AMI Australia Holdings Pty Ltd v Fairfax Media Publications Pty Ltd

[2009] NSWSC 1484

CITATION:	AMI Australia Holdings Pty Ltd v Fairfax Media Publications Pty Ltd [2009] NSWSC 1484
HEARING DATE(S):	8 October 2009
JURISDICTION:	Equity Division Expedition List
JUDGMENT OF:	Brereton J
EX TEMPORE JUDGMENT DATE:	9 October 2009
DECISION:	Further and better particulars refused. Strike out application dismissed. Further and better (unmasked) discovery granted. Subpoenas set aside in part and upheld in part. Stay refused.
CATCHWORDS:	PROCEDURE – application for further and better particulars of defence – defendant not required to give particulars why information not confidential – whether identity of admitted confidential discloser material – application to strike out defence – defence of iniquity to allegations of breach of confidence – where at least arguable that there is no equity in circumstances where disclosure of information is in public interest – where defendant asserts there is a public interest in disclosure – application to set aside subpoenas – relevance – application for further and better discovery – material masked on discovery to avoid disclosure of a confidential source – whether newspaper rule applies to actions for injurious falsehood and breach of confidence – held, newspaper rule does not apply – further and better discovery granted. STAY – in aid of interlocutory appeal – where final hearing imminent - where issue of principles of importance – where no irredeemable prejudice from refusing stay.
LEGISLATION CITED:	(NSW) Evidence Act 1995, s 126B (CTH) Parliamentary Privileges Act 1987, s 16
CATEGORY:	Procedural and other rulings
CASES CITED:	Beloff v Pressdram Ltd [1973] 1 All ER 241 British Steel Corporation v Granada Television Ltd [1981] AC 1096 Castrol Australia Pty Ltd v Emtech Associates Pty Ltd & Ors (1980) 51 FLR 184 Gray v Associated Book Publishers (Australia) Pty Ltd (in liq) [2002] FCA 1045 John Fairfax & Sons Ltd v Cojuangco (1988) 165 CLR 346 NAK Australia Pty Ltd v Starkey Consulting Pty Ltd [2008] NSWSC 1136 Telstra Corporation v Australis Media Holdings (NSWSC McLelland CJ in Eq, 10 February 1997 unreported) Western Australian Newspapers Ltd v Bond [2009] WASCA 127
PARTIES:	AMI Australia Holdings Pty Ltd (first plaintiff) Advanced Medical Institute Pty Ltd (second plaintiff) Fairfax Media Publications Pty Ltd (first defendant) Rita Almohty (second defendant) Kelly Burke (third defendant) Kate McClymont (fourth defendant)
FILE NUMBER(S):	SC 3219/09
COUNSEL:	Mr M Green w Dr E M Peden (plaintiffs) Mr M A Polden (first, third & fourth defendants) Mr R Dubler SC (second defendant)
SOLICITORS:	Bruce Stewart Dimarco (plaintiffs) Johnson Winter & Slattery (first, third and fourth defendants) TressCox Lawyers (second defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
EXPEDITION LIST

BRERETON J

Friday, 9 October 2009

3219/09 AMI Australia Holdings Pty Limited & Anor v Fairfax Media Publications Pty Limited and Ors

JUDGMENT (ex tempore)

1 HIS HONOUR: In the substantive proceedings the plaintiffs (AMI) claim injunctive and other relief against the first defendant (Fairfax), the third and fourth defendants (who are journalists employed by Fairfax), and the second defendant Dr Almohty (a doctor and former employee of AMI), alleging that Fairfax proposes to publish an article or articles written by the journalists based on information said to have been provided to them by the doctor in breach of obligations of confidence owed to AMI, which article is said to convey false imputations injurious to AMI. The proceedings are set down for final hearing for three days commencing on 26 October 2009. In these interlocutory applications, AMI seeks orders that: (1) the defendants give further and better particulars of their defences, (2) striking out those defences in whole or in part, (3) that the defendants give further and better discovery, and (4) setting aside certain subpoenas for production issued by the defendants. Dr Almohty seeks leave to file an amended defence, raising a defence of iniquity to the allegation of breach of confidence. Yesterday I indicated the rulings I proposed to make. These are my reasons for those rulings.

