Federal Court of Australia

Hewson v TCN Channel Nine Pty Ltd [2021] FCA 389

ORDERS

THE COURT ORDERS THAT:

1.    The respondents be granted leave to file an amended defence in the form set out at Annexure A to the interlocutory application filed on 26 February 2021.

2.    Paragraphs 3, 4, 5, 7, 9, 10, 11 and 12 of the subpoena, filed on 9 February 2021, issued and served on GSA Insurance Brokers Pty Ltd be set aside.

3.    The costs of the interlocutory applications filed by the respondents on 26 February 2021 and by the applicant on 2 March 2021 be costs in the cause.

4.    The costs of the interlocutory application filed by GSA Insurance Brokers Pty Ltd filed on 3 March 2021 be reserved.

5.    To the extent not set aside in order 2 above, the subpoena issued and served on GSA Insurance Brokers Pty Ltd be listed before a Registrar on 24 March 2021.

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

REASONS FOR JUDGMENT

(Delivered ex tempore, revised from transcript)

WIGNEY J:

1    The applicant Dr John Hewson, commenced a proceeding in this Court against TCN Channel Nine Proprietary Limited, a second, related company and two of its employees. Those parties may, for convenience, be collectively referred to as “Channel Nine”. Dr Hewson alleges he was defamed in a program broadcast by Channel Nine on 18 May 2020. Channel Nine denies that the program it broadcast conveyed the defamatory imputations alleged by Dr Hewson. It also pleads a defence of honest opinion, pursuant to s 31(3) of the Defamation Act 2005 (NSW). The matter has been listed for trial to commence on 12 April 2021.

2    Two interlocutory disputes have arisen which need to be promptly resolved given the imminent trial date. The first dispute concerns an application by Channel Nine to amend its defence. The second dispute concerns a subpoena that Channel Nine has served on a third party, GSA Insurance Brokers Proprietary Limited. GSA’s connection with Dr Hewson and the program broadcast by Channel Nine will be explained later. It suffices at this point to note that both Dr Hewson and GSA filed interlocutory applications in which they sought to have the subpoena set aside on the basis that it had no demonstrable legitimate forensic purpose and was an abuse of process.

THE RESPONDENTS’ APPLICATION TO AMEND THE DEFENCE

3    It is useful before considering the proposed amended defence to provide a brief chronology of the proceeding to date. Dr Hewson commenced this proceeding on 24 June 2020. On 29 July 2020, Channel Nine filed its defence, settled by senior and junior counsel. At a case management hearing on 28 October 2020, the proceeding was listed for trial to commence on 12 April 2021. It would appear that, at some point in time in November 2020, Channel Nine retained new counsel. It may be inferred that at some point in time, Channel Nine’s new counsel suggested amendments to the defence. It was not, however, until 5 February 2021 that Channel Nine gave Dr Hewson notice that it proposed to file an amended defence settled by new counsel.

4    There was correspondence between the parties during February about the proposed amendment. The amendment application itself was filed on 26 February 2021. As noted earlier, the only substantive defence pleaded by Channel Nine was the defence of honest opinion, pursuant to s 31(3) of the Defamation Act. Subsection 31(3) provided as follows:

(3) It is a defence to the publication of defamatory matter if the defendant proves that—

(a) the matter was an expression of opinion of a person (the commentator), other than the defendant or an employee or agent of the defendant, rather than a statement of fact, and

(b) the opinion related to a matter of public interest, and

(c) the opinion is based on proper material.

5    The commentator the subject of Channel Nine’s pleaded defence of honest opinion was said to be Mr Adrian Dolahenty, a person who was interviewed as part of the program.

