3(b)] of the Statement of Claim, they were defamatory of Mr Gould.

29    Fourthly, although the potential for multiple appeals to which trials of separate issues may give rise is a factor militating against such a course, that prospect is diminished by Mr Jordan’s undertaking to the Court (which is accepted) that, in the event that the judgment following the first stage of the trial is adverse to him on any of the identified issues, he will not seek to appeal until after the final judgment. Both counsel contemplated that the effect of such an undertaking was that Mr Jordan would have to seek a release from his undertaking before commencing an application for leave to appeal after the first stage of the trial.

30    Fifthly, both parties are agreed that the form of the questions identified to be the subject of the first trial are appropriate.

31    Sixthly, while the potential for prolongation of the proceedings is usually an important consideration on applications of the present kind (particularly in defamation proceedings), that is not so significant in the present case. Mr Gould’s commencement of an application for leave to appeal against his conviction has the potential to make it inappropriate for this Court to deal with the defences of justification and contextual truth until that application has been resolved. At the very least, it seems that that resolution may take several months and, possibly, until well into 2021. That is an important mitigating feature in this case.

32    Seventhly, the attitude of Mr Gould to Mr Jordan’s application is an important (although not decisive) consideration.

Conclusion

33    These considerations, in combination, persuade me that this is an exceptional case in which it would be an appropriate exercise of the discretion under r 30.01(1) to accede to Mr Jordan’s application. Accordingly, there will be orders to the effect proposed by him. Orders with respect to the progression of the separate matters to trial will be made at the next Case Management Hearing.

Associate:

Dated:    19 August 2020