Madafferi v The Age Company Ltd

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMON LAW DIVISION
MAJOR TORTS LIST

S CI 2014 05269

ANTONIO MADAFFERI	Plaintiff
v
THE AGE COMPANY LTD (ACN 004 262 702) & ORS	Defendants

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JUDGE:	JOHN DIXON J
WHERE HELD:	MELBOURNE
DATE OF HEARING:	18 SEPTEMBER 2015
DATE OF JUDGMENT:	9 DECEMBER 2015
CASE MAY BE CITED AS:	MADAFFERI V THE AGE
MEDIUM NEUTRAL CITATION:	[2015] VSC 687

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EVIDENCE – Journalist’s privilege – Relevant considerations for declaring a journalist compellable to disclose confidential sources – Nature of public interest in disclosure – Nature of public interest in investigative journalism – Whether adverse consequences likely from disclosure – Considerations applicable to balancing these interests – s 126J, 126K, 131A, Division 1C of Part 3.10, Evidence Act 2008 (Vic).

TORT – Defamation – Defence of qualified privilege – Section 30 Defamation Act2005 (Vic) and Lange qualified privilege defence – Whether reliance on confidential sources a striking feature of the defence – Consequences for defence of claiming journalist’s privilege considered.

PRACTICE AND PROCEDURE – Preliminary discovery to identify a prospective defendant – Whether applicant has shown reasonable cause to believe that he has or may have the right to obtain relief against a journalist’s confidential source – Discretionary considerations – Journalist’s privilege.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Ms G Schoff QC with Mr M Marcus	WMB Lawyers
For the Defendants	Dr MJ Collins QC with Mr HR Hassan	Minter Ellison

HIS HONOUR:

Background

In this proceeding, the plaintiff claims that he was defamed by imputations conveyed in twelve articles (the articles) published by the first defendant (in the print edition of The Age) and/or the sixth defendant (on The Age website and the Sydney Morning Herald website). The second to fifth defendants are journalists who are the authors of the articles. Mr Nick McKenzie, the second defendant, is a principal author of the articles.

The articles are related to investigations by these journalists into allegations of criminal misconduct involving the Calabrian community in Australia, which allegations refer to the plaintiff and his brother. The plaintiff claims that the publications convey very serious defamatory imputations against him of violent criminal conduct, including murder, extortion and drug trafficking. They claim the plaintiff is the head of the mafia in Melbourne. The defendants do not plead justification and accordingly the truth or falsity of the imputations is not in issue.[1] The plaintiff also claims for breach of confidence relating to articles in the print edition of The Age and on the websites concerning meetings between the plaintiff and the Hon. Mr Bill Gillard QC to discuss the plaintiff’s private legal affairs.
[1]The Age Co Ltd v Elliot (2006) 14 VR 375, 378.

The defendants have pleaded qualified privilege defences in relation to all of the articles, being the statutory defence (s 30 Defamation Act 2005 (Vic)) and in respect of some articles the common law qualified privilege defence based on the implied constitutional freedom of communication on matters of government and politics,[2] and denied the claims relating to breach of confidence. The articles refer to confidential sources. Mr McKenzie deposes that, in the course of these investigations, the defendants have promised all confidential sources not to disclose their identities. The defence and the further and better particulars served refer to unidentified confidential sources on which the defendants rely, in part, to substantiate the qualified privilege defences. The impugned publications are based to a significant extent on information provided to McKenzie by those sources.
[2]Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 (the Lange defence).

The application

When the plaintiff sought further and better particulars of those defences, including details of the sources, the defendants refused to supply those particulars, relying on journalists privilege pursuant to s 126K of the Evidence Act2008 and on the ‘newspaper rule’. The plaintiff invited the defendants to identify any likely adverse effect of disclosure of the identity of their sources and any other matter likely to be relevant to the exercise of the court’s discretion under s 126K(2) of the Act. The first defendant responded by publishing an article in The Age that quoted its editor-in-chief as stating that The Age would not be providing details of its sources and quoted Mr McKenzie as saying that under no circumstances would he ever reveal his sources.

By summons dated 25 August 2015, the plaintiff sought orders that journalist’s privilege did not apply to evidence that would disclose the identity of any of the informants described in a schedule to the summons, that the defendants provide further and better particulars of their qualified privilege defences, in particular, that they disclose the sources of information on which they relied in writing the articles, and on which they rely to establish their qualified privilege defences.

The plaintiff also sought orders for preliminary discovery, pursuant to Rule 32.03(2), against the defendants relating to the identity of the sources and discovery of documents identified in several of the articles. In particular, the plaintiff seeks orders that the defendants (and in the case of the first and sixth defendants, an appropriate officer) attend before the court to be orally examined, and an order that the defendants make discovery to the plaintiff of all documents which are or have been in their possession and that relate to the description of the persons concerned.

The plaintiff’s purpose in seeking the identity of the sources referred to in the articles was to join them as defendants to the proceeding, alleging that they are publishers of the articles. The plaintiff also sought relief for breach of confidence against those persons. The plaintiff’s solicitor deposed that his client may wish to assert malice in the proceeding.

The defendants contended that by operation of ss 126K and 131A of the Evidence Act 2008 (Vic) and the newspaper rule the plaintiff was not entitled to the orders sought, unless he satisfied the court that there is a public interest in disclosure of the identities of the sources that outweighs both any likely adverse effect of the disclosure on the sources or any other person and the public interest in the communication of facts and opinions to the public by the news media and in the ability of the news media to access sources of facts.

The evidence on the application comprised the affidavits of the plaintiff’s solicitor, Mr McKenzie, and the defendants’ solicitors. There was no cross examination.

For the reasons that follow the plaintiff has not satisfied me that there is a public interest in disclosure that outweighs both any likely adverse effect of disclosure or the public interest in a free and informed press. Further, because the plaintiff has failed to demonstrate tenable causes of action could be brought against the sources or some of them I decline to exercise my discretion in favour of ordering preliminary discovery. The plaintiff’s application will be dismissed.

Plaintiff’s contentions

The plaintiff contended that the interests of justice require that he now be given access to the sources used for the articles for the following reasons:

(a) The major issue raised by the qualified privilege defences will be whether it was reasonable in all of the circumstances for the defendants to rely on their confidential sources.

(b) The defendants plead that their sources are sources of integrity, that the journalist was entitled to, and did, rely on their integrity, and that the defendants believe that those sources told the truth. The identity of the defendants’ sources, the basis of the information they have provided to the defendants, and their veracity and reliability are put in issue by the defendants in determining whether they acted reasonably. Without disclosure, the plaintiff will be unable to properly test the defendants’ claim that they acted reasonably in publishing the articles.

(c) The imputations essentially conveyed by the articles are attributed to unidentified sources. They are not expressed as the defendants’ opinions. The thrust of the articles is that the imputations have a solid basis in the evidence of unidentified yet well-placed, informed sources.[3] This striking feature of the articles precludes the defendants from resiling from any reliance on their sources.[4]
[3]Cf French v John Fairfax Publications Pty Ltd [2007] VSC 105, [19].
[4]This submission impliedly raises waiver, the application of which was not the subject of specific oral or written submissions.

(d) Because the defendants have not put the truth of the imputations in issue, they cannot assert that there is a public interest in the communication of facts. At its highest all that has been communicated is opinion. The public has no interest in the communication of misinformation. Further, the public has no interest in the release of confidential information for ulterior purposes. The sources are not well-motivated whistle blowers.

(e) Applying the language of John Fairfax & Sons Ltd v Cojuangco,[5] the plaintiff contends that the qualified privilege defences may succeed and he may be left without an effective remedy against the defendants in respect of grave defamatory imputations. It would be incongruous and unjust if the defendants, having derived the advantage that comes from identifying in general terms the sources of the allegations that they make against the plaintiff, could, by invoking journalist’s privilege or the newspaper rule, deny to the plaintiff the opportunity of identifying those sources when testing the defendants’ contention of reasonable reliance on those sources.
[5](1988) 165 CLR 346, 358.

(f) That incongruity and injustice particularly arises in the circumstances of the serious and grave imputations conveyed by the articles.

(g) As the defences are presently particularised, at trial the defendants will need to produce their sources or answer questions about their identity, a matter that reinforces the critical relevance of the identity of the sources to a fair trial. The prospect of unfairness in the trial would not be alleviated by directions to the jury. On analysis of the defendants’ particulars, little justification for the reasonableness of publication can be drawn from attributed material or material in the public domain. It appears that it is by reference to confidential sources that the defendants would assert a reasonable basis for publication.

(h) The material before the court permits a reasonable inference that some of the sources likely to have been relied on by the defendants may be persons who gave unreliable evidence about the plaintiff in other earlier proceedings and that there may be a basis for the plaintiff to assert malice.[6] That inference is a proper basis for a finding that in the absence of disclosure the plaintiff cannot fairly test the merits of the defences taken against him by demonstrating that the defendants’ sources were inherently and obviously unreliable and could not found a reasonable basis for the repetition of allegations that they had made. Further, they were possibly and to the knowledge of the defendants improperly motivated. In the absence of disclosure, the plaintiff may not have an effective remedy against either the defendants or those who originated the imputations.
[6]Relying on Cojuangco, where the High Court said (at [26], 358): ‘For our part we much doubt whether the newspaper rule would be applied to a case such as the present if the question were to arise in the context of an interlocutory application in a defamation action against the appellants in which malice was in issue. It may be that the rule has no application when the newspaper identifies its source in a general way and relies on that source to point up the authenticity of the imputations. But this is by the way.’

