Liu v The Age Company Pty Limited (No 2)

[2015] NSWSC 276

Supreme Court

New South Wales

Medium Neutral Citation:	Liu v The Age Company Pty Limited (No 2) [2015] NSWSC 276
Hearing dates:	18 December 2013, 20 December 2013, 11 April 2014
Date of orders:	23 March 2015
Decision date:	23 March 2015
Jurisdiction:	Common Law
Before:	McCallum J
Decision:	Upon the giving by each defendant of an undertaking to the Court not to rely upon any defence of qualified privilege in proceedings 2011/36003, the order for preliminary discovery made 1 February 2012 and entered 2 February 2012 is stayed pending the determination of the plaintiff’s application for costs
Catchwords:	PRACTICE AND PROCEDURE – where preliminary discovery order made compelling identification of journalists' confidential sources – application to stay order – where journalists undertaking not to rely on defences of qualified privilege – whether application an abuse of process – proper approach to determination of stay application – modern litigation principles
Legislation Cited:	Civil Procedure Act 1995 (NSW),  56 - 588 Defamation Act 1974 (NSW), s 22 Defamation Act 2005 (NSW), s 30
Cases Cited:	Application of Eduardo Murphy Cojuangco (No 2) (Supreme Court (NSW), Hunt J, 6 January 1989, unrep) Aon Risk Services Australia Limited v Australian National University [2009] HCA 27; 239 CLR 175 Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44 Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd [2013] HCA 46 John Fairfax & Sons Ltd v Cojuangco (1987) 8 NSWLR 145 John Fairfax & Sons Limited v Cojuangco [1988] HCA 54; 165 CLR 346 Lange v Australian Broadcasting Corporation [1997] HCA 25; 189 CLR 520 Liu v The Age Company Limited [2012] NSWSC 12 McMahon v John Fairfax Publications Pty Ltd [2010] NSWCA 308 Palavi v Radio 2UE Sydney Pty Ltd [2011] NSWCA 264 Re Application of Cojuangco (1986) 4 NSWLR 513 Richards v Cornford (No 3) [2010] NSWCA 134 The Age Company Limited v Liu [2013] HCATrans 205 The Age Company Limited v Liu [2013] NSWCA 26; 82 NSWLR 268 Wran v Australian Broadcasting Corporation [1984] 3 NSWLR 241
Category:	Consequential orders (other than Costs)
Parties:	Helen Liu (Plaintiff) The Age Company Limited (First Defendant) Richard Baker (Second Defendant) Phillip Dorling (Third Defendant) Nick McKenzie (Fourth Defendant)
Representation:	Counsel: B McClintock SC with G Rubagotti (Plaintiff) TD Blackburn SC with ATS Dawson and L Barnett (Defendants) Solicitors: Kennedys (Plaintiff) Minter Ellison (Defendants)
File Number(s):	2010/224488
Publication restriction:	None

Judgment

1. HER HONOUR: Helen Liu claims to have been defamed by an article published in The Age on 3 February 2010. The article was published under the by-line of three journalists employed by that newspaper. It included quotes from documents said to have been obtained by the journalists from confidential sources. The journalists have undertaken to the sources not to reveal their identity and are determined to adhere to those undertakings.

2. By these proceedings, Ms Liu sought preliminary discovery orders against the proprietor of The Age and the three journalists to ascertain the identity of the sources for the purpose of commencing proceedings for defamation against them.

3. I determined the application on 1 February 2012: Liu v The Age Company Limited [2012] NSWSC 12. I made the following order:

that the defendants give discovery to the plaintiff of all documents that are or have been in their possession which relate to the identity or whereabouts of the sources.

4. At the time the order was made, some documents answering that description had been produced to the Court in redacted form in response to a notice to produce. The plaintiff did not seek access to those documents at the time they were produced to the Court, accepting that any such application should abide the determination of the proceedings.

5. The order for preliminary discovery was entered on 2 February 2012 but stayed (by consent) the following day pending an appeal by the defendants to the Court of Appeal. The appeal was dismissed on 21 February 2013: The Age Company Limited v Liu [2013] NSWCA 26; 82 NSWLR 268. An application for special leave to appeal to the High Court was dismissed on 6 September 2013: The Age Company Limited v Liu [2013] HCATrans 205.

6. Following the exhaustion of the appeal process, the plaintiff relisted the proceedings in order to seek access to the documents produced to the Court in response to the notice to produce. The defendants then filed a notice of motion seeking to have the order for preliminary discovery vacated. It was common ground that the defendants’ application was logically anterior to the plaintiff’s application for access and should be determined first. This judgment determines that application.