2 The applications (1) for further and better particulars, and (2) to strike out the defences in whole or in part, are interrelated. They were argued by Mr Green, who appeared for AMI, by reference to a letter of 17 September comprising objections to and requesting further and better particulars of paragraphs 17, 24, 25, 26, 29A, 32, 40A, 41 and 42 of the defences of the first, third and fourth defendants; and a letter of 24 September in respect of paragraphs 14, 19, 26, 36, 37 and 38 of the defence of the second defendant. It is convenient to address them in the same manner.

Defences of 1st, 3rd and 4th defendants

3 As to the defences of the first, third and fourth defendants, the first issue is raised by paragraph 17 of the further amended statement of claim, which is as follows:

17 In or about May 2009, the second defendant disclosed information as particularised by the first defendant to the first, third and/or fourth defendants, such information being of its nature confidential.

4 The particulars referred to letters from the defendants’ solicitors to the plaintiffs’ solicitor, and to an email of 4 June 2009, which had referred to the information about which complaint is made. This, in a sense, is an unusual approach, since normally one would expect the plaintiffs to particularise the disclosures in question by particularising whether they were said to have been oral or written and, if oral, the substance of the disclosures. But where the defendants have knowledge of those matters is primarily, if not exclusively, as is alleged in this case, it is not always possible for a plaintiff to give such particulars, and one might expect the plaintiffs to give in those circumstances simply the best particulars they can, pending discovery and/or interrogatories.

5 In any event, the defence of the first defendant pleads as follows:

In answer to the matters alleged in paragraph 17 of the further amended statement of claim, the first defendant does not admit the matters alleged as against it and otherwise does not plead to the matters alleged therein which make no allegation as against the first defendant.

6 The defences of the third and fourth defendants were in identical terms, save for the reference to the specific defendant.

7 The substance of the complaint about the defence is that it is evasive. The defendants must know whether or not the information in question had been disclosed to them, and a mere “non admission” is evasive. That contention, in my view, has great force.

8 However, on 24 September 2009, the defendants’ solicitors, by letter to the plaintiffs’ solicitors, clarified that the defence to paragraph 17 should be understood to be in the following terms:

In answer to the matters alleged in paragraph 17 of the further amended statement of claim, to the extent an allegation is made against the first defendant, the first defendant:

(a) admits the disclosure to it of certain information referred to in the following [and there follows a reference to the four communications particularised in the statement of claim];

(b) does not admit that any information disclosed to the first defendant was confidential information of the plaintiffs or either of them;

(c) does not admit that any information was disclosed by the second defendant;

(d) does not admit that any such information which was disclosed to the first defendant is capable of protection by a nondisclosure obligation;

(e) otherwise does not admit the remainder of the allegations in the paragraph.

9 Save insofar as it still does not admit that any information was disclosed by the second defendant – a matter which must be in the knowledge of the other defendants – this addresses the complaint of evasion. However, at least arguably the reference to “certain information” in subparagraph (a) remains evasive, because it does not distinctly admit or deny which of the information particularised in the statement of claim was so disclosed. I will address the sufficiency of that reference to “certain information” under a subsequent paragraph of the pleading, as I will the sufficiency of the non-admission that the disclosure was by the second defendant.

10 As to paragraph 24 and 25, the principal complaint was that in answer to the allegation:

24 On or about May 2009 the second defendant and/or a person (or persons) unknown but identified by the defendant as a former employee of the plaintiffs disclosed information as detailed in the confidentiality obligations annexed and marked (a) hereto.

the defendants admitted the disclosure to them of “certain information” referred to in particularised communications, did not admit that any information so disclosed was confidential or capable of protection by a nondisclosure obligation and otherwise did not admit the allegations.

