Court Inveighs against Cavalier Defence Pleading and Lawyer Media Comment mid Cross Examination

In Kumova v Davison (no.2) [2023] FCA 1, the defendant, Mr Davison, published upon Twitter that the plaintiff, Mr Kumova, mislead the market by his public statements, and engaged in a “pump and dump” scheme in relation to certain shareholdings. In consequence, Mr Kumova sued Mr Davison for damages for defamation.

The Court commented upon two emerging inimical practices in the conduct of litigation. Although a defamation case, the comments were of a kind that are salutary, transcending that litigious space.

The first point concerns the counsel and solicitors pleading positive defences, only to abandon them closer to trial despite no subsequent jurisprudential advance or clarification of the factual matrix.

The second point concerns the lawyers for a litigant proactively making media commentary – on Twitter no less – in the course of trial, upon a critical witness or witnesses being cross-examined.

In these respects, relevantly Justice Lee wrote: –

[82]           A different form of “pump and dump” took place in the conduct of Mr Davison’s defence.

[83]           In his further amended defence, Mr Davison had pleaded the following defences to each of the six matters:

(1)          justification under s 25 of the Defamation Act 2005 (NSW) (Defamation Act);

(2)          statutory qualified privilege under s 30 of the Defamation Act and qualified privileged at common law;

(3)          honest opinion under s 31 of the Defamation Act and fair comment at common law; Kumova v Davison (No 2) [2023] FCA 1 32

(4)          qualified privilege at common law based on reply to attack; and

(5)          (remarkably) triviality under s 33 of the Defamation Act.

[84]           Mr Davison also asserted contextual truth under s 26 of the Defamation Act with respect to the Fifth Matter.

[85]           The bulk of Mr Davison’s defences fell away. It should have been obvious from the start that a number of these defences were untenable on the facts. Mr Davison is not an outlier in not pursuing pleaded defences following mature reflection. It seems that in defamation, in stark contrast to most commercial litigation, there is an entrenched persistence in joining issue and raising positive defences when there is an infirm basis for doing so.

[86]           Defamation cases are now commonly run in the Federal Court. Part VB of the FCA Act does not contain empty rhetoric. There is a statutory duty on practitioners to assist their clients in facilitating the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible: s 37N(2) of the FCA Act. This means that in preparing pleadings, it is necessary for both the solicitor on the record and the barrister settling the pleading to ensure contentions not bona fide in dispute are not put in issue, and to make sure untenable defences are not pleaded. The apparently persistent notion that defamation practitioners can just roll the arm over and plead defences like they are in a time warp that has transported them back to the 1970s needs to be exploded.

…

[325]         Mr Kumova submits that he is entitled to an award of aggravated damages by reason of a shopping list of matters, which may be summarised into three broad headings:

(1)          Mr Davison’s ongoing campaign against Mr Kumova, including that he failed to inform Mr Kumova of the imputations he intended to publish, and continued to tweet about Mr Kumova and reported him to ASIC despite receiving a letter of demand, a Concerns Notice, issuing an apology and the commencement of proceedings;

(2)          Mr Davison’s pursuit of his justification defence; and

(3)          the conduct of Mr Davison and his legal representatives prior to and during the proceeding, including a series of publications before and while the proceeding was underway, as well as Mr Davison’s destruction of documents and failure to comply with discovery obligations.

[326]        I will deal with each of these three matters below, but it is useful to make a preliminary point: some of the submissions of Mr Kumova were understandably put forcefully but, as a consequence, seemed to skirt with a perceived need to condemn Mr Davison for his conduct (particularly his lack of candour as to discovery). Notwithstanding no submission was made expressly by experienced counsel that aggravated damages be awarded to punish Mr Davison, it is important to stress that it is no part of my function to award exemplary damages: any award of aggravated damages is, of course, purely compensatory.

[327]        As to the first matter, which does relate to the circumstances of the publication of the defamatory matters, the content, tone and frequency of the tweets by Mr Davison about Mr Kumova are indicative of an intention to discredit Mr Kumova. They travelled beyond the proper purpose in publishing information or comments as a “citizen journalist”. Mr Davison started tweeting about Mr Kumova in early 2018, and his tweets escalated in frequency and seriousness. Remarkably, the document prepared by Mr Kumova’s solicitors reproducing those tweets is some 111 pages long. Mr Davison also implicated Mr Kumova’s companies, colleagues, friends and family: see, for example, T80.45–81.5. Three examples are demonstrative:

(1)          on 31 May 2020:

MAKE NO MISTAKE The Tolga Kumova plays

…

DO NOT CREATE WEALTH.