Basis for the present application

7. The issue determined in the principal judgment was whether the order sought was “necessary in the interests of justice”: at [115]. In determining that question, I applied the test stated by the High Court that an applicant for such an order must show that “the making of the order is necessary to provide him with an effective remedy in respect of the actionable wrong of which he complains”: John Fairfax & Sons Limited v Cojuangco [1988] HCA 54; 165 CLR 346 at 357.4; cited in my judgment at [115].

8. An important consideration in determining that issue was the “newspaper rule”. As explained by the High Court in Cojuangco, that is not a rule of law or evidence. It is a rule of practice of refusing, in the interlocutory processes in an action for defamation, to compel the publisher of a newspaper to disclose the name of a confidential informant. The Court noted that the rule is not capable of applying directly to proceedings for preliminary discovery: at 356.7.

9. In the principal judgment in these proceedings, I nonetheless accepted that the policy considerations underlying the newspaper rule were strong factors against the exercise of the discretion to order preliminary discovery: at [115].

10. The difficulty was that, on the material before me, it appeared that the plaintiff would not have an effective remedy against the newspaper if the order for preliminary discovery were not made. In particular, I concluded at [154] that it would be open to the defendants to plead the statutory defence of qualified privilege under s 30 of the Defamation Act 2005 (NSW) and the defence of qualified privilege at common law in respect of political discussion recognised by the High Court in Lange v Australian Broadcasting Corporation [1997] HCA 25; 189 CLR 520. Further, I was satisfied, on the strength of the extensive material before me, that those defences might well succeed: cf Cojuangco at 357.9.

11. The significance of such a conclusion is explained in Cojuangco at 357.4:

Where an applicant complains of a defamatory publication in a newspaper a court will refuse an order for preliminary discovery if it appears that the applicant has an effective remedy against the newspaper or journalist without the necessity for making such an order. But where, as here, it appears that the newspaper and the journalist may well plead statutory qualified privilege under s 22 of the Defamation Act, a judge is entitled to exercise his judicial discretion in favour of making the order sought if the newspaper and the journalist do not relinquish that defence and the judge considers that the defence might well prevail. In this respect we agree with Mahoney J.A. that Hunt J.'s reference to "the likelihood of a successful defence" was susceptible of misunderstanding but that in its context the reference should be read as a statement that the defence was open to be pleaded and might well succeed. So understood, his Honour's statement was in our opinion correct.

12. As recorded in my principal judgment at [132], the defendants did not, at the time the application was heard, relinquish any defence of qualified privilege. That was an important factor weighing in favour of granting the order for preliminary discovery.

13. The basis for the defendants’ application to vacate that order is the defendants now undertake to the Court not to rely on any defence of qualified privilege. The defendants contend that, upon their giving such an undertaking, the preliminary discovery order is not necessary to provide Ms Liu with an effective remedy.

14. The notice of motion records an undertaking given to the Court by the defendants “not to rely on any defence of qualified privilege in case number 2010/224488”. That is the proceedings number of these proceedings (the preliminary discovery application). It was clarified in correspondence that the undertaking is in fact given in defamation proceedings commenced by Ms Liu against the defendants, case number 2011/36003.

15. The application to have the order vacated is supported by an affidavit of the solicitor for the defendants, Mr Bartlett (sworn on information and belief) stating that each of the journalist defendants continues to consider himself obliged not to disclose the identity of the sources. The foundations of that obligation (explained in the affidavit of one of the journalists at the original hearing) are the fact that the journalists have given undertakings to the sources to keep their identities confidential; the professional obligations owed by the journalists (both “generally as a journalist” and pursuant to a Code of Ethics that binds them) to respect the confidence of sources and the fact that the sources in the present case have expressed fears for their safety (which the journalists accept and believe to be truly held) if their identity is revealed. Separately, the journalists have expressed a concern that, if they were to reveal the identity of the sources, it would compromise the journalists’ ability to obtain information from other potential sources in the future in matters of public interest.

16. That evidence (as far as it went) was not challenged and there is no reason not to accept it. The extent of the evidence and the significance of the absence of any cross-examination of Mr Bartlett are considered further below.