11 Again the gravamen of the complaint is that the reference to “certain information”, without distinctly identifying what information was and was not disclosed in the light of the particulars in the statement of claim, is evasive. At first, that submission seemed to have great force, but in the course of argument it was destroyed when Mr Polden, for the defendants, pointed out that in a letter of 23 July 2009 from the defendants’ solicitors to the plaintiffs’ solicitors, the defendants had particularised in detail the information admitted to have been disclosed to them. Although the pleadings were amended after 23 July, as Mr Polden pointed out on each occasion that a further request for particulars was made the plaintiffs made clear that they assumed that the particulars already provided stood in respect of the amended pleading unless explicitly withdrawn, which never occurred. It is therefore patent that since 23 July the defendants have amply particularised the “certain information” that they admit was disclosed to them.

12 An associated complaint is that the pleading does not admit the identity of the discloser, a complaint that might more compellingly be made in respect of paragraph 17, which specifically pleads that the second defendant was the discloser, whereas paragraph 24 refers to “the second defendant and/or a person or persons unknown but identified as a former employee”. Paragraph 17 at least calls for a clear admission or denial that it was the second defendant, whereas paragraph 24 would permit an admission which would leave unclear whether it was the second defendant or some other person.

13 The fundamental question is whether the identity of the discloser is a material fact such as to require to be pleaded and thus to require a response. The defendants have indicated that they are prepared to admit that the discloser was a person who had signed a confidentiality deed with AMI. What AMI has to prove in the case that it brings against the relevant defendants, is, inter alia, that those defendants received the information in question from a source that was bound to keep that information confidential. I am unconvinced that the precise identity of that source is a material fact, so long as it is proved or admitted that the discloser is a person bound by confidentiality obligations to AMI.

14 In many cases where a defendant admits a version of a communication or transaction in part, but not whole, it will be appropriate to require the defendant to particularise the defendant’s version – including, in the conventional terms, by reference to whether it was oral, written or implied and, if oral, when, where and between whom each relevant conversation took place and what was the effect of the conversation. But whether that is appropriate will depend on what are the material facts and issues, and the extent to which the plaintiff’s case also is particularised. Particulars are not an alternative to discovery – although interrogatories can sometimes be used to elicit material which could also be elicited by a request for particulars. In the present case, no doubt because they have limited, if any, knowledge of the disclosures that took place, the plaintiffs’ particulars of the alleged disclosures are themselves of a high degree of generality. The defendants’ qualified admission does not appear to set up an alternative version to one particularised by the plaintiffs. In circumstances where, as presently advised, I think the identity of the discloser is not a material fact, it seems to me that to require the defendant by way of particulars to identify who it was who made the disclosure would be going beyond the proper scope of particulars and embarking into what would be permissible, if at all, only as an interrogatory.

15 In any event, I am quite satisfied that the fact that the pleading does not admit the identity of the discloser is not so serious a defect in the pleading as to justify its striking out. Indeed, the whole argument has an air of unreality about it, since the defence of the second defendant – not her most recently amended one, but that filed as long ago as 28 August 2009 – in response to paragraph 17 of the statement of claim admits that she indicated certain of the matters particularised to the other defendants, and in response to paragraph 24 of the statement of claim, again admits that she indicated certain of the particularised matters to the other defendants. Accordingly, I do not accept that the plaintiffs are entitled, by way of particulars, to compel the defendants to identify the discloser.

16 The plaintiffs also sought the “facts, matters and circumstances upon which the first defendant proposes to rely in respect of the allegation that the information was not, of its nature, confidential and related information.” In my view, there is no pregnant negative in the non-admission that the information in question is confidential. The position in respect of a defence of when it comes to iniquity might be different; but here, the defendants are simply putting the plaintiffs to proof that the information was information to which an obligation of confidentiality attached. In those circumstances, the particulars sought are not appropriate.

17 As to paragraph 26, the complaint again is as to the inadequacy of reference to “certain information” disclosed by the “former employee”, which have already been addressed above.

18 Requests were also made, although I think not seriously pressed in the course of argument, for the “facts, matters and circumstances” relied on for the contention that the “newspaper rule” applied, or that (NSW) Evidence Act 1995, s 126B, applied. Those aspects of the pleading are not of material facts relevant to the proof or defence of the plaintiffs’ case in the substantive proceeding, but have been apparently included as an explanation for why the allegation as to the identity of the discloser was not expressly answered. It is not appropriate to order particulars of them.

