England and Wales High Court (Queen's Bench Division) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		02/09/2013

Mr Justice Dingemans:

Introduction

1. This is the hearing of an application to set aside an order of Master Yoxall dated the 9^th April 2013 giving permission to the Claimant, Mr Carr, to serve the Claim Form, Particulars of Claim and other documents on the Defendant, Mr Penman, in Victoria, Australia. Mr Penman also seeks declarations that the court has no jurisdiction to try Mr Carr's claims. The claim is for damages for libel brought in respect of statements made by Mr Penman about Mr Carr in articles published on websites.
2. The issues between the parties were crystallised in helpful submissions made by Mr Griffiths QC, on behalf of Mr Penman, and Mr Hendron, on behalf of Mr Carr. Mr Penman's application to set aside service is made on the bases that: (a) in his without notice application for permission to serve out of the jurisdiction Mr Carr did not make full and frank disclosure of relevant matters; (b) the claim has no reasonable prospects of success: (i) because there was no real and substantial tort committed in this jurisdiction; and (ii) because there are good defences to the claim; and (c) the appropriate forum for the trial of any action is Australia.
3. Mr Carr resists the application and contends that: (a) he did make full and frank disclosure, but if there was any failure to make such disclosure he is sorry and asks that the order granting permission to serve out be not set aside; (b) there was sufficient publication in this jurisdiction to persons important in his life to mean that there was a real and substantial tort, and that there is no proper defence to the claim; and (c) the appropriate forum for the trial of this action is in England, where he has suffered real loss and damage.

The franchising business

4. Mr Carr and Mr Penman are businessmen. Mr Penman set up a gardening business in 1982 which he has franchised around the world, and he has established other franchises providing domestic services. The franchises use one of Mr Penman's first names, so that the mowing part of the gardening franchise is known as "Jim's Mowing". It appears that there are over 2900 franchisees in four separate countries.
5. Mr Carr is a chartered accountant by way of background. He became involved in the Jim's Group franchising business as a shareholder and director of a company acting as a UK divisional franchisor in relation to the franchises. He had originally invested with Richard Harrison, as a fellow director and shareholder.

The start of the dispute between Mr Carr and Mr Penman

6. It appears from Mr Carr's witness statement that in circumstances which it is not necessary to relate, by early 2009 Mr Carr had fallen out with Mr Harrison. Mr Carr contended that Mr Harrison had wanted to walk away from the business. It appears that there was unhappiness among some of those who had purchased UK franchises from the company operated by Mr Carr and Mr Harrison, but the extent of the unhappiness, and whether the unhappiness was directed to Mr Harrison or Mr Carr, is controversial between the parties.
7. In any event by August 2009, at a time when it appears that Mr Carr was on holiday, Mr Penman had served notices terminating the right of Mr Carr's company to operate the franchise. It appears that Mr Penman, Mr Harrison, and Mr Maunder (another person then working for Mr Penman who is now said also to have fallen out with Mr Penman) took control of the UK franchise. There appears to have been a brief power struggle with Mr Carr, part of which related to the phone system through which leads were provided to franchise companies. It is also apparent that Mr Penman made what he considered to be a fair offer to buy out Mr Carr, but this was not accepted by Mr Carr. Mr Penman contended that Mr Carr had then tried to stop persons investing in Mr Penman's franchise business.
8. It is perfectly apparent that since August 2009 Mr Penman and Mr Carr have had no mutual regard for each other or their respective business skills. Mr Carr relies on the fact that on the 14^th August 2009 Mr Penman sent Mr Carr an email in which he said "you are a pathetic sniffling miserable idiot. You stuffed up the business so badly that everyone hates you, yet what you seem to believe is that you have done everything right and some vast conspiracy is on foot to let you down." The email continued stating that Mr Penman had been willing to allow Mr Carr to get money out of the business but "now I hate your guts and I'm going to do everything possible to destroy you". It is only fair to point out that, as appears below, Mr Carr has been found, in Court proceedings in Australia, to have been behind defamatory publications about Mr Penman in which Mr Carr has made allegations about Mr Penman's personal life, relationships and business skills.

