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London v Smallbone [2018] NZCA 131 (2 May 2018)

Last Updated: 11 May 2018

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA
CA362/2017
[2018] NZCA 131



BETWEEN

GEORGE PAUL LONDON
First Appellant

IAN NEVILLE WISHART
Second Appellant

HOWLING AT THE MOON PUBLISHING LIMITED
Third Appellant

PAULETTE MERLE LONDON
Fourth Appellant


AND

LINDSAY JAMES TREVOR SMALLBONE
Respondent

Hearing:

Further submissions:

12 April 2018

16, 19 and 27 April 2018

Court:

Gilbert, Dobson and Toogood JJ

Counsel:

C J Tennet for First and Fourth Appellants
Second Appellant in Person and as director of Third Appellant
A J Romanos for Respondent

Judgment:

2 May 2018 at 9.30 am


JUDGMENT OF THE COURT

  1. The appeal is dismissed.
  2. The second and third appellants are jointly and severally liable to pay the respondent 50 per cent of costs for a standard appeal on a band A basis and usual disbursements.
  1. If the first and fourth appellants had not been legally aided, we certify that we would have ordered them to pay the same amount of costs as ordered against the second and third appellants.


REASONS OF THE COURT

(Given by Gilbert J)

Introduction

[1] The principal issue in this appeal turns on the correct interpretation and application of s 50(1) of the Defamation Act 1992 (the Act), which reads:

50 Striking out for want of prosecution

(1) In any proceedings for defamation, unless the court in its discretion orders otherwise, the court shall, on the application of the defendant, order the proceedings to be struck out for want of prosecution if—

(a) no date has been fixed for the trial of the proceedings; and

(b) no other step has been taken in the proceedings within the period of 12 months immediately preceding the date of the defendant’s application.

[2] Is a plaintiff who succeeded with his or her claim in defamation at trial vulnerable to having their proceedings struck out for want of prosecution under s 50 because a retrial was subsequently ordered but no date for the retrial has been set and no other steps have been taken for over 12 months? Does it matter that the close of pleadings date for the proceeding in terms of the High Court Rules passed well before the first trial and the plaintiff was accordingly not entitled to take any further steps without leave? If s 50 does apply in these circumstances, how should the discretion be exercised?

The proceedings

[3] In March 2012, the respondent, Lindsay Smallbone, sued the appellants in defamation following publication in November 2011 of a book jointly authored by the first and second appellants, George London and Ian Wishart, and published by Mr Wishart’s company, Howling at the Moon Publishing Ltd, the third appellant. The statements complained of were made by Mr Smallbone’s first wife, Paulette London, the fourth appellant, who is now married to Mr London. The statements are of a highly personal nature and are relayed in considerable detail in the book. They cover the period dating back to 1967 when Mr Smallbone was married to Mrs London.
[4] Mr Smallbone diligently prosecuted his proceedings to trial. Following a twoweek trial in the High Court at Wellington commencing on 29 July 2013, Mr Smallbone obtained a verdict from the jury finding that he had been defamed by the appellants and awarding him $220,000 general damages and $50,000 for aggravated damages. Upon receipt of the jury’s verdict, the trial Judge, Williams J, entered judgment but he later recalled the judgment of his own motion, before it was sealed. The appellants then applied to set aside the jury’s verdict on the grounds that it was unsafe in the light of new evidence which they sought leave to adduce. The Judge was satisfied that this evidence was fresh, credible and cogent and would have changed the complexion of the trial.[1] The Judge accordingly set the verdict aside and ordered a new trial.[2] That order was made on 21 May 2014.
[5] Mr Smallbone’s appeal against these orders was dismissed by this Court in a judgment delivered on 26 August 2015.[3] Mr Smallbone sought leave to appeal to the Supreme Court but the application was declined in a judgment delivered on 17 December 2015.[4] Appeal rights having been exhausted, the order for retrial made by Williams J on 21 May 2014 needed to be implemented. In the normal course, this would have involved liaison between the High Court registry and counsel to determine whether any further directions were required in view of the new evidence the appellants wished to adduce and for a date to be allocated for the retrial. This did not happen. Due to an administrative error, the High Court file was archived and the registry staff did not do anything to implement the order for a retrial. Nor did any of the parties apply for a new date or take any other step.