(i) The plaintiff alleges relevant evidence was destroyed by Mr McKenzie and, in consequence, other relevant material may not be available precluding a full exploration by the plaintiff of the basis asserted by the defendants for the articles.

(j) Mr McKenzie has made serious and scandalous allegations concerning possible dangers to himself and his sources, without proper foundation. Evidence of Mr McKenzie’s suspicions is unreliable hearsay upon hearsay when a reasonable basis for such submissions might have been provided, for example by evidence from the police. Mr McKenzie’s contentions of possible adverse effects on criminal justice system sources are a consequence of the inappropriate conduct of those sources, which does not strongly support a public interest in investigative journalism. There is a competing public interest that such sources ought to be discouraged from inappropriate conduct in breach of confidentiality obligations. Reasonable inferences, relevant to the issues in dispute, may arise from the act of leaking confidential police reports in circumstances where there was no basis to lay charges against the plaintiff.

(k) The defendants continue to publish defamatory articles and have publically stated their refusal to reveal their sources. For this reason there is little reason to wait before ruling on the claim to journalist’s privilege. If ordered to reveal their sources, the defendants may withdraw their qualified privilege defences, in which case the trial of the proceeding may be considerably shorter. Narrowing the issues in dispute in the proceeding will facilitate the overarching purpose in litigation.

(l) For these reasons, the prospect of a fair trial for the plaintiff is tainted and it is the public interest in the administration of justice - that all relevant and admissible evidence is before the court – that is paramount where the identity of the source is critical to the issues raised in the case.[7]

[7]Relying on Cojuangco, Langley v The Age Company Limited [2001] VSC 370, [120]-[122], Bateman v Fairfax Media Publications Pty Ltd [2014] NSWSC 400, [24]-[25].

Defendants’ contentions

The defendants submitted that there are four flaws in the plaintiff’s contentions.

First, the plaintiff’s submissions assume that Division 1C is a codification of, or rises no higher than, the common law newspaper rule of practice. The defendants contended that the Division imposes a presumption against compellability for disclosure and places a burden on the plaintiff to rebut that presumption, thereby significantly raising the bar.

The defendants submitted that s 126K(2) predicates that there are cases where some prejudice to the rights of a plaintiff in a particular proceeding must be tolerated because of the strength of the countervailing public interest considerations. In that sense, journalist’s privilege is no different to legal profession privilege and the relative status of journalist’s privilege in relation to the administration of justice is no longer accurately stated by authorities such as Cojuangco. The plaintiff has supported his submissions by reference to the newspaper rule because it is a lower bar than Division 1C.

The Explanatory Memorandum for the Evidence Amendment (Journalist Privilege) Bill 2012 identified that relevant considerations in applying the balancing exercise include the nature of the proceeding, whether it be civil or criminal, or whether the relevant evidence can be obtained without compelling the journalist to give evidence. In a criminal trial, the interests of justice in ensuring a fair trial may be more compelling, depending on the seriousness of criminal conduct.

The Attorney-General’s second reading speech emphasised the strength of the countervailing public interest supporting confidentiality, which is a very important consideration for the court in the balancing exercise.[8] The Attorney-General said:

The privilege recognises the important role that journalists play in a democracy. Some sources of information that is of legitimate interest to the public will only provide that information to journalists on condition of anonymity. Most journalists subscribe to an ethical code which requires that they be cautious in promising confidentiality to informants. However, when a journalist promises confidentiality, he or she must respect that promise.

And later:
Freedom of the press is vitally important in a democratic society. The bill recognises the public interest in the communication of facts and opinion and the need for the media to be able to access information. The introduction of a journalist privilege adds to a healthy democracy in Victoria … It supports the capacity of journalists to investigate and disseminate matters of public interest without compromising the information available to a court in civil and criminal proceedings.

[8]Note also the observations of Rares J in Ashby v The Commonwealth (No 2) [2012] FCA 766, [22]-[24].

Second, the plaintiff in substance contended that the price that a defendant must pay to rely on a qualified privilege defence in a sources case is disclosure of those sources. The defendants contended that, if that proposition be accepted, Division 1C has no work to do because, by definition, the defendants cannot produce their sources to establish truth and the only available defence is qualified privilege.

The defendant submitted that the plaintiff’s implicit proposition – because the identity of the sources is necessarily relevant and must be disclosed at the trial, it should be disclosed now ‑ is now flatly inconsistent with the plain language of the statute, which presupposes circumstances where confidentiality will be protected to the detriment of the plaintiff.[9]
[9]See also Carolan v Fairfax Media Publications Pty Ltd (No 2) [2015] NSWSC 1010, [8], [15].

The defendants developed this submission by reference to the decision of the House of Lords in Reynolds v Times Newspapers Ltd,[10] which the defendant submitted clearly states that a defence of extended qualified privilege, the UK equivalent of s 30, can be made out, at least in some circumstances, by a defendant without disclosing the identity of its sources. The plaintiff’s submission to the effect that a s 30 defence must fail when the defendant does not identify its sources should be rejected. Lord Nichols of Birkenhead stated:[11]

In general, a newspaper’s unwillingness to disclose the identity of its sources should not weigh against it. Further, it should always be remembered that journalists act without the benefit of the clear light of hindsight. Matters which are obvious in retrospect may have been far from clear in the heat of the moment. Above all, the court should have particular regard to the importance of freedom of expression. The press discharges vital functions as a bloodhound as well as a watchdog. The court should be slow to conclude that a publication was not in the public interest and, therefore, the public had no right to know, especially when the information is in the field of political discussion. Any lingering doubts should be resolved in favour of publication.

[10][2001] 2 AC 127. See also Flood v Times Newspapers Ltd [2012] 2 AC 273, 324 [159] (Lord Mance JSC).

[11]Ibid, 205E.

Third, it is demonstrably wrong to assert that the plaintiff cannot test the strength of qualified privilege defences without identification of the sources.

The defendants asserted that the plaintiff has a fully particularised defence, supported by the McKenzie affidavit, and that the plaintiff knows the categories and nature of the sources and how the defendants used their information. The plaintiff also knows the corroborating material in respect of each piece of information in each of the articles. The plaintiff does not need to know the identity of the source to know if the publication was reasonable. The plaintiff can attack the journalistic method, the corroborating material and/or the identified sources. The defendants pointed to the fact that there are numerous other considerations relevant under s 30(3) when considering reasonableness, including the extent to which the matter published is the public interest and the seriousness of any defamatory imputation.

In this context, it is misleading to characterise the striking feature of the relevant articles to be their reliance on defamatory imputations attributed to unidentified sources. To so submit is to overlook the requirement that a defence must engage with the imputation, not the language of the article from which that imputation is drawn. The defendants dispute that the articles convey the imputations in the manner pleaded. The articles identify allegations that are the subject of police (or other) suspicion, or the result of police (or other) investigations. Although the articles convey reliance on confidential sources, in respect of all of the critical matters, the imputations appear from objectively demonstrable facts, such as those found in documents concerning Operation Pandora, Operation Mediacy, Operation Inca, the report of the Woodward Royal Commission, the report of the National Crime Authority with respect to Operation Cerberus, transcripts from coronial inquests and like sources. It will be convenient to give more detail about the defendants’ submissions in this respect when dealing with the articles on an individual basis.

The defendants’ general submission was that contesting whether publication was reasonable in the circumstances was not dependent on the identity of the source that was the conduit for Mr McKenzie’s possession of that information. Identification of the nature of the source in broad terms, disclosure of the information relied on, and an explanation of how the information was used does not deprive the plaintiff of a sufficient and ample basis to attack the use of undisclosed sources as unreasonable. What the plaintiff must do, but has not, is identify the imputation that it cannot meet without knowing the identity of the source. The plaintiff cannot, by misrepresenting the way in which the defence is pleaded, demonstrate that it is unable fairly to meet the allegation that publication was reasonable in all of the circumstances.

The defendants invited the court to reject the plaintiff’s submission that he needs to know the identity of sources to form a view as to whether to plead malice. It seems clear from the plaintiff’s submissions that it is not malice on the part of the defendants that attracts the plaintiff’s interest but rather malice on the part of the defendants’ sources. It is well-established that malice cannot be raised as a matter of mere assertion with the plaintiff proceeding in the hope of establishing malice if the defendant chooses to give evidence.[12] There must be a proper basis in the pleading. That is not this case as the plaintiff conceded the question of malice is a speculative exercise, to be developed in some unidentified secondary way.
[12]Seray-Wurie v The Charity Commission of England and Wales [2008] EWHC 870 (QB).

Fourth, the plaintiff has not attempted to grapple with the countervailing public interest upon which the defendants rely to protect their sources. In substance, the plaintiff’s attack goes to the weight of the evidence on the application in respect of any likely adverse effect of disclosure.

The defendants submitted that the difficulty with conditional disclosure, if ordered in reliance on s 126K(3), would be the fundamental discord between the presumption by a journalist of entitlement to privilege in the context of the ethical obligations binding journalists that underpin it when promising an informant not to disclose the informants identity and later disclosure subject to conditions. One possible condition might be to defer disclosure to the trial. The plaintiff’s submission seeks immediate disclosure requiring that they assume the burden of demonstrating that the prejudice to the public interest in favour of disclosure presently overwhelms the countervailing public interest.