Other litigation between the parties

9. There has already been litigation between Mr Carr and Mr Penman, and companies controlled by them. I have set out details relating to this litigation because it forms part of the material which Mr Penman alleges should have been, and was not, disclosed to Master Yoxall.

The earlier English litigation

10. Mr Carr caused the company which had held the franchise in the UK to transfer its causes of action against: Mr Penman's Australian company; Mr Harrison; Mr Penman; and Mr Maunder; to a newly incorporated English company called Felicity Management Limited ("FML"). FML issued proceedings against Mr Penman's Australian company, and Mr Harrison, Mr Penman and Mr Maunder for inducing breaches of contract. Permission to serve out of the jurisdiction in Australia was obtained. Mr Penman's Australian company, Mr Penman and Mr Maunder brought an application to set aside service and for an order declaring that the Court did not have jurisdiction. In a judgment dated 25 May 2010 His Honour Judge Mackie QC, sitting as a Judge of the High Court, set aside the permission permitting service out of the jurisdiction and declared that the Court did not have jurisdiction to try the claim.
11. HHJ Mackie QC held that the assignment to FML was invalid, the proceedings were brought in breach of a jurisdiction clause, the appropriate forum for the claims was Australia, and that there was a failure to disclose the assignment of the causes of action from Mr Carr's English franchise company to FML.
12. HHJ Mackie QC made an order which joined Mr Carr as a further defendant to the proceedings for the purposes of considering whether a third party costs order should be made against him. On 5 July 2010 an order was made making Mr Carr jointly liable for those costs, and for the order for payment of £35,000 which had been made on account of those costs.
13. On 2 December 2011 Mr Carr was made bankrupt, on a statutory demand issued by Mr Penman's Australian company, having not made any payment to those costs. Mr Carr's bankruptcy was discharged on 1 December 2012.

The Australian proceedings

14. Just before the application to set aside service of the English proceedings was held, two sets of proceedings were issued in Australia. On 7 May 2010 Mr Penman issued proceedings against Mr Carr for publications on a website, held subsequently to have been made by Mr Carr, made in the name of "Mrs Jimbo".
15. On 14 May 2010 Mr Penman's company issued proceedings against Mr Carr's franchise company, FML and Mr Carr alleging various breaches of the franchise agreement.
16. Mr Carr and his companies did not put in defences to those proceedings, but Mr Penman and his company were not able to enter judgment in default under the rules because of the relief that had been claimed. Mr Carr then travelled to Australia and sought permission to defend the proceedings, and Mr Penman sought judgment and an assessment of damages. The applications were heard by Her Honour Daly, AsJ on 30 September 2011 and 3 October 2011.
17. In a judgment dated 7 October 2011 HH Daly AsJ found that there were issues to be tried in the commercial action, and gave Mr Carr and his companies permission to defend conditional on them paying the sum of Australian $25,000 to mark the wasted costs caused by the late defence to the proceedings.
18. HH Daly AsJ did not grant Mr Carr permission to defend the defamation proceedings, holding that there was no arguable defence to the claims. The Judge noted that the publications were "couched in inflammatory and vitriolic language, and appear calculated to offend". Compensatory damages were assessed in the sum of Australian $120,000 and aggravated damages in the sum of Australian $80,000. The Judge did not grant a permanent injunction, but noted that there was "some force" in submissions made by counsel for Mr Penman to the effect that "the mere award of damages will be insufficient to deter Mr Carr from pursuing his vendetta against Mr Penman".

