Federal Court of Australia

Thunder Studios Inc (California) v Kazal (No 11) [2020] FCA 1656

ORDERS

THE COURT ORDERS THAT:

1.    The cross-claimant’s oral application to file a notice of discontinuance be refused.

2.    There be a verdict and judgment for the cross-respondents on the cross-claim and the cross-claim be dismissed.

3.    The cross-claimant pay the cross-respondents’ costs of the cross-claim.

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

REASONS FOR JUDGMENT

(REVISED FROM THE TRANSCRIPT)

RARES J

1    Today is the sixth day of the trial of the claim and cross-claim in this proceeding. At 7.30 pm last night, Sunday, 25 October 2020, the first respondent / cross-claimant, Charif Kazal, notified the applicants / cross-respondents, Rodric David and Thunder Studios Inc (California), that he wishes to discontinue the cross-claim. The hearing of the cross-claim would have commenced today, following the conclusion of the evidence of Michael Hammond who was the last witness called by Mr David and Thunder.

2    Under r 26.12(2)(c) of the Federal Court Rules 2011, a party may file its notice of discontinuance “with the leave of the Court – at any time”. Mr David and Thunder oppose the grant of leave to discontinue and contend that, if Charif does not want to pursue his cross-claim, they are entitled to the benefit of a verdict in their favour on the claims in it.

Background

3    In the cross-claim, Charif seeks damages, including aggravated damages. The further amended notice of cross-claim, filed by leave on 15 November 2019, claims that he has suffered harm and damage to his reputation by a publication by Thunder and Mr David on the website www.charifkazal.com entitled “Kazal Family Truth”. Broadly, that publication complained of summarises adverse findings against Charif Kazal and others made in a report by the Independent Commission Against Corruption of New South Wales (ICAC) and in news stories. Charif complained that the website conveyed imputations that he was a money launderer who dishonestly sought to influence a senior government employee in order to obtain favourable treatment in respect of his family business interests, was guilty of the criminal offence of perjury, and, along with his brothers, assisted Unaoil in funnelling huge sums of cash between multi-national companies and government officials in “the world's biggest bribery scandal”.

4    Mr David and Thunder denied that they had published the matter complained of at all and that the pleaded imputations were conveyed, but in the alternative pleaded, first, justification of the third imputation, namely that Charif was guilty of the criminal offence of perjury, and, secondly, contextual imputations that:

    ICAC had found that Charif had acted corruptly by seeking to improperly influence Andrew Kelly, a senior government official, to exercise official functions in a manner favourable to Kazal family business interests, including by paying for a lavish trip to the UAE (ie United Arab Emirates) for Mr Kelly in May 2007;

    Charif had behaved so as to warrant ICAC investigating whether he had attempted to intimidate a friend of a key witness before it;

    Charif had engaged in forgery; and,

    Charif had given false evidence on oath.

5    Mr David and Thunder also pleaded that the matter complained of in the cross-claim comprised a report of a public document, namely a report by ICAC, or was a fair summary of, or a fair extract from, it, and/or was a fair report of proceedings of public concern under ss 28 and 29 of the Defamation Act 2005 (NSW).

6    During the course of the hearing to date there has been some evidence relating to matters arising on the cross-claim, including cross-examination of Mr David, with some vigour, as to his asserted role as a publisher, or that of Thunder for which he was said to be responsible, as a publisher, of the matter complained of in the cross-claim.

7    Charif accepts that conditions of the grant of leave to discontinue would properly be, and he offers, that he pay the costs of Mr David and Thunder of the cross-claim to date on a party/party basis and that he undertakes to the Court that he will not commence any other proceedings against Mr David or Thunder in respect of the subject matter of the cross-claim. He contends that a factor influencing his decision to seek to discontinue was the delivery of judgment on 20 October 2020 of the Court of Appeal of the Supreme Court of New South Wales in Feldman v Nationwide News Pty Ltd [2020] NSWCA 260. That occurred on the second day of this trial. Senior counsel for Charif said that the effect of what the Court of Appeal had held was that the uses to which Mr David and Thunder proposed to put the ICAC report and evidence given by Charif in the ICAC proceeding would make that evidence admissible in this proceeding.