19 A request was also made for the “facts, matters and circumstances” on which the defendants proposed to rely in respect of the allegation that the information was not of its nature confidential, and so on. Again, there is no need for further particulars of a non-admission of an allegation that information was confidential or capable of being confidential.

20 As to paragraph 29A, the defence asserts that it was in the public interest to disclose the imputations “to protect the community from damage, loss or harm”; secondly, that reliance was placed upon a waiver said to have been made in a letter of 4 June 2009, which was particularised; and thirdly, that reliance was placed upon the public disclosure made before a House of Representatives standing committee on 21 August 2009. AMI seeks particulars of “the precise facts, matters and circumstances, whether legal or factual, upon which the first defendant proposes to rely in respect of the allegation that each piece of information was in the public interest to disclose”.

21 The relevant “pieces of information” have been identified in what the parties have called five “clusters” – but which I prefer to call “imputations” – which it is admitted that the proposed article would convey.

22 It is clear that paragraph 29A(a) seeks to raise a defence of “iniquity”. The cases make reasonably clear that it is at least arguable that the principle that there is no equity or confidence in an iniquity will be attracted in circumstances where disclosure is justified in the public interest “of matters carried out or contemplated, in breach of the country’s security, or in breach of law, including statutory duty, fraud or otherwise destructive of the country or its people, including matters medically dangerous to the public; and doubtless other misdeeds of similar gravity” [Beloff v Pressdram Ltd [1973] 1 All ER 241, 260 (Ungoed-Thomas J); Castrol Australia Pty Ltd v Emtech Associates Pty Ltd & Ors (1980) 51 FLR 184, 213 (Rath J)]. It is, I think, manifestly clear that the case propounded by the defendants is that each of the five imputations is a matter which it is in the public interest to disclose to protect the community from damage, loss or harm of the type referred to in the passage I have cited. I do not understand what further particularisation could be required in order to understand, appreciate and answer that case.

23 It was suggested that the defendants ought to particularise some connection between each of the imputations and each of the disclosures, to show how each disclosure related to an imputation. I do not understand any authority to require that course. What the defendants have to show is that what they propose to disclose – or, in the case of the second defendant, have already disclosed – was justified by reference to the public interest in protecting the community from damage, loss or harm. In circumstances where the case has been narrowed and confined to the five imputations that enables attention to be focused on their subject matter, but I do not see why, in order to understand and answer that defence, it is necessary to particularise some connection between each aspect of the disclosure and each imputation. It will be perfectly possible to see at the trial, without further particulars, whether or not all the disclosures are covered by the claimed public interest in disclosure.

24 As to the request for the “precise facts, matters and/or circumstances upon which the defendants propose to rely in support of the effectiveness of the alleged waiver”, this was not seriously pressed on the hearing of the motion. Other than by reference to the particular paragraph or sentence in the letter in question, which is self-evident, it is impossible to see what further particulars could be required of the allegation of waiver.

25 As to the request for separate particularisation of the “precise facts, matters and/or circumstances relied upon as constituting public disclosure pleaded in paragraph 29A(c)”, such particulars were provided by reference to what took place at the parliamentary committee. An argument advanced that reliance could not be placed on that, because it was said to involve contravention of the (CTH) Parliamentary Privileges Act 1987, s 16, which was said to prohibit use in court of any statements made before the Parliamentary committee. In earlier interlocutory proceedings, Rein J has already shown that the section does not prohibit the use of proceedings before a parliamentary committee simply to prove what was said to the committee. In my view, it is manifestly clear that what the defendants are seeking to do is to say that any confidence attaching to material disclosed to the committee has been lost by virtue of its already being in the public domain. That does not involve any of the matters prohibited by s 16(3) of the Parliamentary Privileges Act. The allegation is sufficiently particularised.