Power to make the orders sought

17. Mr McClintock SC (who appears with Ms Rubagotti for the plaintiff) raised a threshold issue as to whether the Court has power to vacate the order. Argument on that issue consumed the whole of the time initially allocated for the hearing of the defendants’ motion and did not conclude that day. After the conclusion of the day’s hearing, however, the parties reached an agreed position that the Court at least has power to stay execution of the order. On that basis, the plaintiff invited the defendants to file an amended motion seeking a stay. The plaintiff indicated that she would not oppose the amendment. In that circumstance, the foreshadowed further argument as to power did not proceed.

18. When the hearing resumed, the plaintiff’s further written submissions repeated the assertion that the Court has no power to vacate the order (the relief originally sought by the defendants). In light of the way in which the issue unfolded, I do not think it is appropriate for me to determine that question. At the point when the parties reached apparent agreement as to a practical way forward (by the amendment of the motion), it remained for the defendants to be heard further as to the question of power (see T32.30 of 18.12.13). In those circumstances, although the defendants stopped short of abandoning the claim for an order vacating the preliminary discovery order, neither party made submissions directed to that claim and the defendants were content for the Court to determine only the claim for a stay (see T31-32 of 11.4.14).

Issues raised by the application

19. The application was thus refined to the contention that, as a result of the undertakings, the plaintiff now has an effective remedy against the newspaper proprietor and the journalists and, accordingly, that the preliminary discovery order (although properly made) should now be stayed.

20. The plaintiff attacks that contention at both levels. She submits that, accepting that the preliminary discovery order is theoretically capable of being stayed, the present application amounts to an abuse of process or is at least one in which the discretionary considerations are so overwhelming as to require its rejection (including the considerations made mandatory by the Civil Procedure Act 1995 (NSW)).

21. Separately, the plaintiff takes issue with the premise of the application that the defendants’ undertakings not to rely on any defence of qualified privilege leave her with an effective remedy (in the sense comprehended in the decision of the High Court in Cojuangco) against the proprietor of the newspaper.

22. The defendants’ submissions raised what might be regarded as a third issue, namely, the existence or extent of any residual discretion to refuse the application in the event that the Court is satisfied that the plaintiff now has an effective remedy.

Cojuangco

23. In order to understand the alleged abuse of process, it is necessary to explain the full history of the Cojuangco litigation, which has many parallels with the present case.

24. Mr Eduardo Cojuangco was a prominent businessman in the Philippines under the rule of President Ferdinand Marcos. He claimed to have been defamed by material published in the Sydney Morning Herald in early 1985, towards the end of the Marcos regime. The main article, headed “Corruption as an art form”, was a feature piece written by the associate editor of the newspaper, Mr Peter Hastings. The article examined civil, army and police corruption in the Philippines and included reference to Mr Cojuangco as a close “crony” of the President.

25. The front page of the newspaper carried an article also under Mr Hastings’ by-line which said:

President Ferdinand Marcos and his close cronies have ‘squandered’ up to US $9 billion of the nation’s US $26 billion debt, a senior American bank official and prominent local businessmen have alleged”.

26. Mr Cojuangco’s solicitors wrote to the publisher of the newspaper seeking details which would identify the “senior American bank official” and “prominent local businessmen” to whom the defamatory remarks were attributed. The publisher refused to supply those details, citing an obligation to protect the journalist’s sources from disclosure. Mr Cojuangco accordingly brought an application for preliminary discovery seeking to compel the publisher and the journalist to disclose the identity of the sources in aid of proceedings he wished to bring for defamation against the sources.

27. The application was determined at first instance by Hunt J: Re Application of Cojuangco (1986) 4 NSWLR 513. The respondents opposed the application on two grounds. First, they invoked the “newspaper rule”, defined by Hunt J as “the practice whereby a news defendant in a defamation action (or a related type of action) will not except in special circumstances be compelled to disclose the source or sources of its information prior to the trial of that action”: at 519A. The respondents conceded that the rule did not apply directly to an application for preliminary discovery but argued that the existence of the rule should carry significant weight in the exercise of the Court’s discretion.

28. The respondents further submitted that the discovery order was not necessary in the interests of justice, since Mr Cojuangco had a right of action against them (the journalist and the publisher of the newspaper) and could obtain all the relief to which he was entitled by suing them. A premise of that submission, which has also been said to be the justification for the newspaper rule, is that the liability of a newspaper is coextensive with that of its source.

29. As to the question of the newspaper rule, Hunt J accepted that the existence of the rule was a relevant factor but held that, standing by itself, the rule would not be a sufficient basis for exercising the Court’s discretion to refuse an order for preliminary discovery: at 522E-523B.