The plaintiff’s application for preliminary discovery is misconceived. By operation of s 131A of the Evidence Act the application is equally subject to Division 1C. The plaintiff fails on the application to identify the cause of action to be advanced against any particular source, save for the cause of action for breach of confidence. The defendants submitted that, by analogy with the reasoning in Markisic v Today-Denes,[13] should the court determine that publication was reasonable the source would have the benefit of the same defence. Further, no tenable claim for breach of confidence has been articulated because the plaintiff cannot identify information that has the necessary character of confidence which may have been imparted by the source to the defendants.
[13][2005] NSWSC 1276, [89]-[90].

The newspaper rule

Before the introduction of a statutory journalist’s privilege, the ‘newspaper rule’ operated to protect a journalist’s confidential sources from disclosure in interlocutory proceedings[14] where disclosure would be relevant to the issues for trial in the action unless it was necessary in the interests of justice to do otherwise. Its operation was explained by the High Court of Australia in John Fairfax & Sons Ltd v Cojuangco.[15]
[14]Disclosure could be obtained at the trial of the action subject to the trial judge's discretion to disallow questions.
[15](1988) 165 CLR 346, 354-355.

The newspaper rule was not a rule of evidence, but a practice that did not rest on a principle of privilege.[16] It did not afford absolute protection of the confidentiality of journalist’s sources of information because there is a paramount interest in the administration of justice which requires that cases be tried by courts on the relevant and admissible evidence. Some restrictions on the entitlements of litigants to compel identification of a source were imposed by the requirement that disclosure would not be required unless it was necessary in the interests of justice. In Cojuangco,[17] Mason CJ, Wilson, Deane, Toohey, and Gaudron JJ said:

In effect, the courts have acted according to the principle that disclosure of the source will not be required unless it is necessary in the interests of justice. So generally speaking, disclosure will not be compelled in an interlocutory stage of a defamation or related action and even at the trial the court will not compel disclosure unless it is necessary to do justice between the parties.

[16] Ibid.

[17]Ibid.

Under the rule, the plaintiff was required to establish that disclosure was necessary to provide the plaintiff with an effective remedy in respect of the wrong of which he complained. On a complaint of defamatory publication in a newspaper, the practice was to refuse to order disclosure of sources if it appeared that the applicant had an effective remedy against the newspaper or journalist without the necessity of ordering discovery. The fact that information had been conveyed to a journalist in confidence gave way where disclosure was necessary in the interests of justice.

This assessment of whether the applicant had an effective remedy could be affected by the defences pleaded to the claim. In Cojuangco, the question was whether a statutory qualified privilege defence[18] that had been, or was open to be pleaded entitled to judge to order disclosure if the defendants did not relinquish that defence. The High Court stated that it was necessary for a judge to consider whether the plaintiff is left without an effective remedy if an order is not made and that the judge is not called upon to decide whether the statutory defence will succeed. The court said:

It is for him to form a conclusion that the defence might well succeed on the materials before him.

[18]Under s 22 of the Defamation Act1974 (NSW).

The High Court identified two particular features of the issues in that case. First, a striking feature of the publications was that the imputations had a solid basis of support in the views of prominent and informed, but unidentified, sources. The imputations were conveyed with an aura of authority and authenticity that would be lacking if they rested on no more than the assertions of the journalist. The court said:

It is incongruous and unjust that the appellants, having derived the advantage that comes from identifying in general terms the sources of the allegations that they make against the respondent, should now seek to deny him an opportunity of identifying precisely those sources, by invoking the newspaper rule.

Secondly, the defamation was of a very serious kind that might gravely compromise the respondent’s reputation, and, as a prominent business personality, the respondent should be given the opportunity of discovering the precise identity of the sources and deciding upon such action as he then considers appropriate.

Journalist’s privilege under the Evidence Act

Section 126K provides that a journalist is not compellable to disclose the identity of a confidential source unless, on the application of a party, the court determines that the public interest in the disclosure of the identity of the source outweighs the likely adverse effect of disclosure upon the source or others and the free flow of facts and opinion to the news media. Section 131A of the Evidence Act extends the application of this privilege to the pre-trial stages of proceedings.

It is in these terms.

Division 1C—Journalist privilege
126J Definitions
(1) In this Division—
informant means a person who gives information to a journalist in the normal course of the journalist's work in the expectation that the information may be published in a news medium;
journalist means a person engaged in the profession or occupation of journalism in connection with the publication of information, comment, opinion or analysis in a news medium;
news medium means a medium for the dissemination to the public or a section of the public of news and observations on news.
(2)For the purpose of the definition of journalist, in determining if a person is engaged in the profession or occupation of journalism regard must be had to the following factors—
(a)whether a significant proportion of the person's professional activity involves—
(i)the practice of collecting and preparing information having the character of news or current affairs; or
(ii)commenting or providing opinion on or analysis of news or current affairs—
for dissemination in a news medium;

(b)whether information, having the character of news or current affairs, collected and prepared by the person is regularly published in a news medium;
(c)whether the person's comments or opinion on or analysis of news or current affairs is regularly published in a news medium;

(d) whether, in respect of the publication of—
(i)any information collected or prepared by the person; or
(ii)any comment or opinion on or analysis of news or current affairs by the person—

the person or the publisher of the information, comment, opinion or analysis is accountable to comply (through a complaints process) with recognised journalistic or media professional standards or codes of practice.

126K Journalist privilege relating to identity of informant
(1)If a journalist, in the course of the journalist's work, has promised an informant not to disclose the informant's identity, neither the journalist nor his or her employer is compellable to give evidence that would disclose the identity of the informant or enable that identity to be ascertained.
(2)The court may, on the application of a party, order that subsection (1) is not to apply if it is satisfied that, having regard to the issues to be determined in the proceeding, the public interest in the disclosure of the identity of the informant outweighs—
(a)any likely adverse effect of the disclosure on the informant or any other person; and
(b)the public interest in the communication of facts and opinion to the public by the news media and, accordingly also, in the ability of the news media to access sources of facts.

(3)An order under subsection (2) may be made subject to such terms and conditions (if any) as the court thinks fit.

Division 1C of the Evidence Act largely mirrors provisions found in Division 1A of Part 3.10 of the Evidence Act 1995 (Cth). The provisions were introduced by the Evidence Amendment (Journalists’ Privilege) Act 2010 and were based (in part) on ss 68 to 70 of the Evidence Act 2006 (NZ). Provisions to similar effect have also been enacted in Western Australia[19] and New South Wales.[20]
[19]Evidence Act 1906 (WA) ss 20H–20M.
[20]Evidence Act 1995 (NSW) ss 126K, 131A.

The plaintiff submitted that the resolution of a disclosure issue under Division 1C should not be materially different to the application of the newspaper rule. However the proper application of the privilege is to be determined, as the High Court has repeatedly stressed, by interpretation of the language of the statutory provision. For example in Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue[21] the High Court observed:

The task of statutory construction must begin with a consideration of the text itself. Historical considerations and extrinsic materials cannot be relied on to displace the clear meaning of the text. The language which has actually been employed in the text of legislation is the surest guide to legislative intention. The meaning of the text may require consideration of the context, which includes the general purpose and policy of a provision, in particular the mischief it is seeking to remedy.

[21][2009] HCA 41; (2009) 239 CLR 27, 46–7 [47] (Hayne, Heydon, Crennan and Kiefel JJ) (citations omitted).

Some general observations may be made.

First, Division 1C of the Evidence Act replaces the common law’s uncertainty[22] with journalist’s prima facie entitlement to assert privilege.[23] Journalist’s privilege is no longer a rule of practice. It is now a statutory privilege. The Act alters the emphasis in the balance that the common law had achieved in favour of protection of confidential sources.[24] In Ashby v Commonwealth of Australia (No 2),[25] Rares J described[26] the amendments to the Evidence Act (Cth) as having ‘created a statutory right of journalists, as defined in s 126G, to assert privilege from disclosure of their sources which has greater force than the common law rule of practice known as the newspaper rule.’ Rares J referred to the general purpose underlying the provisions as the importance of the free flow of information in a democratic society.[27]
[22]In Cojuangco (1988) 165 CLR 346, 351 [9], the High Court the precise area of operation of the rule ‘is shrouded in uncertainty, as might be expected of a principle erected on shifting foundations’.
[23]Ashby v Commonwealth of Australia (No 2) [2012] FCA 766 [17].
[24]Ibid [23].
[25][2012] FCA 766.
[26]Ibid, [8].
[27]Ibid, [18].

Secondly, and importantly, the newspaper rule only applied in interlocutory proceedings. In Cojuangco,[28] the newspaper’s counsel (AM Gleeson QC) contended in argument that the newspaper rule merely brings about a postponement of the disclosure of sources that will be compelled at trial when a newspaper runs a qualified privilege defence under s 22 of the Defamation Act1974 (NSW). This contention was implicitly accepted by the High Court in its reasons. Prior to the enactment of Division 1C, the practice was, when the identity of sources was relevant, to generally permit the plaintiff to seek disclosure during evidence if the journalist gave evidence. Division 1C brings about a change in that practice. Now neither the journalist nor his employer is compellable to answer that question at trial and may object to do so by asserting the privilege under s 126K(1). When the journalist does not give evidence or the privilege is successfully claimed at trial, issues may arise about whether that claim of privilege provides a sufficient basis to exclude Jones v Dunkel reasoning because a party or witness has failed to give evidence that, on the question of reasonableness of publication, it could be expected to give. I will later return to this question.
[28](1988) 165 CLR 346, 347.