26 In respect of paragraph 32, particulars are sought of the facts, matters and circumstances to be relied on in relation to the defendants’ denial that the imputations were false. In other words, this seeks particulars of truth from the defendants. I do not know how one particularises that an allegation is true, other than by saying it is true. Beyond that what is sought must be evidence, not particulars.

27 In respect of paragraph 40A, particulars were sought of the “facts, matters and circumstances upon which the defendant proposes to rely in support of the allegation that s 65A of the Trade Practices Act … applies.” It emerged in the course of argument that the fundamental issue in the Trade Practices claim would be whether the third and fourth defendants were “prescribed information providers” for the purposes of that section. It also emerged that that argument, and whether s 65A was attracted, did not depend on further particulars, but was perfectly capable of being conducted on the material so far pleaded and particularised. Indeed, in the course of argument, the application for these particulars was abandoned.

28 As to paragraphs 41 and 42, the gravamen of the complaint was that, whereas the statement of claim pleaded that the defendants were in possession of documents and information belonging to the plaintiffs, the non-admission contained in the defence was evasive in circumstances where the defendants must have known whether such documents and information were in their possession. At first sight, this argument had force. However, it is clear that whether the documents and information in question belong to the plaintiffs or to the second defendant is an issue – the second defendant contending that the documents belong to her, not to the plaintiffs. In those circumstances, it can hardly be inappropriate for the other defendants to leave in issue whether the documents in question are documents belonging to the plaintiffs.

29 So far as possession is concerned, without more there might have been some legitimate complaint that the defendants ought at least be able to admit what documents were in their possession – although the pleading does not particularise the documents so as to facilitate that course. However, the parties have had discovery. The defendants have given discovery of the relevant documents in their possession, and it is impossible to see how further particulars could add to what the plaintiffs can already ascertain from the discovery they have been given.

Defence of the 2nd Defendant

30 Turning, then, to the defence of the second defendant, the request for further particulars of paragraph 14 of her defence was not pressed.

31 So far as paragraph 19 of the defence is concerned, the second defendant’s defence in its previous, and now in its amended form, admitted “that she indicated certain matters to the first, third and fourth defendants as contained in some paragraphs by the plaintiffs in correspondence from Bruce Stewart Dimarco to TressCox Lawyers dated 19 August 2009”, which admission is particularised by reference to paragraph and subparagraph of that letter and exception of those “certain matters”. In those circumstances, the second defendant has amply responded to the allegation and particularised precisely which of the matters alleged to have been disclosed she admits was disclosed.

32 The letter requesting particulars also asserted that the denial that the information was confidential amounted to a positive defence and sought the facts, matters and circumstances relied on that for contention. In my opinion, a denial that information was, of its nature, confidential or constituted confidential information does not ordinarily require further particularisation.

33 As to paragraph 26, requests were made for particulars of the “certain matters” admitted to have been disclosed in the defence. Unlike paragraph 19, where the defence had particularised the “certain matters”, that was not repeated in paragraph 26. However, prior to the letter of 24 September 2009, and indeed in a letter from TressCox to Bruce Stewart Dimarco of 23 September to which that letter of 24 September responded, it was stated in paragraphs 14 and 15 that the particulars to paragraph 26 were the same as those to paragraph 19.

34 A similar request to that in respect of paragraph 19 was made for particulars of the implied allegation said to arise, that the information was not confidential. For the reasons already advanced, it is not appropriate to order the provision of such particulars.

35 In respect of paragraph 36, the plaintiffs sought the “facts, matters and circumstances” proposed to be relied on to prove that it was an implicit term of the second defendant’s engagement that she could keep and make copies of all records of her treatment of patients. The second defendant had already particularised that Dr Almohty was engaged as an independent contractor to perform work as a medical practitioner, and was required to maintain her own insurance with respect thereto. It seems to me quite clear that the argument being advanced is that to perform her duties as a medical practitioner and meet her obligations as such, the parties necessarily understood that she would have to keep and retain copies of her patient records. I do not see what further particulars are necessary to understand and answer that case.