The relevant publications

19. The publications giving rise to this claim are set out on a website www.Jims.net dated the 13^th December 2012 in which there was a link to an article in Wealth Magazine headed "Jim's World". The article quoted Mr Penman making a number of statements about Mr Carr. This included statements that: Mr Carr had given poor service; after numerous complaints and attempts to get him to fix it 90% of the franchisees had said this guy had to go; people were going bust; and there was a lack of support. It was said that Mr Carr had cut off people's phones and done everything that he could to destroy the name of Mr Penman's business.
20. The second publication was dated January 2012 and was made by Brisbane Business News on its website and it was entitled "Jim's Mowing seeks public listing". In that article Mr Penman was quoted as saying that Mr Carr was loathed by the franchisees.
21. The extent of the publication on these websites in England and Wales has been an issue before me. It was contended on Mr Penman's behalf that the publications were on Australian websites and that there was no evidence of substantial publication in England. Mr Carr noted that the franchise had 30 divisions, and that all had separate websites, and most had links to the article in Wealth Magazine. One of the websites was in the UK. The website had substantial numbers of visitors. Mr Carr contended the publications would have been republished via social networks and blogs.
22. Mr Carr said he had been advised by family members, friends and ex-colleagues and a potential employer that they had read the articles on these websites in the UK. Mr Carr said his wife had said that there was no smoke without fire and that the Wealth magazine article was the final straw as far as his marriage was concerned. He had noticed a distinct change in attitude towards him from friends and family. No dates were given.
23. A further witness statement was put in on behalf of Mr Penman. This showed that the UK page of the website on which the link to the Wealth Magazine article appeared had had 7,996 hits between September 2012 and April 2013, but that the article had not had a single download. It had first been published in July 2011.
24. During the course of submissions the extent of any continuing publication on the website was raised. This was potentially relevant to whether there was a legitimate purpose in these proceedings. Mr Griffiths QC said the article had been taken down before the hearing of this application, but that was doubted on behalf of Mr Carr. Mr Griffiths QC said he would take instructions and update the Court after the hearing. In an email dated 2 August 2013, copied to Mr Hendron, it was confirmed that the "Jim's World" Wealth Magazine article has been removed from the UK, and Australian websites for the franchises.

Relevant pre action correspondence

25. By letter dated 24 December 2012 to Mr Penman in Australia, Mr Carr referred to the website publications, identified the defamatory meanings and referred to Mr Penman's email dated 14 August 2009. Mr Carr reported that Mr Penman had successfully damaged Mr Carr's name, and demanded an apology, removal of the website article, damages, an agreement not to republish, and costs.
26. In an email dated 21 January 2013 to Mr Penman, Mr Carr recorded that there had been no answer to the pre-action letter. Mr Carr continued "see you in London in the summer for what will be a fascinating trial by jury". Mr Carr then referred to some libel cases in England reporting that "laws are biased towards the Claimant. Libel cases are easy to bring, but difficult to defend … the burden of proof rests with the defendant to show that their words are defensible. Because libel cases are extremely costly and defences are uncertain, the majority of those threatened with a libel suit will back down …". In a later passage Mr Carr referred to Mr Penman's apparent dislike of flying and said "hope you have resolved your flying phobia!".

The Application to serve out

27. Mr Carr drafted his Application Notice and draft order, supporting witness statement, Claim Form and Particulars of Claim personally, although it appears from Mr Carr's correspondence with Mr Penman's solicitors that Mr Carr did have some input from the Bar. It also appears from Mr Carr's statement that he had some assistance from the RCJ's Advice Bureau Solicitors. It is not contended that the legal duties on Mr Carr have been altered by reason of his status as a litigant in person at times in these proceedings.
28. Mr Carr annexed to the materials his pre-action letter 24^th December 2012 and copies of the relevant publications.