8    Notably, Charif has not given any evidence about his motivation or reasons for deciding, at this late stage, to seek leave to discontinue. I accept his senior counsel’s statement from the bar table that the Court of Appeal’s decision was one factor which affected her thinking about the cross-claim.

9    These parties have an extensive history of litigation. The evidence before me to date reveals that Mr David and Charif have been involved, usually with one or more others on each side, in trial and appellate proceedings in the United Arab Emirates, that were at once both civil and criminal in nature, a trial in the Grand Court of the Cayman Islands, in various civil proceedings in courts in the United States of America, and in this proceeding, which commenced as long ago as 2014. I think it fair to say that the parties have a relationship in their litigation which reveals a determination to pursue what they perceive to be their rights through the court systems of various nations.

The history of the cross-claim

10    On 25 May 2017 I gave leave to Charif to file a cross-claim against Mr David. On 5 June 2018, Charif applied to amend the cross-claim and join Thunder as a cross-respondent. I granted him leave to do so on 7 August 2018, but he did nothing to file the amended cross-claim at that time. On 19 August 2019 I granted leave, again, for him to add Thunder as a cross-respondent but he, again, did not do so within the time limited. Ultimately, he sought, and I granted, an extension in November 2019 for him to be allowed to file the further amended cross-claim which he finally did on 15 November 2019.

11    Matthew Price, one of the then employees of Thunder, has always claimed that he, and he alone, was the publisher, as an individual, of the matter complained of in the cross-claim. That was a subject upon which Mr David was cross-examined during the course of his evidence before me, as he had been cross-examined in depositions and oral evidence at a jury trial in the United States District Court for the Central District of California.

12    Senior counsel for Mr David and Thunder contended that Mr Price’s position (that he was the sole publisher) was the principal basis of their defence to the cross-claim. Indeed, at an earlier stage in the proceedings, they sought a separate trial, which Charif opposed, on the question of publication alone, in order to have established that neither of them was a publisher of the Kazal Family Truth website. I refused that application on the basis that all issues between these parties ought be resolved at this trial: Thunder Studios Inc (California) v Kazal (No 8) [2018] FCA 1995. The effect of the notice of discontinuance, were I to grant it, would be to leave those issues unresolved.

Consideration

13    Rule 26.12(2)(c) confers a broad discretion on the Court to grant a party leave to discontinue at any stage of a proceeding prior to judgment. Ordinarily, a court will allow the claiming party to discontinue if he, she or it wants to, provided that no injustice will be caused to the opponent. Courts are mindful that parties should not be compelled to litigate against their will, and this is a factor that is relevant to the exercise of the discretion under the rule.

14    However, it has long been the law that the court will rarely grant leave to a party to discontinue his, her or its action once the final hearing of the proceeding has commenced. In Stahlschmidt v Walford (1879) 4 QBD 217 at 219, Cockburn CJ and Mellor J, sitting as the Divisional Court, held that Field J had wrongly exercised his discretion to grant a plaintiff leave to discontinue on terms that no other action should be brought in respect of the subject matter of the proceeding, and that he should pay the costs of the action.

15    Cockburn CJ held that the defendant was entitled to be protected against the potential for future prejudice because of some possible use that the plaintiff, thereafter, might seek to make of the discontinued subject-matter of his claim. He said that the defendant was, in justice, entitled to the fruits of the proceeding. Mellor J, concurring, said that the discretion to grant leave to discontinue:

…must be exercised with certain limitations, and so as not to take away from the defendant any advantage to which he is fairly and reasonably entitled.