36 As to paragraph 37, the plaintiffs sought particulars of an alleged implied term in the contract of employment that no confidentiality existed over any information comprising unlawful conduct of the plaintiffs. They said, “Our clients are entitled to precise particulars of the ‘unlawful conduct’ on which your client seeks to rely …”. The request is misconceived. Paragraph 37 does not allege any unlawful conduct. It alleges that there was an implied term of the engagement that information comprising unlawful conduct was not protected by confidentiality.

37 As to paragraph 38, particulars were sought of the “facts, matters and circumstances” comprising the ‘nature of the work’ referred to by the second defendant in an earlier answer to a request for particulars of that paragraph, which was said to found an implied term that she could take all and any necessary steps to comply with her obligations as a registered medical practitioner. In circumstances where it is not controversial that Dr Almohty was employed by the plaintiffs as a medical practitioner in New South Wales, further details of the precise nature of the work are quite superfluous to the issue.

38 In my view, therefore, the plaintiffs are not entitled to further and better particulars of any aspect of the defences referred to, and the defences are not so defective as to be liable to be struck out in whole or in part.

Application to set aside subpoenas

39 So far as the application to set aside subpoenas is concerned, I have already indicated briefly my reasons for concluding that certain of the subpoenas should, and others should not, be set aside.

40 Two – those addressed to the Registrar, Medical Board of South Australia, and the Health and Community Services Complaints Commissioner of South Australia – were not pressed by the relevant defendants, and were therefore set aside by consent.

41 One – addressed to the Proper Officer of the Australian Competition and Consumer Commission, seeking production of the trade practices compliance program for the plaintiffs applicable for the relevant period – had the appearance of a fishing expedition and for that reason I set it aside, there being no more than speculation that it might produce documents that would advance the case.

42 Three – addressed respectively to the Director General of the Department of Services, Technology and Administration, the Proper Officer of the NSW Office of Fair Trading and the Proper Officer of the NSW Department of Health – related to the Dwyer Report and associated documents. There is every reason to suppose that such documents exist, and may be relevant to the truth or falsity of the imputations.

43 One – addressed to the Proper Officer of the NSW Medical Board – sought documents plainly relevant to be truth and/or falsity of one of the imputations.

44 The final one – addressed to the Proper Officer of Australian Doctor magazine – sought documents obtained for, or used for the preparation of, or cited, in an article published on 29 November 2006, including although not limited to script notes for call centre staff referred to in the article. Part of the iniquity case which the defendants seek to advance is that “for at least 18 months prior to early 2009” AMI customer service operators had certain practices as to information they provided to patients. Evidence of scripts provided for that purpose would be relevant to proof of the truth or falsity of that allegation. Although the date of the article in question predates 18 months prior to early 2009, the allegation is not limited to 18 months but it is expressed in terms “for at least 18 months”. That does not exclude proof that the practice predated that 18 month period.

45 I therefore declined to set aside those other subpoenas.

Further and better discovery

46 That leaves for consideration the application for further and better discovery. The complaint about the discovery so far given is that, in respect of a recorded interview between one of the journalists and a person who appears to be the source, only a transcript of the recording and not the recording itself has been produced, and in that transcript (and other documents produced) there has been redaction of material that would enable the source to be identified.

47 The starting point is that where an order for discovery is made, a document that falls within the discovery obligation must be discovered in toto and without redaction, unless there is a legally recognized claim to be able to withhold certain parts of it, such as where there is a legally recognized claim of privilege. Where a claim is made of confidentiality falling short of a legal privilege, redaction should not take place except with the leave of the court, and a party seeking permission to redact should apply to the court for such leave. However, as a matter of practice, it not uncommonly happens that a party giving discovery has, without obtaining the agreement of the other party or leave from the court, produced documents for inspection in a masked form, yet the court has subsequently, after argument, permitted the masking to stand – see Telstra Corporation v Australis Media Holdings (NSWSC, McLelland CJ in Eq, 10 February 1997, unreported), Gray v Associated Book Publishers (Australia) Pty Ltd (in liq) [2002] FCA 1045; NAK Australia Pty Ltd v Starkey Consulting Pty Ltd [2008] NSWSC 1136, [4] – [7].