6    The proposed amended defence altered some of the “proper material” that Channel Nine will contend provided the basis for Mr Dolahenty’s opinion. Some of the existing particulars were deleted, some new particulars were added and some relatively minor alterations were made to the other particulars. Dr Hewson neither consented to nor opposed the application to amend. He also conceded that he would not suffer any prejudice if the amendment were allowed. He pointed out, however, that the delay in making the amendment application had not been satisfactorily explained. Dr Hewson also submitted that the proposed deletion of some of the particulars was a matter of some “concern”; that concern being that there is no explanation for why Channel Nine apparently no longer contends that Mr Dolahenty relied on certain material that it previously said formed part of the basis for Mr Dolahenty’s opinion. It would also appear that Mr Dolahenty will not be called to give evidence, so no explanation of the change to the “proper material” will be forthcoming.

7    Channel Nine submitted that the proposed amendments simply refine and more clearly identify the particulars of the proper material. It also submitted that it acted with due dispatch after new counsel had been retained.

8    The principles concerning applications to amend pleadings are well-settled and do not need to be set out here. Ultimately, the decision is a discretionary decision based on a number of relevant considerations. Those considerations generally include whether the amendment would result in any prejudice that cannot be remedied by a costs order and whether the delay in making the amendment application had been satisfactorily explained. Ultimately, however, the Court is concerned to ensure that the real questions in the controversy are properly adjudicated. The Court is not concerned with punishing a party who may have made mistakes in the initial pleading.

9    In this case, the balance weighs in favour of allowing the amendment. The amendments are fairly minor and will not cause any prejudice to Dr Hewson. While there was some merit in Dr Hewson’s complaint that the delay in making the amendments had not been properly explained, that did not outweigh the desirability of ensuring that the real issues in dispute are tried. As for the concerns raised by Dr Hewson about the unexplained the deletion of some of the particulars of the material that was said to have formed the basis of Mr Dolahenty’s opinion, those concerns are really a matter for submission at trial.

THE SUBPOENA ISSUED TO GSA

10    It is necessary to provide some context in order to resolve the dispute concerning the subpoena which has been served on GSA.

11    The program broadcast by Channel Nine essentially concerned a dispute between an insurer and Mr Dolahenty and his wife, Nicole, in relation to insurance. The Dolahentys had stored some possessions at a storage facility and had taken out insurance through GSA in respect of those possessions. It would now appear to be common ground that GSA was an insurance broker and did not itself issue the policy of insurance or underwrite the insurance.

12    Unfortunately for the Dolahentys, their possessions were damaged in the storage facility by water which entered the storage facility during a storm. Even more unfortunately for the Dolahentys, the insurance claim which they made in respect of the damage to their possessions was denied by or on behalf of the insurer or underwriters on the basis that there was an exclusion clause in the policy of insurance for damage caused by flooding. It was determined against the Dolahentys that the damage to their possessions was caused by flooding, not a storm.

13    Needless to say, the Dolahentys were not happy about the denial of their insurance claim. Their vociferous complaints about how they were treated in respect of their insurance claim ultimately came to be aired on Channel Nine’s Current Affair program. The final piece of the puzzle is that Dr Hewson was at the time the chairman of GSA. Some of the Dolahentys’ anger, and the commentary concerning that anger provided by the journalist and presenter of the program, thus came to be channelled toward Dr Hewson.

14    Dr Hewson alleges that Channel Nine’s broadcast conveyed the following defamatory imputations:

(a)    [Dr Hewson] as Chair of an insurance company failed to direct the company to pay insurance claims when he knew those claims were valid and had been dishonestly refused;

(b)    [Dr Hewson] performed so incompetently in his role as Chair of GSA Insurance that the company engaged in misconduct by dishonestly relying on a flood exemption clause to avoid honouring claims for storm damage;

(c)    [Dr Hewson] performed so negligently in his role as Chair of GSA Insurance that the company engaged in misconduct by dishonestly relying on a flood exemption clause to avoid honouring claims for storm damage;

(d)    [Dr Hewson] as Chair of GSA Insurance condones a culture of misconduct within the company, including the knowing refusal to pay out valid insurance claims;

(e)    [Dr Hewson] is the Chair of an insurance company which knowingly refuses to pay out valid insurance claims;

(f)    [Dr Hewson] is the Chair of an insurance company which dishonestly relies [sic] on a flood exemption clause to avoid honouring claims for storm damage.