The legal principles to be applied on this application

29. In the course of submissions it became clear that there was not much by way of material dispute between the parties about the legal principles to be applied by me in determining this application.
30. First when the Court is considering whether service out of the jurisdiction either should be permitted or should have been permitted, the focus of the inquiry is whether the Court should assume jurisdiction over the dispute. The Court needs to be satisfied that there is a serious issue to be tried, see Seaconsor Far East v Bank of Markazi [1994] 1 AC 438 at 457B-C; that there is a good arguable case that the Court has jurisdiction to hear it; and that England is clearly the appropriate forum, see Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460 at 481E and MRG (Japan) Limited v Engelhard Metals Japan Limited [2003] EWHC 3418 (Comm) at paragraph 26.
31. In determining whether there has been a real and substantial tort committed in the jurisdiction, the test is set out in Jameel v Dow Jones [2005] EWCA Civ 75; [2005] QB 946 and then applied in subsequent cases relating to abuse of process. It is established that in order to deal with cases justly, proportionately and to maintain a proper balance between the Convention right to freedom of expression and the protection of other rights, the Court is required to stop as an abuse of process defamation proceedings which serve no legitimate purpose, see Jameel at paragraphs 50 and 55. The test has been expressed in a number of different ways, namely whether "the game is worth the candle", see paragraph 69 of Jameel, or whether there is any prospect of a trial yielding "any tangible or legitimate advantage such as to outweigh the disadvantages for the parties in terms of expense, and the wider public in terms of court resources", see Schellenberg v BBC [2000] EMLR 296.
32. The Jameel test has been applied in a number of cases. It might be noted that in some of those cases the determinations that the action had become an abuse of process was against a background where rulings on meaning and comment had been given. In such cases it is sometimes easier to show that the proceedings would not achieve anything of practical utility for the Claimant, see Cammish v Hughes [2012] EWCA Civ 1655; [2013] EMLR 13 at paragraph 60 and Euromoney Institutional Investor Plc v Aviation News Limited and another [2013] EWHC 1505 (QB) at paragraphs 142-144. To dismiss an action in such circumstances, or to refuse to permit proceedings to be served out of the jurisdiction in such circumstances, is a draconian power vested in the Court, compare Haji-Ioannou v Dixon and others [2009] EWHC 178 (QB) at paragraph 30. However this must not prevent the Court from exercising the power in appropriate cases where there is no legitimate purpose in the proceedings given the importance of free speech.
33. Secondly it is accepted that, in making his without notice application for permission to serve out of the jurisdiction Mr Carr owed a duty to make full and frank disclosure of matters which might reasonably be taken into account by the Judge in deciding whether to grant the application, see MRG (Japan) Limited v Engelhard Metals Japan Limited [2003] EWHC 3418 (Comm) at paragraphs 23 to 30. Material points should be drawn to the Court's attention, it is not sufficient that somewhere in the exhibits a point can be discerned.
34. Thirdly if there has been a failure to make material disclosure the Court may still decline to set aside the order, if setting aside the order would be disproportionate and contrary to the overriding objective to deal with cases justly, see MRG at paragraph 43.

No real and substantial tort within this jurisdiction and Australia is the appropriate forum