48 Neither agreement nor leave has been sought or obtained in this case. The question, however, remains whether the masking or redaction should be permitted to stand. The defendants invoke the so-called “newspaper rule”, whereby a practice is recognized of refusing to compel a newspaper or equivalent defendant to disclose the name of its source for an article complained of as a libel – see, in particular, John Fairfax & Sons Ltd v Cojuangco (1988) 165 CLR 346. A useful summary of the features of this rule is to be found in the recent judgment of the Court of Appeal of the Supreme Court of Western Australia, in Western Australian Newspapers Ltd v Bond [2009] WASCA 127 at [60] – [68]. It is clear that the rule is one of practice and not one of law. It is clear that at least its prime application is in defamation actions, and there is a question as to whether it extends beyond that. It is clear also that the court retains a discretion to decide, at an interlocutory stage, whether to make or refuse an order which will directly or indirectly disclose the identity of a confidential source. But the mere relevance in pending proceedings of the identity of a confidential source is not a sufficient reason, at an interlocutory stage, to dispense with the rule – which extends to discovery and inspection and interrogatories.

49 In my view, it is highly doubtful that the newspaper rule applies to a proceeding such as the present. The defendants have argued that it does so, on the basis that injurious falsehood is analogous to defamation, and that the law in Australia is not identical to that in England (where the House of Lords has held that the rule is confined to defamation actions and did not extend to actions for breach of confidence) [British Steel Corporation v Granada Television Ltd [1981] AC 1096, 1197, 1203]. It is true that the judgment of the High Court in Cojuangco refers to “defamation or related action” [354] and “defamation, perhaps other analogous actions” [356]. It would be surprising, in the light of the strong endorsement of the majority judgment in Granada Television to be found elsewhere in the judgment of the High Court, if it were intending by those incidental words to cast doubt on the House of Lords’ rejection of the extension of the rule to actions for breach of confidence. I see nothing in Cojuangco which suggests that Granada should not be followed in that respect.

50 It is true that in Western Australian Newspapers v Bond the Supreme Court of Western Australia appears to have assumed that the rule applied in proceedings in which the principal causes of action were for conversion and for breach of confidence. However, save for suggesting that Cojuangco be compared with Granada Television, the court did not analyse the question, and appears to have assumed that the causes of action or case before it were related or analogous to a defamation action. It may well be that such an assumption was correct in circumstances where the pleading, as summarised in paragraph 14 of the judgment, included an allegation that the article there in question, based on the material said to have been converted, was defamatory.

51 In this case, no question of defamation arises. The defendants contended that an action for injurious falsehood was analogous to one for defamation. In my opinion there are significant reasons for not accepting that submission, the principal one being that, in an action for defamation, justification or proof of truth of the imputations is cast upon the defendant newspaper, whereas in an action for injurious falsehood proof of falsity and malice falls upon the plaintiffs. That is a significant reason for concluding that the special dispensation afforded to newspaper defendants in defamation proceedings ought not be available in injurious falsehood actions. In my view, I should follow the House of Lords, in the absence of doubt having been cast on the correctness of its decision by the High Court, and hold that the rule does not extend to actions for breach of confidence; nor would I extend it for actions for injurious falsehood.

52 Moreover, as a matter of practicality, in the present proceedings I would come to the conclusion that in any event the rule should not be enforced, for the reason that, in circumstances where the second defendant has admitted that she was the source, it cannot seriously be said that she is any longer a confidential source such as to be entitled to the kind of protection that the rule is intended to afford.

53 Accordingly, I order that by close of business on Monday 12 October 2009, by way of further and better discovery, the first, third and fourth defendants produce for inspection by the plaintiffs document number 16 in Part 1 of the first defendant’s list of documents, and unredacted copies of the documents which it has so far discovered in redacted form.

Further Amended Defence

54 The second defendant sought leave to file a further amended defence. I granted that leave. The substantial opposition to it was a complaint as to the inadequacy of the particularisation of the defence of iniquity. I am amply satisfied that that defence was adequately particularised. I therefore granted that leave.