15    As noted earlier, Channel Nine denied that those imputations were conveyed and has also pleaded a defence of honest opinion. It did not plead any defence of justification pursuant to s 25 of the Defamation Act. The truth or otherwise of the alleged imputations is therefore not directly in issue.

16    Importantly, however, at least insofar as the subpoena dispute is concerned, Dr Hewson’s claim for damages included a claim for aggravated damages. The basis of that claim is said to be both that he knew that the imputations were false, and that Channel Nine also knew the imputations were false. Dr Hewson’s pleading contained detailed particulars of various facts which he contended demonstrated that Channel Nine knew that the imputations were false: see paragraphs 11(c) through to (h) of the Statement of Claim. Dr Hewson has also given notice that he will give evidence to the effect that he knew that the defamatory imputations were false. An outline of his evidence has been served.

17    The upshot, according to Channel Nine, is that the truth of the alleged imputations is in issue on the pleadings and will be in issue at the trial. In short, Channel Nine submitted that because Dr Hewson had sought aggravated damages on the basis of his and Channel Nine’s knowledge of the falsity of the imputations, he had put the truth or falsity of the imputations in issue.

18    The subpoena issued to GSA was said by Channel Nine to primarily relate to Dr Hewson’s claim for aggravated damages. The subpoena required the production of the following documents:

1.    A copy of this subpoena;

2.    Any documents recording or evidencing any communications with Dr John Hewson in relation to the claim lodged on or about 19 February 2020 in respect of document number 39378 in the name of Nicole Dolahenty (Claim), including as to whether the claim should have been paid;

3.    One copy of documents and/or correspondence recording or evidencing any response or communication by GSA Insurance Brokers (GSA) in relation to the television segment on “Current Affair” titled “Insurance Fight”, broadcast on 18 May 2020 (Segment);

4.    One copy of all documents and/or correspondence recording or evidencing any consideration by GSA of the extent of flood risk at the Storage King North Parramatta at its site at 1 North Rocks Road, North Parramatta NSW (Site), before recommending insurance to Storage King that contained a flood exclusion;

5.    One copy of all documents and/or correspondence recording or evidencing any consideration by GSA of the adequacy of insurance cover at the Site, taking into account flood risk at that site;

6.    One copy of all documents and/or correspondence recording or evidencing any response or communication by Dr John Hewson to the Segment;

7.    One copy of all documents and/or correspondence recording or evidencing inquiries made by Dr John Hewson and/or members of the GSA board after broadcast of the Segment as to the suitability of the insurance issued by GSA to Storage King for the Site;

8.    All correspondence between GSA and International Claims Agency Ltd and/or McLarens Holdings Pty Limited in relation to the Claim;

9.    One copy of all documents and/or correspondence recording or referring to the preparation of the Site Specific Hydrologist Report dated 23 April 2020 in respect of the Site, prepared by Dr Sharmil Markar on behalf of WRM Water & Environment Pty Ltd;

10.    One copy of all documents recording or evidencing GSA’s consideration of the appropriate insurance at the Site during the 12 months prior to the date on which it issued the policy of insurance to Storage King under which the claim was made, including whether that policy of insurance should contain an exclusion for flood;

11.    One copy of any policies or procedures of GSA concerning the placement of contents protection insurance containing cover for flood damage with respect to Australian commercial properties which were subject to flood risk:

a) in the period 12 months prior to the date on which it issued the policy of insurance to Storage King under which the claim was made; or

b) that were created or dated from 18 May 2020; and

12.    One copy of any government or regulatory guidance or advice to insurance brokers concerning the placement of contents protection insurance containing cover for flood damage with respect to Australian commercial properties which were subject to flood risk.

19    Channel Nine submitted that the documents sought by the subpoena are required in order to test Dr Hewson’s evidence that the imputations were false and that he knew the imputations to be false.