16    In In the matter of Mempoll Pty Ltd, Anankin Pty Ltd and Gold Kings Pty Ltd [2013] NSWSC 301 at [10], Brereton J applied that principle. He explained that, ordinarily, once the parties have defined their positions, prepared their cases and proceeded to a hearing, it will be unfair to deprive a party who has obtained a forensic advantage of that advantage by allowing the cause of action to remain unresolved: see too SCI Operations Pty Ltd v Trade Practices Commission (1984) 2 FCR 113 at 142–143 per Sweeney J, 161–163 per Lockhart J and 181–183 per Sheppard J. In SCI 2 FCR at 182, Sheppard J said:

I have embarked upon this discussion to provide a background for what I next say. It is, in my opinion, highly undesirable for courts in this day and age to leave parties to litigation which is to be terminated before a hearing in an uncertain state as to what further litigation concerning the same subject matter may be brought by one or the other in the future.

Whether the court is concerned with dismissal before a hearing on the merits or leave to discontinue, the rules direct its attention, and also that of the parties, to what is to be the future position in relation to further reliance on the same cause of action. Thus the court is empowered, in effect, to say whether there is to be cause of action estoppel or not. The fact that there is uncertainty concerning the creation of an issue estoppel where proceedings are dismissed seems to me to make it highly desirable for the court to provide, if it is able to do so, for whether any issue estoppel is to exist or not. It cannot do so directly and, in relation to dismissal, the provisions of O. 35, r. 6 are probably such as to prevent it doing so at all. But if a party, as has the Commission here, has made an application for leave to discontinue, then it seems to me that the court in deciding whether to grant leave and, if so, upon what terms that leave should be granted, has a wide discretion to do justice between the parties.

(emphasis added)

17    In Wickham v Bells Securities Pty Ltd [2006] QSC 167 at [27]–[28] Chesterman J allowed a plaintiff to discontinue on conditions, saying that he considered that those conditions would protect the defendant against disadvantage from the plaintiff’s decision. He used two evocative phrases that might reflect Charif’s position here, describing the plaintiff as having:

been brought to the ring but refuses to dance. He has expressly declined to litigate the causes of action which he brought against the second defendants but has been reluctant to prosecute for two years.

18    His Honour considered that it was hard to resist an inference that there was “an element of humbug in the plaintiff’s case until the recent change of legal representation”. That last qualification does not apply here because Charif has prosecuted this case with his current representation since September last year.

19    In my opinion, it would not be appropriate to grant leave to discontinue at this time in the trial having regard to the history of the parties in prior proceedings against one another, their obvious continuing conflict and my reasons in Thunder (No 8) [2018] FCA 1995 at [20]–[30]. It is necessary that the rights of the parties in respect of the subject matter of cross-claim be resolved once for all while the trial is taking place. If Charif chooses to call no evidence there will be a verdict and judgment that reflects that result: SCI 2 FCR at 182.

20    I do not think that the imposition of conditions, given the forensic history of disputation, would give sufficient protection to Mr David and Thunder from the potential that in some forum or another, the subject matter of the cross-claim might be revived. It is important that, at least, this proceeding put the controversy to rest so far as it deals with matters that were set down for this trial.

21    Mr David and Thunder wish, and are entitled, to have the allegations of their liability on the causes of action that Charif has pleaded against them in the cross-claim authoritatively determined.

22    In my opinion, the refusal of the application to discontinue is an appropriate means to achieve the overarching purpose of the civil practice and procedure provisions in s 37M(1) of the Federal Court of Australia Act 1976 (Cth) of achieving the just resolution of this dispute according to law, as quickly, inexpensively, and efficiently as possible.

Conclusion

23    For these reasons I refuse the application to discontinue the proceedings.

24    Following delivery of the above reasons, senior counsel for Charif informed me that she elected to call no evidence in support of the cross-claim. In those circumstances the appropriate orders are that:

(a)    there be a verdict and judgment for the cross-respondents on the cross-claim;

(b)    the cross-claim be dismissed; and

(c)    the cross-claimant pay the cross-respondent’s costs of the cross-claim.

25    I will reserve the question whether the costs order should be on an indemnity basis.

Associate:

Dated:    16 November 2020