Thirdly, the circumstances in which the court’s power to override the privilege is to be exercised are defined. Section 126K(2) identifies factors to be taken into account in undertaking the balancing exercise. The presumption against compellability for disclosure is only displaced on the application of a party. Thus, the plaintiff carries the primary onus. The use of the word ‘likely’ suggests the standard to be met in establishing adverse effect. However, I do not think that the plaintiff carries the onus of proof on all issues raised for consideration by the section and I will return later to the issue of onus and standard.

Sections 15 and 32 of the Charter of Human Rights and Responsibilities Act 2006 (Vic) require that the provisions of the Victorian Act should be given a beneficial interpretation consistent with the statements of intent in the Explanatory Memorandum to the Bill and in the Attorney-General’s second reading speech to the Victorian Parliament that are set out elsewhere in these reasons.[29]
[29]At paragraph [14]-[16].

Independently of the Charter, in Western Australia, Pritchard J gave similar provisions a beneficial interpretation stating:[30]

The enactment of the Shield Laws means that the confidentiality of information provided to journalists by informants is no longer (if it ever was) a matter of purely private interests, but is now recognised as a strong public interest, which may outweigh other public interests which apply in relation to the production of documents for the purposes of litigation.
[30]Hancock Prospecting Pty Ltd v Hancock [2013] WASC 290, [174] (Pritchard J).

When will journalist’s privilege not apply

On the basis of the analysis that follows, the proper approach to considering whether to require disclosure of the identity of sources is:

(a) First, to identify the issues in the proceeding that determine the context of the application;

(b) Second, to identify the public interest in disclosure in the context of those issues that is advanced by the plaintiff;

(c) Third, to assess the degree of significance, or weight, to be attributed to that public interest;

(d) Fourth, to identify the likely adverse effect of an order for disclosure on the informant and others;

(e) Fifth, to identify the public interest in a free and informed press and in investigative journalism;

(f) Sixth, to assess the degree of significance, or weight, to be attributed to that public interest;

(g) Seventh, to weigh up the competing considerations according to the significance, or weight, attributed to them to answer whether the public interest in disclosure outweighs the other interests.

The first task is to determine the issues in the proceeding that determine the context of the application, since the balancing exercise is undertaken ‘having regard to the issues to be determined in the proceeding’ which includes the defences put forward, or to be taken, by the defendants. The public interest in disclosure must be identified by the plaintiff. That inquiry will usually involve prognostication about the impact of the privilege on the just determination of the plaintiff’s claim. That said, the public interest considerations that are put into the value judgement required of the court are not in their entirety referable to the issues in the proceeding. Plainly, some of those considerations are broad, extending well beyond the issues between the parties.

The question for the court is whether that public interest ‘outweighs’ the other matters identified in the subsection. In another context (propensity evidence), McHugh J observed, in Pfennig v The Queen,[31] that:

The use of the term ‘outweigh’ suggests an almost arithmetical computation. But prejudicial effect and probative value are incommensurable. They have no standard of comparison.

[31](1995) 182 CLR 461, 528.

The balancing exercise created by s 126K(2) may be similarly described. The public interest in the disclosure of the informant goes to the fairness of the trial of the issues raised in the proceeding, the interests of justice. The issues of likely adverse effect and public interest in facts and opinions communicated by an informed media have nothing to do with the fairness of the trial process, but a great deal to do with the proper functioning of a free democratic society under the rule of law. The only sense in which one set of considerations can outweigh the other is by a value judgement, which requires the attribution of weight, or degree of significance, to the factors being considered, but not for a calculation.

To reject the notion that the confidentiality of journalist’s sources deserves absolute protection, the High Court in Cojuangco stated that:

The role of the media in collecting and disseminating information to the public does not give rise to a public interest which can be allowed to prevail over the public interest of the litigant in securing a trial of his action on the basis of the relevant and admissible evidence. No doubt the free flow of information is a vital ingredient in the investigative journalism which is such an important feature of our society. Information is more readily supplied to journalists when they undertake to preserve confidentiality in relation to their sources of information.

The High Court stated 20 years ago that the appropriate balance would not be struck where such a high value on a press freedom and on freedom of information was set so as to leave an individual without an effective remedy in respect of defamatory imputations published in the media.

This analysis brings into focus the concept of an effective remedy. To what degree will the conduct of a fair trial for the benefit of the plaintiff be impaired by maintaining confidentiality of sources? On the other hand, given the obvious public interest in investigative journalism, which the plaintiff accepts, in what degree will detrimental impact on that public interest or likely adverse consequences for the informant or any other person outweigh the conduct of a fair trial?

The onus and standard of proof on the parties when advocating for that value judgment to be exercised in their favour are identified by an analogy with the scales of justice. The plaintiff bears the onus to tip the balance of the scales to favour disclosure, which is the required standard. The plaintiff bears the evidentiary onus of placing proof of relevant considerations in one pan, while the defendants seeking to tip the balance in favour of confidentiality by reference to other considerations bear an evidentiary onus to place proof of those other considerations in the opposing pan. The court’s value judgement turns on assessing the weight, or degree of significance, of the opposing sets of considerations or values. That exercise may be affected by the extent to which the party that does not bear the evidentiary onus has sought to negate or minimise considerations put against its position. In respect of adverse effects from disclosure, which is a factual question, such consequences must be likely, in the sense of probably or apparently going to happen.

Some preliminary observations may be made before turning to analysis of the submissions on the pleadings and the evidence on the application. First, it is not necessary for a fair trial to be had that there be complete, or perfect, disclosure of all relevant and admissible evidence. Secondly, whether a fair trial is being conducted in the court is, quintessentially, an assessment to be made by the trial judge, who is best placed to make that assessment on the basis of the issues that remain to be determined at trial; on the pleadings, in the light of counsel’s opening statements, and on examination and cross-examination of witnesses and other relevant circumstances that occur in the course of the trial.

On the other hand, the Civil Procedure Act 2010 seeks to facilitate cultural change in litigation to facilitate the just, efficient, timely, and cost-effective resolution of the real issues in dispute. Achievement of that objective is favoured by earlier disclosure, prior to trial, of information that was traditionally revealed, at least in a common law jury trial, during the running of the trial. Further, at least in the context of the newspaper rule and prior to the enactment of the Civil Procedure Act, in Cojuangco the High Court rejected the notion that it is inappropriate for a judge in deciding an application for preliminary discovery to speculate on the prospects of a successful qualified privilege defence, particularly in the absence of evidence going to the issues raised by such a defence. The plaintiff contends that a litigant will be left without an effective remedy for the purposes of the balancing exercise under s 126K(2) if the judge concludes that the defence might well succeed on the materials before him.

Following Cojuangco and in the context of the newspaper rule, McCallum J in Liu v The Age Company Limited,[32] said:

The task is for the Judge to assess the defence prospectively without knowing what the final evidence will be or indeed what will be revealed by further interlocutory steps such as discovery and interrogatory.

Reflection for a moment on the distinction between an interlocutory rule of practice and a statutory presumption of non-compellability, release from which is discretionary and may be subject to such terms and conditions as the court thinks fit, demonstrates that this observation is, as it was in Liu, confined to the application of the newspaper rule. The Cojuangco principle is not the basis for assessing the weight or degree of significance of the public interest in disclosure for the application of the statutory test.

[32][2012] NSWSC 12, [140].

The legislation contemplates, by its terms, that a court may determine that journalist’s privilege not apply in interlocutory or preliminary proceedings. It also contemplates, by s 126K(2), that there can be circumstances in which the disadvantages to the plaintiff in assessing the strength of the defendants’ defence may be a price that has to be paid, given the strength of the countervailing public interest.[33] The public interest in free flow of information may outweigh other public interests which apply in relation to the production of documents for the purposes of litigation. Each decision will turn on the particular circumstances.
[33]See Carolan v Fairfax Media Publications Pty Ltd (No 2) [2015] NSWSC 1010, [8], [15].

To assist in this balancing exercise, the court has the power, pursuant to s 126K(3), to make an order subject to such terms and conditions as the court thinks fit. Appropriate terms and conditions may depend on the point in the proceeding when the issue arises, and may include pseudonym orders, closed court orders, and orders that restrict disclosure to certain persons and/or on the basis of particular undertakings given by those persons. In criminal cases, physical facilities in court rooms, including screens and remote audio-visual transmission are also employed where a witness persuades the court that adverse effects from identification by, or confrontation with, an accused are likely.

When a qualified privilege (or other) defence makes the identity of the source relevant, there are at least two particular issues relevant to whether the interests of justice require disclosure of the source that may affect, in the context of a balancing exercise, a court’s assessment of the degree of interference with the public interest in the administration of justice that is occasioned by nondisclosure.

The first issue is how the defendant’s reliance on the undisclosed sources makes their identity relevant. It is evident that journalists need to exercise particular care in their use of information from confidential sources in order to avoid waiver of journalist’s privilege. The question of whether a plaintiff is unfairly denied an effective remedy by non-disclosure may be raised because of the conduct of the defendant. The extent to which the identity of sources is relevant to the proper administration of justice could depend upon the way information from the confidential source, and the nature and integrity of the source, is used by the defendant in its communication. That was the issue in Cojuangco.