Strike-out applications

[6] On 13 January 2017, just over 12 months after the Supreme Court’s judgment was delivered, the second and third appellants filed an application to strike out the proceedings for want of prosecution in reliance of s 50 of the Act and rr 15.1 and 15.2 of the High Court Rules. Rule 15.1 permits the Court to strike out a pleading in various circumstances including for abuse of process. Rule 15.2 enables the Court to dismiss a proceeding if the plaintiff fails to prosecute the proceeding to trial and judgment. On 8 February 2017, the first and fourth appellants filed their own application to strike out the proceedings on similar grounds.

High Court judgment

[7] In the High Court, all parties proceeded on the basis that the prerequisites to the making of an order under s 50 of the Act were satisfied — no date had been fixed for the trial and no other steps had been taken in the proceedings within the period of 12 months immediately preceding the date of the applications. The Judge made the same assumption. The issue was whether the discretion in s 50 not to strike out the proceedings should be exercised. The appellants argued that they had been prejudiced by the delay; some witnesses had since died and memories of the relevant events which occurred in the 1960s and 70s had faded further since the last trial. In short, the appellants argued that it was no longer possible to have a fair trial. They also contended that Mr Smallbone had delayed seeking a retrial partly because he was attempting to dissuade the new witness from giving evidence. This allegation was strongly contested by Mr Smallbone. He explained his inaction by saying that the proceeding had been very expensive for him to pursue and it had taken him a year to arrange the further funding required for the retrial.
[8] Williams J dismissed the appellants’ applications in a judgment delivered on 7 June 2017.[5] The Judge summarised his reasons for doing so in the following paragraphs of his judgment:

[35] Taking all of these matters into account, I am satisfied by a fine but clear margin that it is appropriate in this case to make an exception to the rule in s 50. Despite the lapse of time, fading memory, the loss of peripheral witnesses and the Londons’ health issues, it is significant that the plaintiff prosecuted his claim with diligence to favourable verdicts and that they were only set aside when new evidence was later unearthed by the defence.

[36] The plaintiff then moved to test that decision on appeal with the same diligence. Given the issues raised about this Court’s jurisdiction to set jury verdicts aside and direct a retrial, those appeals were far from hopeless. They raised novel issues of law that were well arguable. And while lack of money after the Supreme Court decision is, seen alone, no excuse at all, I prefer to see this explanation against the considerable resources the plaintiff must already have expended on the proceeding and the fact that his silence was barely 12 months long.

[37] As the McKay Committee said, s 50 is directed at plaintiffs who are unwilling or unable to prosecute their defamation claims. Plaintiffs may sue for strategic reasons (to gag publication) making a verdict beside the point, or they may simply not be committed to bringing the litigation to trial due to a lack of resources, competence or underlying merit. Section 50 is designed to weed those claims out by placing the onus on plaintiffs to prove that their claim is not of that character.

[38] In the end, and despite his post-appeal inaction, I do not consider that Mr Smallbone is either unwilling or unable to see this litigation to a conclusion within a reasonable timeframe. The overall history of this litigation does not bear that suggestion out.

Grounds of appeal

[9] The second and third appellants advance seven grounds in their notice of appeal. They contend that the Judge erred by:
[10] The first and fourth appellants filed their appeal the day after the notice of appeal was filed by the second and third appellants. They advanced three grounds of appeal, all of which overlap with those included in the second and third appellants’ notice of appeal. They contend the Judge erred by:
[11] At the commencement of the hearing of the appeal, the Court raised with counsel whether s 50 was engaged in the circumstances of this case. Despite the earlier concession, Mr Romanos for Mr Smallbone considered on reflection that it was not. The appellants sought an opportunity to give further consideration to this issue and a timetable was set for the filing and service of submissions addressing it. We have now received and considered these submissions.
[12] We consider that the grounds of appeal can most conveniently be dealt with by addressing the following issues:

Was s 50 of the Act engaged in the circumstances of this case?