30. As to the question of whether the discovery order was necessary in the interests of justice, the task was to determine whether Mr Cojuangco was likely to obtain the relief to which he was entitled if he was restricted to suing the newspaper: at 525D. Justice Hunt held that, in the particular circumstances of that case, he was not. The critical consideration in that determination was the existence of the statutory defence of qualified privilege under s 22 of the Defamation Act 1974 (NSW), which his Honour accepted “had the effect of almost entirely separating the liability of the newspaper for what it republishes from the liability of its informant, so that it can no longer be said with confidence that their liabilities are co-extensive”: at 526B.

31. The defence of qualified privilege at common law was of little avail to media defendants because it required the establishment of reciprocity of interest or duty to publish defamatory matter. The common law rarely recognised an interest or duty to publish defamatory matter to the general public. The statutory defence removed the element of reciprocity (allowing that the interest of the recipient is enough) and added a requirement to establish that the conduct of the publisher in publishing the matter was reasonable in the circumstances (s 22 of the 1974 Act has been replaced by s 30 of the Defamation Act 2005 (NSW), which is in substantially the same terms).

32. The significance of the existence of the statutory defence was the prospect that a journalist whose conduct in publishing the defamatory matter was reasonable in the circumstances would have a defence potentially not available to the source (hence the undermining of the assumption of co-extensive liability).

33. Justice Hunt was persuaded, on the strength of the particular material before him in that case, that the newspaper’s conduct was likely to be held to be reasonable in the circumstances and that the newspaper would have available to it a strong defence of qualified privilege: at 530B. On the strength of that finding, his Honour made preliminary discovery orders requiring Mr Hastings to attend before the Court for examination as to the identity of the sources. His Honour further ordered Mr Hastings and the proprietor of the newspaper to produce documents directed to that issue.

34. The newspaper’s appeals to the Court of Appeal and the High Court were each dismissed unanimously: John Fairfax & Sons Ltd v Cojuangco (1987) 8 NSWLR 145; John Fairfax & Sons Limited v Cojuangco [1988] HCA 54; 165 CLR 346.

35. As in the present case, the newspaper then brought an application before Hunt J to have the original order set aside or alternatively stayed: Application of Eduardo Murphy Cojuangco (No 2) (Supreme Court (NSW), Hunt J, 6 January 1989, unrep). Justice Hunt was satisfied that the Court has power “to reconsider such an order” (as already noted, the correctness of that conclusion, at least to the extent that it refers to a power to vacate the order, is disputed by Mr McClintock).

36. As in the present case, material was put before Hunt J to the effect that, notwithstanding the change of political circumstances in the Philippines since the original judgment (Marcos was no longer in power), Mr Hastings still felt bound not to reveal the identity of his sources and so would not be called to give evidence at the trial of any defamation action against the publisher. An express undertaking was given to the Court to that effect. After a careful analysis of the significance of that undertaking, Hunt J concluded:

“The present is not one of those unusual cases where the defence of statutory qualified privilege might well succeed despite the absence of the journalist from the witness box. For all the reasons given, the applicant has not satisfied me that such a defence might well succeed in this case.”

37. On the strength of that finding, Hunt J made orders setting aside all of the orders made at the original hearing and refusing the application for preliminary discovery. To avoid confusion, I will refer to those later orders as the rescission orders.

37. Mr Cojuangco appealed against that decision. Before the appeal was determined, Mr Hastings died. On the last day of the hearing of the appeal, the newspaper gave an undertaking not to rely upon any defence under s 22 of the 1974 Act.

38. The Court of Appeal was unanimously of the view that Hunt J should not have made the rescission orders. However, the Court was divided as to what orders should be made to dispose of the appeal. Kirby P considered that the original preliminary discovery orders should stand. Leaving aside the proceedings as against the late Mr Hastings, his Honour would have allowed the appeal, set aside the rescission orders and dismissed the application to have the preliminary discovery orders set aside or stayed. Mahoney and Handley JJA agreed that the rescission orders should be set aside. However, their Honours considered that, as a result of the undertaking given by the newspaper during the appeal not to rely upon any defence of qualified privilege under the statute, Mr Cojuangco had an effective remedy against the newspaper. On that basis, their Honours concluded that the appeal should be dismissed.