In Bateman v Fairfax Media Publications Pty Ltd,[34] the defendants refused to provide particulars identifying the persons whose honest opinion or comment was the basis of the publication, invoking the newspaper rule. Rather than seek an order compelling disclosure, the plaintiff sought a strikeout of the relevant parts of the defence. After setting up the history and rationale of the newspaper rule, McCallum J stated:[35]

The defendants' position in the present case brings those principles under a measure of strain. It is difficult to reconcile reliance upon the defences of honest opinion of a commentator and comment of a stranger with an acceptance of responsibility for the matters complained of. By those defences, the defendants seek to deflect responsibility, defending the alleged defamation as the comment of the very person whose position the newspaper rule was designed to protect.
In my view, it would be inimical to the interests of justice in the present case to allow that course. The defendants should not be compelled to disclose the identity of the sources so long as such disclosure is unnecessary. In my view, disclosure of the sources is made necessary by the defendants' decision to deploy defences raising the issue. I have not been taken to any authority in which the practice of refusing to compel discovery of a source was condoned in a context where the identity of the source was so central to the issues of fact to be determined at trial.

McCallum J ruled that the defendants should be put to an election as to whether to identify the persons whose opinion or comment the relevant matter was alleged to be failing which the defence should be struck out.

[34][2014] NSWSC 400.

[35]Ibid, [24].

Secondly, the issues raised in the proceeding by the defences taken may make the identity of sources relevant in a way that is inconsistent with the maintenance of the privilege for like reasons. The defence may put in issue the way information from the confidential source, and the nature and integrity of the source, contributed to the reasonableness of publication. Fairness may dictate that the privilege is waived by the issue raised on the pleadings.

In Chong & Neil v CC Containers Pty Ltd & Ors,[36] the Victorian Court of Appeal considered issues arising at a civil trial of claims, inter alia, of a conspiracy to injure by means of a fraud. Relevantly, Court of Appeal considered issues in respect of waiver of the privilege against self-incrimination and what inferences arose if a party, in reliance on the privilege, failed to give evidence, but advanced a positive defence. On the question of waiver, the court said:[37]

Fairness is central to the question whether a party’s conduct should be construed as waiving their privilege. If a party by his or her conduct expressly or impliedly discloses or makes an assertion about matters to which privilege would apply, fairness to the other party may dictate that the party’s conduct should be taken as a waiver of any privilege attaching to that matter.
In Mann v Carnell, Gleeson CJ, Gaudron, Gummow and Callinan JJ stated, in the context of legal professional privilege, that it is ‘inconsistency … between the conduct of the client and maintenance of the confidentiality’ which effects a waiver of the privilege. The making of express or implied assertions about the content of the subject matter of the privilege while at the same time seeking to maintain the privilege gives rise to the inconsistency.

[36][2015] VSCA 137.

[37]Ibid, [200].

In the context of client legal privilege, s 122 of the Evidence Act gives statutory force to the common law principles of waiver set down in Mann v Carnell. There is no like provision in the Act in respect of journalist’s privilege, but nothing in the text of the provision or in the Act as a whole indicates that by s 126K the legislature intended to exclude the operation of the common law doctrine of waiver. Other privileges in the Act, such the privilege against self-incrimination,[38] are not subject to express provisions governing the circumstances of waiver, yet it is accepted for example, that the privilege can be waived.
[38]See s 128 of the Act.

The common law doctrine of waiver is relevant to assessing the degree in which the public interest in the administration of justice has been affected by the denial to the plaintiff of the identity of the sources used for the publication.

Issue waiver was considered by the Court of Appeal in Vic Hotel Pty Ltd v DC Payments Pty Ltd.[39] In that proceeding, legal advice that would ordinarily be privileged was disclosed in the defendant’s particulars and the primary judge struck out the references in those particulars. The Court of Appeal held that the plaintiff, by the issues raised in its amended statement of claim, opened up the issue on which the advice was relevant and that the plaintiff had waived privilege over the communications identified in the defence particulars. The Court of Appeal stated:[40]

The test for waiver is not whether the pleadings made any express or implied assertions about the content of the privileged communications, pleaded either as a material fact or as a particular to any material fact, which might be inconsistent with maintenance of the privilege. Rather, it is whether the privilege holder, DC Payments, by its conduct in its pleading of the state of mind of Next Payments, acted in a way that was inconsistent with its objection to Next Payments adducing evidence that would result in disclosure of its knowledge of the privileged legal advice. Put another way, was DC Payments’ conduct in pleading a state of mind of Next Payments inconsistent with the maintenance of confidentiality in communications relevant to that state of mind.

[39][2015] VSCA 101, 321 ALR 191.

[40]Ibid, [34].

The Court approved of the observations of the Full Court of the Federal Court in Commissioner of Taxation v Rio Tinto Ltd:[41]

… the question is not whether the Commissioner has put his state of mind in issue but whether he has directly or indirectly put the contents of the otherwise privileged communications in issue in the litigation, either in making a claim or by way of defence. Put another way, to adapt Allsop J’s language in DSE, has the Commissioner (being the privilege holder) make an assertion as part of his or her case in the litigation that lays open the privileged documents to scrutiny, with the consequence that an inconsistency arises between the making of the assertion and the maintenance of the privilege?

[41]Commissioner of Taxation v Rio Tinto (2006) 151 FCR 341, 360.

The New South Wales Court of Appeal stated in LVMH Watch & Jewellery Australia Pty Limited v Michael Lassanah & Ors:[42]

Section 30(3)(g) refers to the "integrity" of the source rather than the "accuracy" of the source. It is directed to whether the source is reputable or sound and of moral principle not whether the particular information provided by the source in the particular instance may be inaccurate. There may be circumstances where a source has provided inaccurate or unreliable information on a number of occasions in the past such as to draw their integrity as a source into question, but this was not the situation here. (Citation omitted)

[42][2011] NSWCA 370, [139].

Although the balancing exercise undertaken in respect of the newspaper rule, because it is a rule of practice, was not described in terms of waiver, the High Court’s analysis in Cojuangco is consistent with waiver principles. If a defendant has put in issue the identity and integrity of its sources, by laying that issue open for scrutiny the defendant may be acting inconsistently with its entitlement to enforce journalist’s privilege. By analogy with other privileges, the privilege might be lost through issue waiver.

If the defendants positively raise the identity and integrity of their confidential sources to assert, as part of a qualified privilege defence, that they have acted reasonably in the publications, the weight to be attributable to the public interest in disclosure for the proper administration of justice may be correspondingly increased. In this sense, the principles of waiver assist in evaluating the relevant strength of a value in the required balancing exercise, one which favours the plaintiff.

The second issue that may affect a court’s assessment of the degree of interference with the public interest in the administration of justice that is occasioned by nondisclosure, is whether a successful claim of privilege provides a sufficient basis to exclude Jones v Dunkel reasoning because a party or witness has failed to give evidence or an explanation that, on the question of reasonableness of publication, it could be expected to give. If Jones v Dunkel reasoning is available to the plaintiff at trial, to what extent will such reasoning ameliorate the adverse consequences of nondisclosure?

It is likely that, having regard to the rule in Browne v Dunn, the plaintiff will question the journalist to suggest that his reliance on the undisclosed sources was unreasonable. Jones v Dunkel reasoning may permit an inference that identification of the undisclosed sources would not assist the journalist’s contention that use of and reliance on the undisclosed sources in publishing the articles was reasonable conduct. The permissible limits of such reasoning are well established by the authorities. In Chong & Neil[43] the Court of Appeal said:

The rule does not enable the absence of a witness to make up any deficiency of evidence. It will not support an adverse inference unless the evidence otherwise provides a basis on which that unfavourable inference can be drawn. But where evidence has been left uncontradicted, any inference favourable to a party for which there was ground in the evidence might be more confidently drawn when a person, presumably able to put the true complexion on the facts relied on as the ground for the inference, has not been called as a witness and the evidence provides no sufficient explanation of his or her absence. The reasoning involves the treatment of the failure to adduce evidence as a reason for increasing the weight of the proofs of the opposite party or reducing the weight of the proofs of the party in default. (Citations omitted)

[43][2015] VSCA 137, [208].

The Court of Appeal explained that although it has been recognised that a court cannot draw adverse inferences from a claim of privilege,[44] care is required in identifying the inferential reasoning that is precluded. A distinction can be drawn between the prohibition against drawing an adverse inference from the claim of privilege and adverse inferences that may arise from the absence of evidence which a party or witness could be expected to give.[45] The Court of Appeal identified that there is authority against the view that a claim privilege against self-incrimination provides a sufficient basis to exclude Jones v Dunkel reasoning where a party or witness fails to give evidence.[46] Although it was unnecessary to express a concluded view, the Court of Appeal suggested that the privilege against self-incrimination may not preclude the application of the rule in Jones v Dunkel to a party or witness who fails to give evidence.
[44]Usually the privilege against self-incrimination or client legal privilege.
[45][2015] VSCA 137, [218]-[219].
[46]Ibid, [221]-[228].

It is premature to express any view about how these principles might operate at the trial of this proceeding and although the issue was raised by me in oral argument, counsel did not have a fair opportunity to address what is a complex question, probably best left to trial. It might be proper that the trial judge direct the jury that inferences adverse to those sought by the defendants on the question of reasonable conduct in publishing the articles could be drawn, notwithstanding journalist’s privilege, because of the state of the evidence at trial. The plaintiff’s ability to use Jones v Dunkel reasoning would be a factor that lessened the degree to which the public interest in the disclosure of the identity of the sources was adversely affected by the privilege. It might not be the case that the plaintiff would be left without an effective remedy if disclosure is refused, but it is impractical on the material presently before the court to so conclude.