[13] Section 50 of the Act was enacted in accordance with the recommendation of the Committee on Defamation chaired by I L McKay in their December 1977 report.[6] The purpose of the provision was partly to address the problem of “gagging writs” which the Committee described as those commonly claiming high damages but really only intended to stifle publication of further matter on the same subject.[7] The Committee noted the difficulty in striking out civil proceedings for want of prosecution under the existing procedural rules and recommended the enactment of a provision requiring a plaintiff to show why proceedings should be permitted to continue if no step has been taken by either party for one year:[8]

We consider that where no step in the action has been taken by either party for 1 year, the defendant should ordinarily be entitled to have the action dismissed. Judges are generally reluctant to dismiss actions because of delay and we can see some advantage in fixing a period after which a plaintiff must show some adequate reason to justify an exception being made. A plaintiff who is really concerned at an injury to his reputation will not be dilatory.

[14] The 12-month period adopted in s 50 of the Act commences on the date the last step was taken in the proceedings by any party. This expression is not defined in the Act but it was plainly intended to mirror the familiar terminology used in the then current High Court Rules which came into force on 1 January 1986. This in turn replicated terminology in the Code of Civil Procedure that was in force at the time the Committee reported.
[15] In Mountain Rock Productions Ltd v Wellington Newspapers Ltd, one of the few reported decisions on s 50, McGechan J considered that a step for the purposes of the section would be one taken in accordance with the Court’s procedural rules:[9]

There is no particular mystery in the concept of “step” “in a proceeding” given contexts. The section and rule envisage some genuine and authorised procedural act within the limits of the rules and recognised practice of the Court. Usually that will involve the filing of a document in the registry: but even that is not essential. As R 432(2) implicitly recognises, a “step” may be wider than the filing of pleadings or the making of interlocutory applications. I have no doubt an oral interlocutory application under R 245 would constitute a “step”. While the act concerned more usually will be within the registry or courtroom, actions outside Court premises governed by the rules of Court — e.g. the tender and return of praecipes under RR 429 and 430 — would qualify. The act must, however, be one within and governed by the rules or recognised practice of the Court. Actions outside that area, albeit connected with the litigation, are not “steps” for this purpose. Mere correspondence, or negotiations, or briefing of witnesses are not included. (Rule 432 hardly was intended to prevent preparation for trial after setting down.)