20    The principles that apply in relation to applications to set aside subpoenas are well-known and do not need to be rehearsed in detail here. Relevantly, a subpoena must have a legitimate forensic purpose. That generally means that it must be demonstrated that the documents sought to be produced by the subpoena have “apparent relevance” to the issues in the proceeding: FUD18 v Minister for Home Affairs [2019] FCA 1858 at [24], citing National Employers’ Mutual General Association Ltd v Waind and Hill [1978] 1 NSWLR 372 at 385. That does not mean that it must be demonstrated that the documents will ultimately be tendered or will be admitted into evidence, but it does mean that it must be demonstrated that it is at least “on the cards” that the documents sought will have some relevance to the issues that arise on the pleadings, or are reasonably likely to add in some way to the relevant evidence: Alister v The Queen (1984) 154 CLR 404 at 414-415. A subpoena will, however, be held to be an abuse of process if it is shown to amount to little more than an attempt to “fish” for documents which might somehow assist the party who has issued the subpoena; that is, the documents are sought not to support the case as pleaded, but to discover whether there may be some other plea or defence available: Becwell Legal Services Pty Ltd v McMaster [2011] FCA 1501 at [28] and the cases cited there.

21    The first step in determining whether the subpoena in question has a legitimate forensic purpose is to identify the issues in the litigation in respect of which it is said that the documents sought by the subpoena may have some adjectival relevance. The second step is to examine the individual paragraphs in the subpoena to determine whether it can be said or concluded that the documents that will or are likely to be produced in answer to those paragraphs in the schedule may have apparent or adjectival relevance to those issues.

The issues to which the subpoenaed documents were said to relate

22    Dr Hewson submitted that the documents sought by the subpoena could have no relevance to the truth or falsity of the imputations. He relied in particular on the fact that each of the imputations stated in one way or another that GSA was the insurer and that it was GSA who had refused the Dolahentys’ insurance claim. As noted earlier, it was essentially common ground that GSA was the broker, not the insurer. Dr Hewson submitted, on that basis, that the imputations were all manifestly false, which explained why Channel Nine did not rely on the defence of justification.

23    Channel Nine submitted, however, that the documents sought by the subpoena were relevant in an adjectival sense to two issues which were likely to, or would, arise at the trial. Both of those issues related to the truth of the imputations which, as already noted, was in issue in the context of Dr Hewson’s plea that he was entitled to aggravated damages.

24    The first issue was said to be that, even if it was accepted that GSA was the broker and not the insurer, Channel Nine would contend that it nonetheless made the decision to deny the Dolahentys’ insurance claim. As a number of the alleged imputations involved the assertion that GSA refused the Dolahentys’ insurance claim, the question whether GSA refused the claim, even though it was only the broker, was relevant to the truth of at least some of the alleged imputations. The truth of the imputations was in issue by reason of Dr Hewson’s plea that he was entitled to aggravated damages.

25    The second issue was said to be whether GSA and Dr Hewson knew that the damage caused to the Dolahentys’ property was caused by storm, not flood. If they did, it followed that their reliance on the flood exclusion clause was dishonest, as some of the imputations conveyed or allegedly conveyed. Channel Nine also argued that there was an issue about whether, given the imputations, GSA or Dr Hewson had acted negligently or incompetently in recommending insurance to the Dolahentys, which included a flood exemption.

26    There is merit in Channel Nine’s submission that Dr Hewson’s claim for aggravated damages puts in issue the truth or falsity of the imputations, despite the fact that it had not pleaded a justification defence. It may also be accepted, as Channel Nine submitted, the issue as to who made the decision to refuse the Dolahentys’ insurance claim is a relevant fact in issue. If GSA made the decision, that would go some way to disproving Dr Hewson’s claim that the imputations were, and were known to be, false.

27    Similarly, it may be accepted that the issue as to whether GSA and Dr Hewson were aware of information which indicated that the damages to the Dolahentys’ property was caused by a storm event and not flooding is an issue raised by the pleadings and an issue that may properly arise at trial. If GSA or Dr Hewson were aware of such information, that would go some way towards disproving Dr Hewson’s claim that the imputations were false and were known to be false. That is because a number of the imputations involved or included an assertion about the dishonest reliance on the flood exemption clause or the dishonest refusal to pay out the claim on that basis.