In Lew v Herald & Weekly Times & Ors,[47] which was an application under the newspaper rule for disclosure of the identity of sources, the application was made notwithstanding that the defendants had given up their defences in order to avoid having to provide the identities of their sources. Chernov J (as he then was) stated that as each of the defendants had withdrawn the defence of qualified privilege, each was precluded from leading evidence as to the credibility of the source of the material in the articles. The identity of the source remained relevant for the purposes of aggravated or exemplary damages.[48] Chernov J considered that the fact alone that the identity of the source was relevant to the plaintiff’s claim for damages does not necessarily require that disclosure of the sources is necessary in the interests of justice.[49]
[47][1998] VSC 2.
[48]At [28].
[49]Citation, [29].

Returning to considerations based on the Civil Procedure Act2010, there are obvious tensions in the public interest in the administration of justice that are relevant when assessing the weight of that interest. The defendants, if faced with disclosure, may seek to be released from promises of confidentiality, which I accept to be a remote prospect, or abandon the defences. The defendants may be advised, and choose to, run the defence on the basis of nondisclosure of the sources. These alternatives create uncertainty that may prejudice achieving the overarching purpose in civil litigation.[50] From the plaintiff’s perspective, pre-trial disclosure of the sources is likely to contain costs, aid him in his preparation for trial, and it may reduce the reserve the drain on public resources. The plaintiffs, if faced with nondisclosure, may be at a disadvantage in assessing the strength of the qualified privilege defence.
[50]Note the observations of McCallum J in Carolan v Fairfax Media Publications Pty Ltd [2015] NSWSC 1010, [12]-[14].

Issues

The principal issue identified in argument about whether the plaintiff would be denied an effective remedy or the public interest in disclosure was affected was the impact of non-disclosure of sources on the qualified privilege defences.

Section 30 of the Defamation Act 2005 (Vic) states:[51]
[51]In respect of the common law defence see Bashford v information Australia (Newsletters) Pty Ltd [2004] HCA 5, (2004) 218 CLR 366.

30 Defence of qualified privilege for provision of certain information
(1)There is a defence of qualified privilege for the publication of defamatory matter to a person (the recipient) if the defendant proves that—
(a)the recipient has an interest or apparent interest in having information on some subject; and
(b)the matter is published to the recipient in the course of giving to the recipient information on that subject; and
(c)the conduct of the defendant in publishing that matter is reasonable in the circumstances.

(2)For the purposes of subsection (1), a recipient has an apparent interest in having information on some subject if, and only if, at the time of the publication in question, the defendant believes on reasonable grounds that the recipient has that interest.
(3)In determining for the purposes of subsection (1) whether the conduct of the defendant in publishing matter about a person is reasonable in the circumstances, a court may take into account—
(a)the extent to which the matter published is of public interest; and
(b)the extent to which the matter published relates to the performance of the public functions or activities of the person; and
(c)the seriousness of any defamatory imputation carried by the matter published; and
(d)the extent to which the matter published distinguishes between suspicions, allegations and proven facts; and
(e)whether it was in the public interest in the circumstances for the matter published to be published expeditiously; and
(f)the nature of the business environment in which the defendant operates; and
(g)the sources of the information in the matter published and the integrity of those sources; and
(h)whether the matter published contained the substance of the person's side of the story and, if not, whether a reasonable attempt was made by the defendant to obtain and publish a response from the person; and
(i)any other steps taken to verify the information in the matter published; and
(j)any other circumstances that the court considers relevant.

(4)For the avoidance of doubt, a defence of qualified privilege under subsection (1) is defeated if the plaintiff proves that the publication of the defamatory matter was actuated by malice.
(5)However, a defence of qualified privilege under subsection (1) is not defeated merely because the defamatory matter was published for reward.

It should be borne in mind that, as Brennan J stated in Stephens and Others v West Australian Newspapers Limited,[52] the law of qualified privilege seeks to balance, or to reconcile, the law's protection of personal reputation and freedom of speech that is appropriate in a free society. There is a public interest in both objectives and the law must provide a nice adjustment in regulating the competition between them.
[52](1994) 182 CLR 211,238, [8].

In Aktas v Westpac Banking Corporation Limited,[53] French CJ, Gummow and Hayne JJ said of the rationale for the privilege:
[53][2010] HCA 25, [21]-[22].

The relevant principles were said by Gleeson CJ, Hayne and Heydon JJ in Bashford v Information Australia (Newsletters) Pty Ltd to be stated in the earlier authorities "at a very high level of abstraction and generality". Another member of the majority, Gummow J, spoke to the same effect.
In Justin v Associated Newspapers Ltd, Walsh JA said that the "broad principle" underlying qualified privilege is that occasions exist in which it is desirable as a matter of public policy that freedom of communication should be given priority over the right of the individual to protection against loss of reputation. It also has been said that the categories (if there be utility in a system of categories) of occasions of qualified privilege are not closed and cannot be rendered exact. Cases of reciprocity, or as Griffith CJ put it, "community of interest", supply a recognised category, which in turn has an indeterminate reference. The limits of that range of reference in a given case are to be placed by regard to the "broad principle" identified by Walsh JA and to the remarks of Dixon J in Guise v Kouvelis as follows:
But the very width of the principles governing qualified privilege for defamation makes it more necessary, in deciding how they apply, to make a close scrutiny of the circumstances of the case, of the situation of the parties, of the relations of all concerned and of the events leading up to and surrounding the publication.

(Citations omitted)

In Cush v Dillon; Boland v Dillon,[54] French CJ, Crennan and Kiefel JJ stated:

The defence of qualified privilege is based upon notions of public policy, that freedom of communication may in some circumstances assume more importance than an individual's right to the protection of his or her reputation. The question of whether the person making a defamatory statement was subject to some duty or was acting in the protection of some interest, in making the statement, is to be understood in this light. (Citation omitted)

[54] [2011] HCA 30, [12], See also Harbour Radio Pty Ltd v Trad [2012] HCA 44, [30]-[35].

For present purposes, I draw no distinction between a Lange defence and the statutory defence, which, in a practical sense, may have largely superseded it. Relevantly, each defence requires that the defendant establish that publication was reasonable. As the s 30 qualified privilege defence was closely modelled on s 22 of the now repealed Defamation Act1974 (NSW) while prescribing more fully the circumstances to be taken into account in determining reasonableness, subject to recognition of the primacy of the legislative text, the earlier authorities are of some use in fleshing out the applicable concept of reasonableness.[55]
[55]In Rogers v Nationwide News Pty Ltd (2003) 216 CLR 327, 339 [30], the High Court stated that reasonableness is not a concept that can be subjected to ‘inflexible categorisation’.

The Victorian Court of Appeal recently considered the defence in Lower Murray Urban and Rural Water Corporation v Di Masi & Ors.[56] The trial judge found in favour of the respondents that the publication was not reasonable in the circumstances. The Court of Appeal endorsed the trial judge’s view that it is impossible to divorce subjective considerations from a proper determination as to whether the publishing conduct of the defendant was reasonable in the circumstances. The trial judge had correctly concluded that:[57]

Subparagraphs (g) and (i) of s 30(3) each necessarily involve a consideration of matters, such as the knowledge of the defendant of the facts which are alleged in the matter published by it. Subparagraph (g) concerns the sources of the information in the matter published, and the integrity of those sources. It would be unreal – and probably unfair – to confine the consideration of the integrity of a journalist’s sources to objective considerations; rather, clearly, it would seem that the author of defamatory material must, in addressing that point, be entitled to adduce evidence as to his or her estimate and understanding of the integrity of the sources. Subparagraph (i) concerns steps taken by the defendant to verify the information in the matter published. The adequacy of the steps, taken by a defendant to verify the information in the matter published, must depend on the knowledge, by that defendant, of the information contained in the matter published, and the knowledge, by the defendant, of facts which verify or substantiate the information contained in the matter published. An assessment of the sufficiency of the steps, taken by a defendant to verify the information contained in the matter published, must depend upon the state of knowledge of the defendant of the information contained in the matter published, and on the factual material in the possession of the defendant, which supports (or contradicts) that information.

[56][2014] VSCA 104.

[57]Ibid, [80].

Concerning the interaction of those subjective considerations and malice, the trial judge said:[58]

Further, although knowledge by a defendant, that allegations contained in matter published by it are untrue, is, almost invariably, conclusive evidence of malice, it is not the equivalent of malice. Rather, to prove malice, a plaintiff must satisfy a jury that the dominant motive of the defendant was an improper motive, which was ulterior to any duty or interest of the defendant in publishing it. Thus, if the concept of reasonableness, for the purposes of s 30(1)(c), includes a consideration of subjective matters, such as the state of knowledge and understanding of a publisher of the information contained in the matter published, there would be no inconsistency between s 30(1)(c) – which requires the defendant to prove that its conduct in publishing the material was reasonable – and s 30(4), which places the onus of proof of malice on the plaintiff. (Citation omitted)

[58]Cited by the Court of Appeal, ibid, [80].

The Court of Appeal drew attention[59] to what the High Court said in Lange,[60] when it described the reasonableness of the Lange defence in the following terms:

Whether the making of a publication was reasonable must depend upon all the circumstances of the case. But, as a general rule, a defendant’s conduct in publishing material giving rise to a defamatory imputation will not be reasonable unless the defendant had reasonable grounds for believing that the imputations were true, took proper steps, so far as they were reasonably open, to verify the accuracy of the material and did not believe the imputation to be untrue. Furthermore, the defendant’s conduct will not be reasonable unless the defendant has sought a response from the person defamed and published the response made (if any) except in cases where the seeking or publication of a response was not practicable or it was unnecessary to give the plaintiff an opportunity to respond. (Court of Appeal’s emphasis)

The Court of Appeal stated[61] that the requirement of reasonableness in the statutory defence falls to be construed in conformity with what was understood to be the proper construction of s 22 of the Defamation Act 1974 (NSW) at the time that s 30 of the Defamation Act was enacted in Victoria, and identified a line of authority where reasonableness has been approached in this manner.[62]

[59]Ibid, [83].