39. The parties rely on the Cojuangco decisions in different ways. The defendants invoke the decisions of Hunt J and the Court of Appeal in Cojuangco (No 2) as support for the course now taken; that is, they contend that there is a precedent for vacating or staying a preliminary discovery order in exactly the circumstances of this case. The defendants’ submission went so far as to contend that the fact that the defence of qualified privilege could have been abandoned from the outset is relevant only to the costs of the present application, and is otherwise irrelevant to its determination.

40. By way of footnote, it should be observed that the Cojuangco litigation was concluded before the decision of the High Court in Lange (published in 1997) in which the Court recognised the dissemination by members of the Australian community of information, opinions and arguments concerning government and political matters as an occasion of qualified privilege: at 571. The Court imported the criterion of reasonableness of conduct, borrowed from the statutory defence, as the element required to be established in that instance in order to protect a publication that would otherwise be held to have been made to too wide an audience: at 573. The matter complained of in the present case clearly raises the prospect of a good Lange defence. Accordingly, on the principles established by the Cojuangco litigation, the undertakings in the present case necessarily had to extend (as they do) to any defence of qualified privilege, not just a defence under the statute.

41. Returning to the argument, the plaintiff submits that the significance of the Cojuangco (No 2) decisions is exactly the opposite of that contended for by the defendants. She relies on those decisions to sustain her contention that the present application is an abuse of process. Specifically, she notes that by reason of those very decisions, the defendants must be taken to have known all along that the making of the preliminary discovery order could have been obviated by their giving undertakings in the terms now given. In that circumstance, the plaintiff submits that the defendants’ failure to abandon the defence before the hearing of the original application must be seen as a deliberate forensic decision such that it is an abuse of process now to invoke the benefit of that approach.

Is there now an effective remedy?

43. Before considering that issue, it is convenient first to consider whether, with the benefit of the undertakings now given, Ms Liu now has an effective remedy against the publisher.

44. Mr McClintock submitted that the defendants overlook the fact that, in the principal judgment, I gave two independent reasons for concluding that the plaintiff did not have an effective remedy against the defendants, only one of which is dealt with by the undertakings. The second appears at [159]-[160] of the judgment, as follows:

[159] A further consideration relied upon by the plaintiff as to the effective remedy consideration is the fact that she would seek, in vindication of her reputation, to “nail the lie”. The plaintiff relied in that context upon the statement of Mahoney JA in Cojuangco in the Court of Appeal (John Fairfax & Sons Ltd v Cojuangco (1987) 8 NSWLR 145 at 151D):

The fact that there is another remedy will not, I think, be conclusive against a plaintiff seeking the exercise of this power. He may desire, and legitimately desire, to sue one person rather than another notwithstanding that he will recover adequate monetary compensation from that other. Particularly in relation to defamation, the function of litigation as a means of vindication of a plaintiff’s reputation and as a means of mitigating the sting of the wrong done to him by judgments against his chosen defendant should properly be taken in to account: Uren v John Fairfax & Sons Pty Ltd (1966) 117 CLR 118 at 150; Broome v Cassell & Co Ltd [1972] AC 1027 at 1071.

[160] If the plaintiff is unable to identify the sources, she will in effect be left without the opportunity to pursue a remedy that would see the issue of the alleged forgery fully litigated and determined. That is a significant consideration, in my view.

45. The defendants’ submissions addressed at length the content of the notion of “an effective remedy”, submitting in effect that the plaintiff’s desire to sue the sources rather than the newspaper is not an aspect of that consideration.

46. In Cojuangco (No 2), Mahoney JA returned to that issue, evidently regarding it to be an open question. His Honour commented that the High Court “did not consider the question whether or to what extent the desire of a plaintiff to sue, not the newspaper but the person whose name is sought, is relevant to the exercise of a discretion in respect of pre-trial discovery.” His Honour did not consider it necessary to determine that question as a matter of principle, concluding that, even if it is a factor that may be taken into account, the remedy against the newspaper was, in the circumstances of that case, an “effective remedy” within the principle referred to by the High Court.

47. Mr Blackburn submitted that, implicitly, the decision of the High Court does determine the issue thought by Mahoney JA to have been left open. Mr Blackburn also relied on the remarks of Handley JA in Cojuangco (No 2) to the effect that an effective remedy does not mean a cause of action which must succeed. The question is whether the plaintiff has a remedy against the newspaper which is “no less effective” than an action against the sources; that is, “the plaintiff in his action against the newspaper must not be faced with any defence in addition to those that would also be available to the sources if they were sued.”