Implementation of discovery by sample

55 The first defendant, by motion filed in court yesterday, sought orders to facilitate the selection of the sample of doctors, clinical service operators and nurses for the purposes of the discovery by sample previously ordered. As I indicated in the course of argument, while I do not agree that what the defendants propose was implicit in the order originally made, and while indeed I am inclined to the view that, on the face of the order, the construction contended for by the plaintiffs is probably the better one, the interests of justice and transparency dictate that the defendants should be able to make the selection that defines the sample: because, if for any reason that sample is not a fair one, the plaintiffs, and not the defendants, are in a vastly superior position to establish that to be so by providing additional material from their possession, custody or power.

56 I therefore made orders yesterday to give effect to the earlier discovery order by providing for the plaintiffs to identify those service providers who were on duty on the day selected for the purpose of the sample, so as to enable the defendants to select those three in each category in respect of which documents were to be discovered.

Application for stay

57 Mr Polden applies for a stay of the order for further and better discovery (of unmasked documents) on the basis that the defendants may wish to test my decision on appeal. I accept that the extent and scope of the newspaper rule is a matter of principle and of importance, and in an appropriate case might well be the subject of a grant of leave to appeal. If I thought that compliance with the order would destroy a viable appeal on that question, and notwithstanding the imperative of readying this case for a final hearing, I would probably incline to the application for a short stay to permit leave to appeal to be sought.

58 Nonetheless, I note that the order as presently framed does not require compliance until close of business on Monday, which permits an urgent application to the Court of Appeal on Monday, and given the proximity of the final hearing, I do not think it is unreasonable to expect that if an application is to be made it be made by then.

59 Moreover, and in my view decisively, as things stand the defendants cannot assert with certainty that discovery of the material in question would reveal the identity of a source other than the second defendant. I have referred already to the fact that the second defendant has admitted in her own pleadings that she disclosed information to the journalists, and in those circumstances it is difficult to see why any obligation of confidentiality would continue to attach to the newspapers so as to justify enforcement of the newspaper rule. I am prepared to reconsider the question of a stay, and would very likely grant one, if the defendants serve and lodge with my associate an affidavit deposing that compliance with the discovery orders as made would result in the disclosure of a confidential source other than the second defendant. If such an application is to be made it can be made later this afternoon or on Monday morning.

60 Subject to that, I refuse to grant a stay.

61 I withdraw the description the recording of the interview of the second defendant and substitute document number 16 in Part 1 of the first defendant’s list of documents.

Costs

62 That leaves us with the question of costs. Beginning with the second defendant, there was no reasonable basis for opposing the second defendant’s application for leave to amend. The second defendant would normally be required to pay the costs of that application, it being an indulgence sought from the court, but in circumstances where its application has been unreasonably opposed I will not make that order; at the same time, because an indulgence was required, I will not accede to its application that its costs be paid on an indemnity basis. I order that the plaintiffs pay the second defendant’s costs of the motions of 1 October 2009.

63 So far as the Fairfax defendants are concerned, the position is more complicated because while they succeeded – and succeeded clearly – on the plaintiffs’ motion for particulars and striking out, they did suffer a minor defeat in respect of their subpoenas (although some were upheld), and they lost the argument about discovery. One can only be approximate about apportioning costs between parties, and it is undesirable to do it by reference to issues as that simply complicates the task of a costs assessor. In rough terms, it seems to me that about three-quarters of the argument was attributable to the strike out and particulars argument, and about a quarter to the discovery argument. There were of course some other incidental elements, including the subpoenas (on which, at the end of the day, success was fairly evenly balanced) and the establishment of a regime for identifying the doctors and consultants in respect of whom the sample discovery was to be given (on which the defendants succeeded, but the plaintiffs’ opposition was entirely reasonable).

64 Ultimately that leads to a position where I think the plaintiffs in principle should pay about three-quarters of the defendants’ costs, and the defendants should pay about one-quarter of the plaintiffs’ costs. Pragmatically setting those off each against the other, the result is that the plaintiffs should pay half of the defendants’ costs of the motions.

65 I order that the plaintiffs pay half of the defendants’ costs of the motions of 1 October 2009.

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