[60](1997) 189 CLR 520, 574.

[61][2014] VSCA 104 [85]-[86].

[62][2014] VSCA 104, [86].

Sims v Wran,[63] in the context of the defence of qualified privilege under s 22 of the Defamation Act1974 or at common law, recognised that in order to establish that the defendant’s conduct in publishing the articles was reasonable in the circumstances, a defendant would have to establish its belief in the truth of what was published and to disclose both the nature and the source of the information it possessed. Hunt J stated in respect of the obligation of the defendant to establish that his conduct was reasonable in the circumstances, which is an element of the defence under s 30 of the Victorian Act:[64]

The obligation of the defendant to establish that his conduct was reasonable in the circumstances … has been interpreted by the Court of Appeal as requiring the defendant to establish his belief in the truth of what he published and to disclose both the nature and the source of the information which he possessed. That belief must, of course, be looked at in the context of the sense in which the defendant intended to convey, rather than the sense in which what was published was in fact understood by the ordinary reasonable reader. The matters which the defendant may prove in order to establish that state of mind on his part are discussed in Siedler v John Fairfax & Sons Ltd and more fully in Redmond v Uebergang. They include all that was present to the defendant’s mind and which led to the existence of his belief in the truth of what he published. None of these matters to be put forward by the defendant in evidence are necessarily within the knowledge of the plaintiff, and the plaintiff would have no forewarning of the nature of the defendant’s case he has to meet upon this issue. (Citations omitted)

[63][1984] 1 NSWLR 317, 327F.

[64]Compare s 4 of the Defamation Act 2013 (UK) discussed in Matthew Collins, Collins on Defamation, OUP, 2014, chapter 12.

Echo Publications Pty Ltd v Tucker & Ors (No 3)[65] was a case where a statutory qualified privilege defence[66] failed for want of proof of reasonableness. The Court of Appeal noted the defendant might not be able to discharge their onus of proving reasonableness without giving evidence as to the circumstances leading to publication. Speaking for the court, Hodgson JA said:[67]

It is plain that a publisher’s state of mind may be relevant to reasonableness, for example whether or not the publisher believed in the truth of the defamatory matter … the publisher’s actual state of mind may be highly relevant. It is also plain that many of the circumstances of publication may be relevant. It may be relevant how the material was received, what other information the publisher had about the material, and whether there were any grounds known to the publisher for believing the material either was or was not true, and so on. Reasonableness could be affected by whether or not the publisher was aware of certain facts. … in cases such as this a relevant circumstance would be Echo Publications’ assessment of Fast Buck$ as a reliable source of information, and also Echo Publications’ assessment of the extent of public interest in being informed of Fast Buck$’s opinions on the subjects in question: that is, in both respects, what Echo Publications’ actual assessment was and whether that assessment was objectively reasonable. The Court has some material on which it might reach a view as to what would be a reasonable assessment of these matters, but has no evidence from Echo Publications as to what its actual assessment was. … In my opinion, this is a case where the conduct of Echo Publications might have been reasonable; but since the party in a position to lead evidence as to many circumstances relevant to the question of reasonableness has not done so, I am not satisfied it has discharged its onus of proving that its conduct was reasonable.
[65][2007] NSWCA 320.
[66]s 22 of the Defamation Act 1974 (NSW)
[67][2007] NSWCA 320, [24]-[27].

Applicable principles

In determining whether to order that a journalist or his employer is compellable to give evidence to disclose the identity of an informant, the court must evaluate the evidence before it in the manner set out above. Because that enquiry is, in part, undertaken by reference to the issues to be determined in the proceeding, I have set out some relevant discussion of the qualified privilege defence to aid analysis of the issues for the balancing exercise required by s 126K(2). Before turning to an analysis of the issues raised in the pleadings, particulars, and evidence on the application, I will state that for the reasons already expressed, I regard as unduly narrow the plaintiff’s submission that the question of whether reliance on the confidential sources was reasonable is the major issue arising on the qualified privilege defences.

I do not accept the plaintiff’s submission that the test enunciated in Cojuangco - whether on the material before the court on the interlocutory application the plaintiff will be left without an effective remedy at trial - is the correct approach to the balancing exercise required of the court under s 126K(2). The proper question is where the public interest in the proper administration of justice sits in the required balancing exercise.

I do not accept the plaintiff’s submission that at trial the defendants must produce their sources or answer questions about their identity. I agree with the defendant’s submission that this proposition is inconsistent with the statutory language. As the following analysis shows, there is much more to the defences than reliance on undisclosed sources. It may be that a failure on the part of the defendants to disclose their sources and to insist on confidentiality may effectively weaken those defences to a greater degree than disclosure. There are difficult questions that may arise at trial, and may be best evaluated in that context, such as the impact of the doctrine of waiver and the availability of Jones v Dunkel reasoning, depending on how the defence is run at trial. Those considerations will be relevant to both discretionary considerations and the related question of whether, and if so what, terms and conditions might be appropriate when compelling disclosure.

Mr McKenzie states that the particular concerns commonly raised by the criminal justice sources, of whom there are more than 10 persons, was that if their identities were revealed that knowledge could either discourage potential witnesses from coming forward to provide information to the authorities, hinder or interfere with ongoing investigations, and/or identify their informants, which could either discourage their cooperation or expose them to serious repercussions. I accept Mr McKenzie’s evidence that the statements were made to him in the context of his discussion with those persons about the basis on which he would receive information that they provided. There is no reason not to accept that such statements were made.

Mr McKenzie described the political sources to be five persons who are members of or closely associated with the Liberal Party. He does not suggest that there are potential consequences of the kind in issue with the Italian sources through identification of these persons. Rather, he claims that breach of his obligation of confidence owed to the sources would effectively end his career as an investigative journalist. I accept that such an outcome is likely and would be an adverse effect of disclosure.

I note that the defendants have published that they will not reveal their sources if unsuccessful in this application. The defendants submitted both that it was their policy not to reveal sources and that this announcement demonstrated their genuine fear for the safety of their sources.

For these reasons, having carefully considered the affidavits and the submissions, I am persuaded that the defendants have established that an adverse effect for the sources from disclosure of their identity is likely. I am also persuaded to accept Mr McKenzie’s expressed fears of adverse consequences for himself, his family and his professional career. I accept that the Italian sources would, if identified, be genuinely fearful for their personal safety. That is, in itself, a significant adverse consequence.

Further, although it is an archetypal fear about the mafia that informants to the authorities are likely to suffer personal injury or death, the evidence about the police enquiry corroborates Mr McKenzie’s hearsay statements about the beliefs of his sources. I do not infer that the plaintiff would be complicit in adverse consequences for the personal safety of informants. That conclusion would necessarily be based upon propensity reasoning from the assumption that Mr McKenzie’s allegations about the plaintiff are true. I am satisfied that it is likely that Mr McKenzie will be adversely affected by a genuine concern that some of the Italian sources might threaten his personal safety or that of his family were Mr McKenzie to reveal their identities.

The statements attributable to criminal justice sources, to the effect that disclosure of their identity may have an adverse effect on their work are inherently probable and I accept that an adverse consequence of that sort would likely follow on disclosure of their identities. I am also persuaded that if Mr McKenzie did reveal his sources it would almost certainly spell the end of his career as an investigative journalist. Although I am not persuaded that Mr McKenzie will reveal his sources even if compelled to do so, the enquiry is not in respect of Mr McKenzie’s likely future conduct but is directed to the likely adverse effect on the informant or any other person assuming disclosure occurred.

I am satisfied that this consideration is deserving of significant weight against requiring the defendants to disclose their sources.

B. The public interest in investigative journalism

Section 126K(2)(b) refers to the public interest in the communication of facts and opinion to the public by the news media and, accordingly also, in the ability of the news media to access sources of facts. The plaintiff did not dispute the existence of that public interest. It is well recognised and described in the material that I have referred to above, including the statements of the Attorney-General in the Victorian Parliament and the observations of the highest courts.[79] I need not repeat these matters.
[79]John Fairfax & Sons Ltd v Cojuangco (1988) 165 CLR 346, 354, Reynolds v Times Newspapers [2001] 2 AC 127, 205, Flood v Times NewspapersLtd [2012] 2 AC 273, [159], Goodwin v United Kingdom (1996) 22 EHRR 123, Nagla v Latvia No 73469/10 (ECHR, 16 July 2013 Application No 73469/10) Financial Times Ltd v United Kingdom (2010) 50 EHRR 46, [59]-[60].

What is presently necessary is to assess the weight, or the degree of significance, to be attributed to this public interest in the balancing exercise required by the section.

The defendants plead that the articles about which the plaintiff complains relate to matters of significant and legitimate public interest that warrant investigation and public scrutiny. They include:

(a) investigations into organised crime in the Calabrian community;

(b) political fundraising and associated disclosure requirements;

(c) the integrity of political processes in government decision-making in Australia;

(d) the integrity and proper administration of Australia’s migration laws;

(e) potential links between a charity fundraising event and organised criminal activity;

(f) the banning of the plaintiff from the Crown Casino by the Chief Commissioner of Victoria Police on public interest grounds; and,

(g) the propriety of the conduct of the former Chair of the Adult Parole Board.