28    There is, however, no merit in Channel Nine’s submission that, because the falsity of the imputations was in issue, there was also a live issue about whether GSA or Dr Hewson had somehow acted incompetently or negligently in recommending to the Dolahentys that they take out an insurance policy which included a flood exemption clause. The imputations all related to the validity of the refusal of the insurance claim and the reliance on the flood exemption clause in that regard. None of the imputations related to the actions of GSA, or Dr Hewson as its chairman, in recommending a policy with a flood exemption clause. That is simply not an issue properly raised on the pleadings.

29    It should perhaps also be noted in this context that some of the particulars of the “proper material”, which Channel Nine said that Mr Dolahenty relied on in expressing his opinion, appear to raise, at least indirectly, an issue about GSA’s conduct in recommending insurance including a flood exemption clause. The issue raised by the pleading in that regard, however, is whether Mr Dolahenty had a proper basis for expressing any opinion he expressed at the time he expressed it. It does not open up for consideration generally the question of whether GSA somehow acted negligently or improperly in recommending the insurance in question.

The documents sought by the subpoena

30    The next step is to determine whether the documents sought by the subpoena may have some apparent or adjectival relevance to the issues which have just been identified. Unfortunately, it is necessary to consider each of the paragraphs in the schedule to the subpoena separately.

31    As for paragraph 2, it may be accepted that the documents likely to be produced in answer to this paragraph may have some apparent relevance to the issue as to whether GSA effectively made the decision to refuse the Dolahentys’ insurance claim, even though it was only the broker, not the underwriter or insurer. The documents produced in answer to paragraph 2 may also have some apparent relevance to the issue as to whether GSA or Dr Hewson were aware of any information which may have indicated that the damage to the Dolahentys’ property was caused by storm, not flooding.

32    Dr Hewson’s case is that GSA did not refuse the claim as it was only the broker. He also claims that any assertion that he was aware of any information which indicated that the damage to the Dolahentys’ property was caused by a storm and not a flood was false. Channel Nine is, however, entitled to test Dr Hewson’s claims or evidence to that effect, including by cross-examining him about any documents that may be produced in answer to the subpoena which may cast doubt on his evidence. It follows that paragraph 2 of the schedule to the subpoena at least should not be set aside.

33    The same however, cannot be said about paragraph 3 of the subpoena. It is difficult to see how it could be said that any “response or communication” by GSA in relation to the relevant program would have any apparent or adjectival relevance to the identified issues or any other issues raised by the pleadings. The suggestion that documents produced in answer to this paragraph might have some apparent relevance would appear to be speculative at best. It should also be added that this paragraph of the schedule to the subpoena lacks clarity and is impermissibly broad. It appears to call for the production of any correspondence emanating from GSA at any time and to anyone in relation to the relevant program. The very breadth of this paragraph strongly suggests that it amounts to little more than a fishing expedition. It follows that paragraph 3 of the subpoena should be set aside.

34    Paragraph 4 of the subpoena appears to be directed to documents relating to GSA’s supposed recommendation of insurance which included a flood exemption clause. For the reasons given earlier, that is not an issue properly raised by the truth or falsity of the imputations or the pleadings generally. The alleged imputations do not relate to GSA’s recommendation of the policy. Nor could it be said that documents produced in answer to this paragraph are likely to have any apparent relevance to Channel Nine’s defence of honest opinion. As discussed earlier, the main issue raised by that defence is whether any opinion expressed by Mr Dolahenty in the program at the time was based on proper material. There is no suggestion that any opinion expressed by him was based on any information in any document that may be produced in answer to this or any other paragraph of the subpoena. It follows that paragraph 4 of the subpoena should be set aside.

35    The same can be said in relation to paragraph 5 of the schedule to the subpoena. The imputations did not relate to GSA’s consideration of the adequacy of the relevant insurance. Nor is that an issue properly raised by Channel Nine’s honest opinion defence.