35. I deal with this matter first, because if there is no real and substantial tort, and if Australia is the appropriate forum, other matters may not be relevant. Also if there is a real and substantial tort within this jurisdiction, it would be an important matter to consider when deciding whether to permit the action to continue even if there had been material non-disclosure.
36. Both articles about which complaint were made were publications first made in Australia. Although Mr Carr is based in England, he has travelled to Australia to deal with the proceedings, and the articles have a context that has been considered in Australian litigation.
37. There has been a link to the "Jim's World" Wealth Magazine article on a UK website between July 2011 and July 2013, but the evidence shows that there were no downloads of that article between September 2012 and April 2013. The article in the Brisbane Business News is on an Australian website, and there is no evidence of readership in England and Wales. I accept, as Mr Hendron has said, that a considerable number of persons living in this jurisdiction are Australian or have strong links to Australia, but this is not the sort of article which might be expected to have an overseas readership, and there is nothing apart from Mr Carr's reference to "articles" in his witness statement to suggest it has been read in this jurisdiction.
38. Mr Carr's evidence does not disclose proper details about the publications made to his wife, family or friends, or even give approximate timings to show that any relevant publication was within the relevant limitation period. The original Particulars of Claim did not provide any details of publications or provide details of specific losses referred to in Mr Carr's statement. Mr Hendron said that Mr Carr wanted to amend the Particulars of Claim, but no draft amendment was available, or submitted during or after the hearing. The gist of the proposed amendments was not even given.
39. There are some other relevant other matters to be considered. These are: (1) as noted above, HH Daly AsJ had accepted that there was "some force" in submissions made by counsel for Mr Penman to the effect that Mr Carr was "pursuing his vendetta against Mr Penman"; (2) Mr Carr had explicitly referred to the costs of defending libel proceedings in an email to Mr Penman before proceedings began; and (3) Mr Carr has not paid any of the libel damages awarded against him in Australia, and he has been made bankrupt as a result of unpaid interim costs orders arising out of litigation with Mr Penman in this jurisdiction. In the light of the matters set out above, and in the absence of any draft Amended Particulars of Claim, I find that this action has been pursued in part to visit on Mr Penman the costs of defending libel proceedings in this jurisdiction.
40. In these circumstances, in my judgment there is no real and substantial tort in this case which would justify Mr Carr serving the proceedings out of the jurisdiction on Mr Penman. This is because "the game is not worth the candle" given the absence of proper evidence about publication in this jurisdiction. There is no "tangible or legitimate advantage such as to outweigh the disadvantages for the parties in terms of expense, and the wider public in terms of court resources" given the likely irrecoverable costs of the proceedings that Mr Carr was keen to highlight to Mr Penman.
41. I should note that I did consider whether the fact that Mr Penman had used (very similar) laws of libel in Australia against Mr Carr ought to lead to a different result. I do not consider that it should. First, this is because Mr Carr can bring such proceedings in Australia, and indeed has contemplated doing so. Secondly it does not address the fact that if there has been any publication in this jurisdiction, it has been minimal when compared with the publications that might have been expected to have occurred in Australia.
42. I did also consider whether there might be a continuing publication, and whether the proceedings would have been justified in order to obtain an injunction. It appears that Mr Penman's advisers had themselves contemplated that point because some links to the article had been removed before the hearing, and an email confirming that has now been provided, see paragraph 24 above. To the extent therefore that Mr Carr wanted removal of the offending article (as requested as part of his pre action request for relief), it might be recorded that he has achieved some measure of success in the action.
43. I should record that it did not seem to me that the evidence established that Mr Penman was bound to succeed in any defence of justification. There were emails showing persons had made complaints about Mr Carr. However there was also evidence showing that some of these complaints might have been properly directed to others. Mr Carr plainly had very different views from Mr Penman about who was really at fault, and nothing in this judgment can determine those issues. It might be thought that both Mr Carr and Mr Penman had, at times, written emails or used language which they might now regret.

Material non-disclosure

44. It appears from what I have said above that: HH Daly AsJ's acceptance that there was force in the proposition that Mr Carr was pursuing a vendetta against Mr Penman; Mr Carr's email referring to costs to Mr Penman before proceedings began; and Mr Carr's failure to pay libel damages in Australia and the unpaid interim orders; were all material matters to be disclosed to Master Yoxall. This is because they were all relevant to the purpose for which the proceedings were being pursued and the issue of whether there was a real and substantial tort in this jurisdiction.
45. In my judgment there was no obligation on Mr Carr to do more than he had about other potential defences to the claim. Mr Carr referred to his belief that the statements about him were not justifiable, and whether the statements are justifiable could not sensibly be determined at this stage.
46. The material matters identified in paragraph 44 above were not disclosed on the without notice application made by Mr Carr. The email was missing, even though the pre-action protocol letter had been placed before Master Yoxall. It is true that there was a reference to other proceedings and threats of bankruptcy in the articles, but this was not a full and frank disclosure to Master Yoxall of the defamation proceedings and the failure to make payments. Given the importance of this information to an assessment of whether there was a real and substantial tort within this jurisdiction, I also set aside the order for service out of the jurisdiction on this basis.

Conclusion

47. For the reasons given above I will set aside the order for service of these proceedings out of the jurisdiction, and I will declare that the Court will not exercise its jurisdiction to hear this action.