48. Mr McClintock submitted that the defendants’ submissions on that issue sought in effect to cavil with a part of my decision which has not been challenged on appeal. So much may be accepted. The question is whether that is determinative against the present application.

49. The matter I considered relevant was the plaintiff’s entitlement to have “the opportunity to pursue a remedy that would see the issue of the alleged forgery fully litigated and determined”. There was implicit in those remarks a degree of speculation as to the nature of that opportunity. Although it was a consideration which fortified my conclusion, it was not necessary in the original application to assess that consideration standing alone. I do not think it was truly an independent reason sustaining my conclusion on the issue of an effective remedy. Had the defendants abandoned the qualified privilege defences from the outset, I am in little doubt that the outcome would have been different.

50. The defendants’ submissions have persuaded me that, following upon their abandonment of any qualified privilege defence, the plaintiff has a remedy against them in defamation which is “no less effective” than an action against the sources. As a result of the undertakings, the plaintiff will not be faced with any defence in addition to those that would also be available to the sources if they were sued. It is true that she will not have the opportunity to confront her accusers but, upon reflection, I do not think that deprives her of an effective remedy. Rather, the absence of the sources from the litigation is a factor that is likely to preclude the newspaper from succeeding in any truth defence.

Is the application an abuse of process?

51. Plainly, notwithstanding the conclusion that the plaintiff has an effective remedy against the defendants, the present application must be dismissed if it is properly characterised as an abuse of the Court’s process.

52. As already noted, the application was supported by the affidavit of Mr Bartlett and he was not cross-examined on that affidavit. Mr McClintock noted, however, that the affidavit does not explain the decision to proffer the undertakings only now, after the application has been fully litigated (and taken along all avenues of appeal) on a different premise.

53. The Court was informed that the need to cross-examine Mr Bartlett was obviated by the following concession made by the defendants (T4.18):

The defendants’ legal advisors were aware of the sequel to Cojuangco (which means the concession before Hunt J that the journalist Mr Hastings would not be called and the concession before the Court of Appeal that qualified privilege would be abandoned) and, the legal advisors being aware of those matters before the start of the trial, the defendants took the course that they did before McCallum J. That is, they did not do what occurred in the sequel to Cojuangco, namely, abandon the defence of qualified privilege.”

54. There is accordingly no dispute as to the defendants’ awareness, from the outset, of the potential benefit of abandoning the qualified privilege defences. However, I do not think it follows inexorably (as the plaintiff’s argument assumes) that the approach taken in the present litigation was a cynical abuse of the process invoked. I do think the approach taken is plainly relevant to the question of costs but the determination of that issue has been deferred: see T5.17.

55. It is important to recall the nature of the interests at stake. The abandonment of their defences of qualified privilege was not something to be proffered lightly by the defendants. As recognised by the High Court in Lange at 568, the purpose of the law of defamation is to strike a balance between the right to reputation and freedom of speech. That is not to say an even balance of those interests must or can be achieved in any individual case, but that is the premise which informs any analysis of the law in this field.

56. The defences of qualified privilege play an important part in achieving the balance of those interests. A clear recognition of their weight on that scale may be found in the High Court’s discussion in Lange of the defence at common law prior to the recognition of political free speech as a category of qualified privilege. The Court said (at 569.6):

Without the statutory defence of qualified privilege, it is clear enough that the law of defamation, as it has traditionally been understood in New South Wales, would impose an undue burden on the required freedom of communication under the Constitution. This is because, apart from the statutory defence, the law as so understood arguably provides no appropriate defence for a person who mistakenly but honestly publishes government or political matter to a large audience. In Lang v Willis, this Court held that election speeches made to large audiences of unidentified persons are not necessarily privileged even if the speeches deal with matters of general interest to the electors. In that respect, the common law as hitherto understood in Australia has simply reflected the English common law.

57. The abandonment of the defences of qualified privilege must accordingly be seen as a significant concession, not only to the private interests of the defendants but to the balance of public interests the law of defamation seeks to achieve.

58. At the same time, it must be recognised that the interest sought to be protected by that concession is also one of important standing on the issue of freedom of speech. The history of the newspaper rule was considered at length by Hunt J in Wran v Australian Broadcasting Corporation [1984] 3 NSWLR 241. His Honour noted at 251G that the rule is based upon the public interest in encouraging the public discussion and evaluation of public affairs on an informed basis.