36    Channel Nine submitted that documents produced in answer to this paragraph of the subpoena may assist it in some way to prove subparagraph 3.6 in paragraph 11 of its proposed amended defence, which is one of the particulars of the proper material. Subparagraph 3.6 pleads that “the Storage King site at which the Dolahentys hired a storage unit was situated on a creek and was liable to be inundated”. It appears to be a matter of speculation at best that any documents that might fall within paragraph 5 of the schedule to the subpoena may somehow assist Channel Nine in proving the substantial truth of that fact.

37    Paragraph 5 of the schedule to the subpoena accordingly should be set aside.

38    Paragraph 6 of the schedule to the subpoena is not challenged by GSA or Dr Hewson. Nothing more need be said about it.

39    Paragraph 7 of the schedule to the subpoena is essentially in the same position as paragraph 4. The imputations do not relate to the “suitability” of the insurance ultimately taken out by the Dolahentys. Nor did there appear to be any proper basis for concluding that the documents produced in answer to this paragraph of the subpoena would have any apparent relevance to Channel Nine’s honest opinion defence. It follows that paragraph 7 of the subpoena should also be set aside.

40    It may be accepted that documents produced in answer to paragraph 8 of the schedule to the subpoena produced may have some apparent or adjectival relevance to the issue as to whether GSA decided to refuse the Dolahentys’ insurance claim, even though it was only the broker. They may also have some apparent or adjectival relevance to the question of whether Dr Hewson and GSA were aware of any information which may have indicated that the damage to the Dolahentys’ property was caused by a storm, rather than a flood. It follows that it may be accepted that it would be on the cards that documents produced in answer to paragraph 8 of the subpoena may materially assist Channel Nine’s case in challenging Dr Hewson’s contention that the imputations were false and known to be false.

41    Paragraph 9 of the schedule to the subpoena is objectionable on a number of bases. It appeared to be common ground that the hydrological report referred to in paragraph 9 supported the view that the damage was caused by flood, not storm. The refusal of the Dolahentys’ insurance claim was based in part on the contents of the report. It would appear that Channel Nine proposes to challenge the veracity or cogency of the report. The cogency or veracity of the hydrological report could only be a relevant issue if it was contended that GSA or Dr Hewson knew that the report was somehow defective or deficient and relied on it anyway. The pleadings contain no allegation to that effect. Nor is there any apparent basis for any such contention. It is, in those circumstances, difficult to see how any correspondence or documents recording or referring to the preparation of the report could be said to be relevant to any issue properly raised by the pleading. The paragraph is also expressed in overly broad and oppressive terms, such as to suggest that it amounted to a “fishing expedition”.

42    It follows that paragraph 9 of the schedule to the subpoena should be set aside.

43    Paragraphs 10, 11 and 12 in the schedule to the subpoena may be dealt with shortly. In many respects they are in the same position as paragraphs 4 and 7 and should be set aside on the same bases as those paragraphs. In short, these paragraphs again appear to relate to GSA’s consideration of the appropriateness of the insurance policy taken out by the Dolahentys, including, as it did, a flood exclusion clause. For the reasons already given, that is not a proper issue raised by the pleadings, including any issue about the truth or falsity of the pleadings. Paragraphs 11 and 12 are also objectionably broad and speculative.

44    Paragraphs 10, 11 and 12 of the schedule to the subpoena should accordingly be set aside.

CONCLUSION AND DISPOSITION

45    Channel Nine should be granted leave to file an amended defence. They should, however, be ordered to pay Dr Hewson’s costs, if any, thrown away as a result of the amendment.

46    All of the paragraphs of the schedule to the subpoena should be set aside other than paragraphs 2, 6 and 8.

47    As for the costs of the interlocutory applications filed by the respondent on 26 February 2021 and by the applicant on 2 March 2021, costs of those interlocutory applications will be costs in the cause. It is, in all the circumstances, appropriate for the costs of the interlocutory application filed by GSA on 3 March 2021 to be reserved.

Associate:

Dated:    26 April 2021