[16] We agree with this analysis. It is reinforced by r 5 of the former High Court Rules in force at the time the Defamation Act was enacted. This rule provided that a failure to comply with the requirements of the rules would not nullify “any step taken in the proceeding” but the Court was empowered to set aside any such step in which the failure occurred. This confirms that a step taken in the proceeding must be one taken in accordance with the Court’s procedural rules and in respect of which the Court can make orders and exercise oversight.
[17] Rule 426A of the former High Court Rules, which took effect from 1 January 1993 one month prior to the commencement of the Defamation Act, was cast in similar terms to s 50. It provided that where a proceeding has not been set down for trial and at least 12 months have elapsed since the last step was taken in that proceeding, no further steps shall be taken in the proceeding without the leave of the Court. Similarly, leave of the Court was required under r 432 to take any step in a proceeding after it had been set down for trial. These rules further confirm that a step in a proceeding is one taken in accordance with the procedural rules of the Court and subject to the Court’s jurisdiction to make directions and other orders. The Court’s permission to take the step would not otherwise be needed.
[18] Rule 432 has been replaced by r 7.7 of the current High Court Rules. The concept of setting down has been replaced by a close of pleadings date which is now fixed under r 7.6(4), generally at the same time a trial date is allocated. The date for trial will therefore often be set before all procedural steps have been completed and the close of pleadings date reached. If no close of pleadings date is fixed by a judge, r 7.6(4A) makes the default close of pleadings date the later of 60 working days before the trial date or the date on which the trial date is allocated.
[19] The record does not disclose the date fixed as the close of pleadings date in the present proceeding. However, it must have been a date well in advance of the commencement of the trial on 29 July 2013. Despite the order for retrial, no party was entitled to take any step in the proceeding after that date without the leave of the Court. The order for retrial was in effect an order to retry the proceedings on the basis of the existing pleadings. Such an order does not permit parties to amend their pleaded case in the light of what occurred at the trial and no party was entitled to modify their pleadings or take any other step without first obtaining leave of the Court. That has been the position since the close of pleadings date, which must have been some time prior to July 2013.
[20] It is evident from this review that s 50 is directed at defamation proceedings, particularly gagging writs, which are issued but then left to drift for over 12 months without any procedural step being taken to advance the proceedings to trial. The inactivity that will expose a plaintiff to having their proceedings struck out is in the pre-trial phase before the close of pleadings date (formerly the setting down date) when all procedural steps must be taken to ready the proceeding for trial. After that date has passed, no further steps can be taken without leave. Parliament cannot have intended that the proceedings could thereafter be struck out for want of prosecution merely because no party took an impermissible step.
[21] Interpreting the section in context and in the light of its purpose, we consider that the words “no date has been set for the trial” in s 50(1)(a) mean what they say and do not refer to a case where a date has been fixed for the trial, a trial has occurred, but a retrial has been ordered. We do not accept Mr Wishart’s submission that the previous trial was “nullified” and the date set for that trial can therefore be ignored. Reading the section as a whole, the “step” that would need to be taken to avoid the operation of s 50(1)(b) is a procedural step within the rules to advance the proceeding to the stage where the matter is ready for trial so that a trial date can be allocated. This means the first trial, not a retrial, because no steps are required or even permitted without leave after that time. It is irrelevant that a party might wish to seek leave to take further steps after a retrial has been ordered.
[22] Applying this interpretation, s 50 has no application in the present case. All necessary steps have been taken to prepare the proceedings for trial and a date was fixed for the trial. It cannot be said that this was a gagging writ or that Mr Smallbone has failed to prosecute his claim. The trial has taken place and he succeeded. No steps are required to be taken to progress the proceedings to a retrial; the order for a retrial simply needs to be implemented by allocating a date and making any further directions that may be needed to deal with the new evidence. A telephone call or an email to the Court registry seeking the allocation of a date for the retrial is not a step. The failure to make such contact does not trigger the operation of s 50. In our view, this is not the type of situation Parliament had in mind when enacting s 50.
[23] For these reasons, we conclude that s 50 is not engaged in the circumstances of this case and there was accordingly no jurisdiction to strike out the proceedings for want of prosecution under that section. Defendants to claims in defamation that have been to trial and are facing a retrial must fall back on the general provisions for dismissal under rr 15.1 and 15.2 of the High Court Rules. The general expectation that defamation proceedings will be pursued promptly to final determination is likely to be relevant on such applications, but not by invocation of s 50.

Did the Judge err in the exercise of his discretion?