59. The abuse of process alleged by the plaintiff consists in the fact that, in light of the defendants’ conceded awareness of the Cojuangco litigation, the timing of the decision to abandon the defences was a calculated decision which permitted “enormous amounts of judicial resources and costs to be wasted” in circumstances where, on the premise of the present application, the preliminary discovery application could have been brought to an end on day one. I think that submission overlooks the importance of the substantive right that had to be abandoned. That issue is addressed further below. Further, I accept that, as submitted by Mr Blackburn on behalf of the defendants, their opposition to the preliminary discovery application (while adversary) was proper and that they believed they would win. The issues raised in opposition to the order were important and went beyond the issues determined in Cojuangco.

60. Mr Blackburn said that, having lost, the defendants have come back to Court to say, “as it were with gritted teeth”, that they will forego a perfectly good defence in order to protect their sources. I do not think their approach to that issue entails any impropriety.

61. For those reasons, I am not persuaded that the present application amounts to an abuse of the process of the Court.

What is the proper approach to the application?

62. Mr McClintock submitted that, even if the application is not an abuse of process, there are overwhelming reasons to refuse it.

63. First, Mr McClintock submitted that the principal judgment is the kind of decision which the Court would not revisit. He submitted that, even if the preliminary discovery order is properly characterised as interlocutory, to permit its re-litigation would be unjust and contrary to modern principle. He relied in that context on the remarks of McLelland J in Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44 at 46, where his Honour referred to the “great injustice and enormous waste of judicial time and resources” which would arise if there were no limit on the entitlement of a party to relitigate interlocutory orders at will. His Honour said:

In the present case I am dealing with an interlocutory order of a substantive nature made after a contested hearing in contemplation that it would operate until the final disposition of the proceedings. In such a case the ordinary rule of practice is that an application to set aside, vary or discharge the order must be founded on a material change of circumstances since the original application was heard, or the discovery of new material which could not reasonably have been put before the court on the hearing of the original application.

64. It is clear enough that, in the present case, knowing of the Cojuangco litigation, the defendants could have put the undertakings before the court on the hearing of the original application. As submitted by Mr Blackburn, however, there is a real question as to whether those undertakings ought “reasonably” to have been put before the Court at that time, since they involve the abandonment of what appears to be a perfectly good defence. The defendants thought they would successfully oppose the preliminary discovery application without having to give up that defence. The issues on which the application was contested went beyond the issues determined in Cojuangco.

65. I think there is force in those contentions. Accordingly, I do not accept that the principle stated in Brimaud mandates the rejection of the present application. I do accept, however, that there are powerful reasons for constraining the relitigation of issues determined after a fully contested hearing, as was the case here.

66. Mr Blackburn submitted that, far from being a reason not to grant a stay, the fact that the undertakings could have been provided at the original hearing is irrelevant except as to costs. He submitted that the present application raises exactly the same question as in the first round, namely, the single question whether the plaintiff has an effective remedy against the newspaper.

67. Mr Blackburn went so far as to contend that the decision of the High Court in Cojuangco suggests that, where it appears the plaintiff has an effective remedy, there is no residual discretion to refuse the present stay application. That submission was based on the statement of the High Court that, where that is the case, a court “will refuse” an order for preliminary discovery: at 357.4. Alternatively, Mr Blackburn submitted that, if there is a discretion to refuse the present application notwithstanding the conclusion that the plaintiff has an effective remedy against the newspaper, it is a narrow discretion.

68. I do not think it can now be regarded as the correct approach to confine the inquiry on the present application to the question of an effective remedy, even though that appears to have been the approach assumed by the majority in Cojuangco (No 2). I do not think the High Court meant that the existence of an effective remedy is necessarily determinative and I do not think the experience of the litigation can be ignored. At the very least, the approach taken in Cojuangco (No 2) was to treat the application as a request for an indulgence, sounding in costs. If, for example, the newspaper had an immunity against any costs order, that would be a consideration in favour of holding the defendants to the original preliminary discovery order.

69. I accept, however, that the conclusion that the plaintiff now has an effective remedy against the newspaper points to the conclusion that, subject to the further matters raised by Mr McClintock (by which I mean the “modern litigation principles” to which he referred), a stay should be granted. In approaching the matter on that basis, I am applying the principles applied by the majority in Cojuangco (No 2), which, subject to the subsequent developments in the law relied upon by Mr McClintock, are binding on me.