They Transfer it.

From your pocket to theirs!

Caveat Emptor…

(2)          on 16 June 2020: “Teflon Tolga Kumova sanitising his life for the crowd. Not a mention of his Brother Emre Kumova being arrested as a principal player in a meth drug syndicate at the exact same time Tolga made his money on Doray Minerals. I bet Emre has some stories”; and

(3)          on 15 January 2021: “Tolga Kumova should have a disclaimer on everyone [sic] of his pumps saying: Caution Not 1 of my stocks have ever made a profit. My profit comes from speculative rises in share prices”.

[328]        The force of these statements is exacerbated by what I find was Mr Davison’s less than genuine apology on 20 September 2020, which read:

I have in the last few days received a statement of claims that I made imputations that Tolga Kumova has engaged in insider trading. Let me be clear. That was not and has ever [sic] been my intention, inference or thought. I apologise to Tolga for any hurt caused.

[329]        The conduct of this campaign by Mr Davison against Mr Kumova amounted to improper or unjustified conduct, increasing hurt and satisfying me that the circumstances of the publication of the defamatory matters warrant an award of aggravated damages.

[330]        Secondly, Mr Davison’s pursuit of his justification defence, including the fact that large aspects of it were abandoned, is of real concern and amounts to unjustified conduct increasing Mr Kumova’s hurt and warranting an award of aggravated damages. The raising of what was partly an untenable justification defence adopting allegations of serious criminal conduct not only caused and increased vexation to Mr Kumova, but also caused delay and wasted costs (notwithstanding its later, partial abandonment).

[331]         Thirdly and finally, over the course of the proceeding, Mr Davison proceeded with disregard for the processes of this Court. Although engaging in contemporaneous public commentary on Court cases by litigant is not itself improper (if kept within appropriate bounds), Mr Davison tweeted about Mr Kumova and those assisting him incessantly while the proceeding was before the Court, for example:

(1)          with reference to an interlocutory judgment of Flick J (Kumova v Davison [2021] FCA 753), on 5 July 2021, Mr Davison tweeted: “The Judgement [sic] was short and bitter. Apparently my Twitter feed does not break enough news to be considered a [sic] journalist. So I will break some tomorrow, ;)” and, the next day, on 6 July 2021, “More breaking news not before unleased [sic] on unwashed retail masses! We will disclose an update to the Tolga Kumova v Stockswami saga We’ll unravel a pump and dump scheme”;

(2)          on 8 July 2021, he tweeted: “The 1 good thing about being sued is that you become so broke, you don’t get worried about being sued a second time”;

(3)          on 28 July 2021, he tweeted: “This is funny. Tolga’s Kumova’s PR agent runs a smear campaign against me while his lawyers write letters complaining I’m still talking about Kumova & his stocks. They don’t like me talking about Evan Cranston either. Tough titties”; and

(4)          on 23 December 2021, he tweeted: “Tolga is claiming I’m calling him a pumper & dumper but for some reason doesn’t want me to put on evidence of his pumping & dumping”.

[332]         At the risk of a digression, Mr Davison’s approach to providing tendentious commentary was, regrettably, mirrored on one occasion by his solicitors. On 23 June 2022, during the course of cross-examination of Mr Kumova, Mr Davison’s solicitors responded to some evidence by posting a tweet, which opens, “Tolga Kumova 4.8 billion overvaluation!” As I pointed out when this post was drawn to my attention, r 28.1 of the Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 (NSW) provides a solicitor must not publish or take steps towards publication of any material concerning a proceeding which may, among other things, prejudice the administration of justice. It is unnecessary for me to form any view as to any breach of this rule, but it suffices to note that a solicitor mocking a witness on social media while they are under cross-examination and because of the evidence they have given should not occur. That said, this conduct was not engaged in by Mr Davison and I have not placed significance upon it in assessing damages.

…

(emphasis added)