[24] Even if there had been jurisdiction to strike out the proceeding under s 50, we would not have been prepared to interfere with the Judge’s exercise of discretion. Because of our conclusion on the jurisdictional issue, we summarise only briefly the appellants’ submissions on the exercise of the discretion and our reasons for rejecting them.
[25] Mr Wishart submits that Mr Smallbone was required to show that there was a good reason for his “breach” of the 12-month statutory limit, sufficient to justify “the exceptional indulgence” of being allowed to resume the proceedings despite that breach. This argument is founded on a misconception of s 50. There is no breach of any obligation — only the passage of time rendering the provision operative. The Court’s discretion under s 50 is not fettered. It is to be exercised in accordance with the overall interests of justice in the circumstances of the particular case and having regard to the statutory presumption that absent good reason to the contrary proceedings for which no trial date has yet been allocated will be struck out where no steps are taken by any party for 12 months. While a plaintiff will usually need to show some adequate reason for the delay, this will not necessarily always be required. One can readily envisage a case where, despite there being no adequate explanation for the delay, the interests of justice are nevertheless best served by allowing the proceedings to continue, for example where the plaintiff’s claim is strong, the delay has caused no prejudice and the proceeding can be brought on for trial promptly. All relevant factors must be weighed. There is no threshold requirement in the section that a plaintiff must provide a satisfactory explanation for the delay. That may usually be expected but ultimately the issue is whether there is some good reason why the proceedings should be allowed to continue despite the statutory presumption that they should be struck out.
[26] Mr Smallbone explained his delay as being due to a temporary lack of funding. The Judge did not accept that this was an adequate excuse on its own but was prepared to consider this explanation in its wider context.[10] The Judge recognised that Mr Smallbone would have incurred considerable costs pursuing his claim to trial and subsequently contesting in the High Court, the Court of Appeal and the Supreme Court the appellants’ applications to introduce new evidence and set aside the jury verdict.[11] We are not persuaded that the Judge erred in taking this into account in exercising his discretion.
[27] Mr Wishart’s next point is that the Judge miscalculated the 12-month period. The Judge considered that time commenced to run from the day the Supreme Court’s judgment was delivered, 17 December 2015. Mr Wishart contends that the last step in the proceeding was taken in October 2015 when the appellants filed their notice of opposition to Mr Smallbone’s application for leave to appeal to the Supreme Court. The Judge also took into account the holiday period during which the Court registry office was closed. We accept that the 12-month period in s 50 includes holidays. However, that does not mean that the Judge was not entitled to take into account that no steps could be expected by any party while the Supreme Court’s judgment was awaited and the fact that it was delivered immediately prior to the Christmas holiday period. Although this did not affect the 12month period in the section, we are far from persuaded that the Judge was wrong to take these matters into account in exercising his discretion.
[28] Mr Wishart next submits that the Judge failed to take into account that Mr Smallbone’s impecuniosity and consequent temporary lack of ability to fund the retrial constituted an abuse of the process of the Court. Mr Wishart referred to this Court’s decision in Bank of New Zealand v Savril Contracts Ltd confirming that the Court has a duty rather than a discretion to prevent abuse of its processes.[12]
[29] The circumstances which could give rise to an abuse of process are not confined to fixed categories. We accept that were a plaintiff to commence or continue litigation without any genuine intention of pursuing the proceedings to vindicate his or her legal rights (through lack of capacity or otherwise) this could well amount to an abuse of the process of the Court.[13] However, we reject Mr Wishart’s submission that a temporary lack of funding by a plaintiff to pursue his or her claim can of itself constitute an abuse of process of the Court. Mr Smallbone has demonstrated a genuine desire to clear his name and vindicate his legal rights by pursuing his proceedings to trial. Mr Wishart attempts to meet this response by arguing that Mr Smallbone was only diligent when he thought he might win. He claims that this is no longer the case in view of the fresh evidence. We are not able to draw such an adverse inference against Mr Smallbone based on the limited material before us.
[30] Mr Wishart advances an alternative claim of abuse of process. He contends that Mr Smallbone has attempted to pervert the course of justice by pressuring the proposed new witness not to give evidence for the defence. This is a very serious allegation and it is strenuously denied by Mr Smallbone. The Judge was not able to resolve the issue in the context of the appellants’ strike-out applications and without hearing the witnesses give their evidence and be cross-examined. Nor are we. We are not persuaded that the Judge erred in putting this issue to one side for present purposes.
[31] Mr Wishart’s next point is that the Judge failed to take into account what he describes as “aggravating factors”. The first of these is said to be that Mr Smallbone had been warned to get his retrial underway urgently but he had done nothing. The foundation for this submission is a minute issued by this Court on 4 November 2014 in the context of the appeal. The minute recorded under a heading “Substantive appeal”:

The parties agree that one day is needed for the hearing of this appeal. The appeal should be heard by the Permanent Court. Given this is a defamation case, with the prospect of a new trial, the matter requires a fixture fairly urgently.