70. It remains to consider whether the application should be refused on the grounds of modern litigation principles. Mr McClintock noted that the Court must have regard to the provisions of Part 6 of the Civil Procedure Act as well as the decisions of the High Court in Aon Risk Services Australia Limited v Australian National University [2009] HCA 27; 239 CLR 175 and Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd [2013] HCA 46. Mr McClintock also relied on “the line of authority applying Aon principles in New South Wales and which informs the construction of ss 56-58 of the Civil Procedure Act”, citing as examples Richards v Cornford (No 3) [2010] NSWCA 134; McMahon v John Fairfax Publications Pty Ltd [2010] NSWCA 308 and Palavi v Radio 2UE Sydney Pty Ltd [2011] NSWCA 264.

71. I was not taken to any of those provisions or decisions in argument.

72. Part 6 of the Civil Procedure Act does not expressly refer to applications to stay the execution of an order of the Court. Section 58 regulates decisions “whether to make any order or direction for the management of proceedings”, expressly including “any order granting an adjournment or stay of proceedings”: see s 58(1)(a)(ii). The plaintiff’s submissions assumed (without expressly addressing the issue) that the mandatory requirements of Part 6 apply to the present application. It is appropriate to assume, without deciding, that that is correct. In any event, those considerations are plainly relevant to the determination of the application: cf Aon at [92]-[93]; Expense Reduction at [57].

64. In considering those matters, I place a high value on the gravity of the decision to abandon an apparently good defence. That is a unique circumstance which distinguishes this case from the authorities relied upon by Mr McClintock.

65. I also place a high value on the gravity of compelling a journalist to reveal the identity of a source. In my principal judgment, I explained my reason for considering that the weight of that consideration was lessened in the circumstances as they then stood. I said at [203] to [204]:

However, the protection of sources from disclosure of their identity is not a right or an end in itself. The rationale for the protection lies in the public interest in cultivating trust between sources and journalists as a boon to free speech and, in particular, free political discussion.

The defendants unilaterally determined in the present case that the interests of the sources must yield to what the defendants claimed was a paramount public interest. It was that decision which exposed the sources to the risk of disclosure of their identity. Having invoked the relativity of competing interests as the basis for that decision, the defendants can hardly maintain that interests competing with the public interest in protecting confidentiality of journalists' sources must be set to one side in the determination of the present application. In my assessment, the force of the considerations underlying the newspaper rule is substantially lessened in the present circumstances.

75. The abandonment of the defences is a substantial concession to that concern.

76. The overriding purpose of the Civil Procedure Act calls attention to a synthesis of factors. The decision in Aon acknowledges that the achievement of a timely and cost-effective resolution of a dispute is an aspect of justice but it is not to come at the price of justice.

77. I have two principal concerns arising from my consideration of the matters identified in ss 56-58 of the Civil Procedure Act. The first is the object of case management of achieving the timely disposal of the proceedings at an affordable cost: see s 57(1)(d) of the Act. The defendants do not concede any obligation to meet the cost of the lengthy original hearing, notwithstanding the turn of events in the present application. As a result of the position they now take, if the stay is granted, the plaintiff’s costs of the whole first round of the hearing will have been wasted.

78. Secondly, one of the considerations identified in s 58 is “the use that any party has made, or could have made, of any opportunity that has been available to the party in the course of the proceedings”. There is considerable force in Mr McClintock’s complaint as to the course taken by the defendants in the present case of making no concession as to the defences, even conditionally, at the original hearing.

79. Again, however, it must be recognised that the concession ultimately given in abandoning the defences is the abandonment of a substantive right. The opportunity was not one in which the defendants had been directed to take any particular step.

80. I have concluded that, in all the circumstances, leaving aside the question of costs, the preliminary discovery order should be stayed. However, my concern as to the plaintiff’s wasted costs remains. As already noted, the parties agreed that the question of costs should be deferred. That course was adopted in the context of a request by the plaintiff, in the event that she was successful, that I defer making an order for access to the documents produced to the court in case “a rational resolution” to the matter could be reached.

81. While the course of deferring costs commended itself to me at the time, upon reflection it is potentially a relevant consideration in the synthesis of matters to which I must have regard in determining the defendants’ application. However, it is necessary to give the defendants an opportunity to be heard on that issue.

Orders

82. For those reasons, the order I propose is:

1. that, upon the giving by each defendant of an undertaking to the Court not to rely upon any defence of qualified privilege in proceedings 2011/36003, the order for preliminary discovery made 1 February 2012 and entered 2 February 2012 be stayed pending the determination of the plaintiff’s application for costs.

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