[32] Contrary to Mr Wishart’s submission, this minute was not a warning by this Court to Mr Smallbone to “get his retrial underway urgently”. Rather, it was a direction to arrange the earliest available fixture for the hearing of the appeal which would determine whether there would be a retrial.
[33] Mr Wishart next submits that the Judge wrongly confined his attention to the delay since the last step was taken and failed to take into account the total length of time that had elapsed since the relevant events were alleged to have occurred, up to 50 years ago. He refers to authority indicating that cases relating to events that occurred 10 or 20 years ago may not be capable of being justly tried.
[34] If Mr Wishart was right that no claim could justly be heard merely because the published statements related to events that occurred 10 or 20 years ago, it would mean that defamatory statements about historical events could be made with relative impunity and the plaintiff would be left with no effective recourse. However, we accept the appellants’ broad proposition that the Court must always endeavour to ensure that proceedings are pursued expeditiously, particularly defamation proceedings. In the context of a strike-out application for alleged want of prosecution, the Court will need to consider whether it remains possible to conduct a fair trial despite the time that has passed.
[35] Williams J carefully assessed the matters advanced by the appellants in support of their submission that a fair trial is no longer possible and concluded that this was not the case.[14] As the trial Judge, his views carry considerable weight on this issue. Having presided over the trial, he is better placed than we are to determine whether the claim can be tried fairly despite the historical nature of the allegations in issue. We are not persuaded that the Judge’s assessment on this issue was wrong. We reject Mr Wishart’s submission that another trial would be a “roulette game” given the age of the protagonists and the events they will be recalling occurred up to 50 years ago. We note that Mrs London purported to be able to recall these events in considerable detail for the purposes of the book that was not published until many years later, in November 2011.
[36] Finally, Mr Wishart submits that the Judge failed to distinguish Mountain Rock. There is nothing in this submission. Each case turns on its own facts. The Judge’s conclusion that the proceedings should not be struck out is readily reconcilable with the same outcome in Mountain Rock, albeit for different reasons.
[37] Mr Tennet, for the first and fourth appellants, supports Mr Wishart’s submissions. These have already been addressed. We need only refer to Mr Tennet’s submissions to the extent that they raise additional matters. Mr Tennet submits that the Judge erred by finding that s 50 applies only to gagging writs. We are satisfied that the Judge made no such error.[15] Mr Tennet also argues that the Judge erred in law by determining that an exception could be made to the normal rule in s 50 by a “fine but clear margin” whereas something more compelling is required. We are not persuaded that a focus on this phraseology leads anywhere. After taking into account all relevant considerations, the Judge was plainly satisfied that the overall interests of justice were best served by declining to strike out the proceedings despite the statutory presumption. Self-evidently, having been so satisfied by a clear margin, it would have been wrong for him to have nevertheless struck out the proceedings.

Should the proceedings have been struck out under either r 15.1 or r 15.2 of the High Court Rules?

[38] The appellants complain that the Judge did not address their strike-out applications with reference to rr 15.1 and 15.2 of the High Court Rules. This was no doubt because the arguments were subsumed in those presented in reliance on s 50. This is clear from the applications which recite the same grounds to justify the exercise of discretion under each of these provisions. If the appellants’ arguments failed for the purposes of s 50, those same arguments could not justify an order striking out the proceedings under rr 15.1 or 15.2.
[39] We have already addressed the abuse of process allegations founding the application under r 15.1 and we need say nothing further about those allegations. The test for striking out a proceeding for want of prosecution in reliance on r 15.2 is more onerous in the present case than the s 50 pathway because of the more exacting 12-month statutory presumption in the latter provision. Having failed under s 50, there was no prospect that the strikeout applications could nevertheless succeed under r 15.2. We are satisfied that the applications were appropriately dismissed regardless of which jurisdictional basis was relied on.

Result

[40] The appeal is dismissed.
[41] The second and third appellants are jointly and severally liable to pay the respondent 50 per cent of costs for a standard appeal on a band A basis and usual disbursements.
[42] If the first and fourth appellants had not been legally aided, we certify that we would have ordered them to pay the same amount of costs as ordered against the second and third appellants.




Solicitors:
Debbie Goodlet, Whanganui for First and Fourth Appellants
Langford Law, Wellington for Respondent

[1] Smallbone v London [2014] NZHC 832.

[2] Smallbone v London HC Wellington CIV-2012-485-482, 21 May 2014 (Minute and Final Order).

[3] Smallbone v London [2015] NZCA 391, (2015) PRNZ 768.

[4] Smallbone v London [2015] NZSC 192.

[5] Smallbone v London [2017] NZHC 1223 [High Court judgment].

[6] I L McKay and Others Recommendations on the Law of Defamation (Report of the Committee on Defamation, December 1977).

[7] At [412].

[8] At [479].

[9] Mountain Rock Productions Ltd v Wellington Newspapers Ltd [1997] 3 NZLR 31 (HC) at 36–37.

[10] High Court judgment, above n 5, at [25].

[11] At [27] and [36].

[12] Bank of New Zealand v Savril Contracts Ltd [2004] NZCA 4; [2005] 2 NZLR 475 (CA) at [103].

[13] Grovit v Doctor 1 WLR 640 (HL) at 647–648.

[14] High Court judgment, above n 5, at [16]–[17] and [29]–[32].

[15] At [37] the Judge made clear that the provision applies generally, not just to proceedings issued to gag further publication.

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