For the purposes of this application, I am satisfied that there is a significant and substantial legitimate public interest in the communication of facts and opinions on these particular matters to the public. Further, for the media to access sources of fact that enable it to express opinion on these particular matters necessarily involves recourse to the techniques of investigative journalism that require recourse to sources that may only provide information on a confidential basis. Disclosure to the public of, and informed public debate about, the matters set out in the preceding paragraph weighs heavily in the balance in favour of maintaining the presumption of non-compellability.

The subject matter of this debate is the impact on Australian public life of very serious allegations of criminal conduct or misconduct about which there is a substantial risk that it would otherwise not be exposed to a proper degree of public scrutiny. Since Cojuangco in 1988, there has been a significant increase in the institutional response within the Australian body politic to allegations about organised crime, political corruption, and like matters, which was initially driven by the findings of royal commissions.

Mr McKenzie drew particular attention to the ethical obligations which bound him as a member of the Media, Entertainment, and Arts Alliance and by the Fairfax Code of Conduct. Mr McKenzie deposed, and this evidence was not challenged by the plaintiff, that in considering whether to publish the articles he turned his mind to his ethical obligations. He states that he relied on attributable sources where possible and that he gave consideration to the possible motives of confidential sources. Wherever possible, the defendants have sought corroboration of allegations and have distinguished between allegations and proven facts. Responses were sought from the plaintiff prior to publication. The defendant submitted that their conduct bore all the hallmarks of responsible investigative journalism in cases where the news media’s ability to source facts is partly dependent upon confidential sources.

For these reasons, I am satisfied that the considerations that favour not requiring the defendants to disclose the identity of their informants are weighty and important matters that, to a substantial degree, satisfy the public interest in the communication of facts and opinion to the public by the news media.

C. The public interest in disclosure

In applying the principles that I have set out above to identify the weight to be given to the public interest in favour of disclosure, it is necessary to look at each publication individually. It is also desirable to analyse the imputations that the plaintiff says arise from the articles and identify the importance of the identity of the source to the plaintiff’s ability to properly contest the qualified privilege defence at trial.

The defamatory imputations

The plaintiff summarised his defamatory imputations across the 12 articles to be that the plaintiff;

(a) is the leader of the mafia in Melbourne;[80]
[80]First, seventh, eighth, ninth, tenth, eleventh, and twelfth articles.

(b) as the leader of the mafia, was involved in shooting attacks upon three pizza restaurants as part of an extortion racket;[81]
[81]First article.

(c) as the leader of the mafia, has established a powerful criminal network across Australia;[82]
[82]First article.

(d) is involved in a large-scale illegal drug trafficking enterprise;[83]
[83]First article.

(e) is a crime figure involved in a substantial number of crimes including murder, gunshot wounding, and arson;[84]
[84]First, second, third, fourth articles.

(f) is the leader of a well-established Calabrian mafia cell in Melbourne;[85]
[85]Second, third, fourth articles.

(g) helped bankroll a Liberal Party marginal federal seat in the 2013 election using the proceeds of crime;[86]
[86]Second article.

(h) is a hitman;[87]
[87]Second article.

(i) paid a bribe to the Howard government in order to procure a Visa or his associate, and alleged drug traffic and criminal;[88]
[88]Second, third articles.

(j) has murdered two people;[89]
[89]Third article.

(k) is a mafia godfather;[90]
[90]Third article.

(l) provided corrupt mafia donations to the Liberal Party in order to procure a visa for a mafia criminal figure;[91]
[91]Fourth, seventh articles.

(m) is a mafia boss;[92]
[92]Fifth, sixth articles.

(n) failed to account to the Royal Children’s Hospital for funds raised at a charity event he hosted in its name;[93]
[93]Fifth article.

(o) provided ‘blood money’ to the Liberal Party in the form of donations;[94]
[94]Sixth article.

(p) is a criminal;[95]

(q) is involved in blackmail, extortion and murder;[96] and,

(r) is a mobster/organised crime figure who has been attending Crown Casino to engage in money laundering.[97]

[95]Sixth article.

[96]Seventh article.

[97]Eighth, ninth, tenth, eleventh, twelfth articles.

Defendants’ response to the imputations

As stated above, the defendants contended that the plaintiff’s focus on the identity of the sources is misconceived. The defendants submitted that their qualified privilege defence is substantially based in material that is available to the plaintiff, which on proper analysis demonstrated that there is limited reliance upon the undisclosed sources. The defendants summarised how the qualified privilege defence is particularised by grouping together the imputations to which it responds. The defendants have provided quite detailed particulars of their defence and, significantly, Mr McKenzie’s affidavit explained, in some detail, what are the sources for each article and clarified for the plaintiff the identity of some documents that he used that fell within the categories described in schedule A to the summons of which the plaintiff sought details.

The defendants asserted that there are multiple sources in respect of almost all of the information in the articles. In many cases, particularised attributed material corroborated or otherwise supported information provided by confidential sources.

I do not accept the plaintiff’s submission that the confidential sources were the key to the defendants’ qualified privilege defence. All but one (the sixth article) of the defendants’ publications refers to confidential sources. The references in the articles to confidential sources are not prominent but are a thread in the fabric of the qualified privilege defence, along with identified sources and proven facts, assertions of careful adherence to prudent journalistic practice and the ethical code, and the public interest. The defence does put in issue the integrity or apparent integrity of the sources. There may be some constraint upon the way that this issue ultimately will be permitted to go to the jury.

Taking the use of the sources in the articles into account, I am satisfied that in addressing whether publication was reasonable in the public interest, the identity of the sources is not the critical matter. That is not to say that disclosure would not assist the plaintiff. Rather, it is to conclude that the public interest in disclosure, when assessed against all available source material for the claim that the defendants acted reasonably, and the opportunities for the plaintiff at trial to meet the defence, is not as compelling as the plaintiff contends. Sufficient critical matters appear in objectively demonstrable facts and documents, such as the Report of the Woodward Royal Commission or the National Crime Authority with respect to Operation Cerberus, transcripts from coronial inquests, etc. to permit evaluation of the issues arising on the qualified privilege defence.

On analysis of this material, to which I will now turn, I am satisfied that the plaintiff is not significantly disadvantaged by the references to confidential sources in understanding how the defendants will contend at trial that they acted reasonably in publishing the articles.

The first group of imputations, which the defendants deny are conveyed, concerned the plaintiff’s alleged association with or involvement in organised criminal activity. These are the imputations set out at paragraph [130] (a)-(f), (h), (j), (k), (m), (q), and (r). The particulars alleged that the articles distinguished between facts, allegations and suspicions and were substantially based upon the following matters, which are appropriately particularised, none of which turns on the identity of any of the defendants’ confidential sources.

(a) Documents in respect of Operation Pandora;

(b) The Australian Federal Police operations known as Operation Mediacy and Operation Inca;

(c) The report of the Woodward Royal Commission;

(d) A report of the National Crime Authority with respect to Operation Cerebus;

(e) Transcripts and published media reports of the colonial inquests into the deaths of Antonio Peluso and Alphonse Muratore;

(f) Published decisions of various courts and tribunals, incorporating references to the evidence of Sgt Wayne Bastin, Intelligence Manager, Organised Crime Squad, Victoria Police;

(g) Searches of ASIC and LANDATA online databases; and,

(h) The Crown Casino exclusion notice issued by the Chief Commissioner of Victoria Police to the plaintiff.

The second group of imputations, which the defendants deny are conveyed, concerned the plaintiff’s involvement in fundraising for the Liberal Party and making corrupt payments to procure visas. These are the imputations set out at [130] (g), (i), and (l). The particulars alleged that the articles distinguished between facts, allegations and suspicions and were substantially based upon the following additional matters, which are appropriately particularised, none of which turns on the identity of any of the defendants’ confidential sources.

(a) Operation Mediacy conducted by the Australian Federal Police;

(b) A fundraising dinner for the then Liberal candidate for the federal seat of Bruce at a Docklands reception centre partly owned by the plaintiff on 1 March 2013;

(c) Communications with individuals named in the further particulars of the defence;[98]
[98]See paragraph 8A(c)(C)(vii).

(d) Records of the Australian Electoral Commission;

(e) Articles referred to at paragraph 7(ii) of the further amended statement of claim;

(f) The fact that the Administrative Appeals Tribunal found that the plaintiff’s brother had a history of violent criminal offending in Italy; and

(g) It is a matter of public record that Operation Inca resulted in the plaintiff’s brother’s conviction for his part in an attempted, very substantial, ecstasy importation.

The third group of imputations, which the defendants deny are conveyed, concerned the plaintiff’s failure to account for charity fundraising. These are the imputations set out in [130](n). The particulars alleged that the articles distinguished between facts, allegations and suspicions and were substantially based upon the same sources as provided information for the first and second articles and on information from additional sources that are named, alleging that none of the information turns on the identity of any of the defendants’ confidential sources.

The final group of imputations, which the defendants deny are conveyed, concerned the plaintiff’s provision of ‘blood money’ in donations to the Liberal Party and that the plaintiff ‘is a criminal’. These are the imputations set out in [130](o) and (p). The defendants state that these statements are based on a fair and accurate report of a speech given by a member of the Victorian Parliament on 28 May 2014.

By way of example, in relation to the first article, in pleading the qualified privilege defence, the defendants particularise the issue of reasonableness as follows:

C.The conduct of the First, Second, and Third and Sixth Defendants was reasonable in the circumstances in that:
[details the public interest in the subject matter, and that the article distinguished between suspicions, allegations and facts]
…
iv.The First Article was based upon and contained information obtained responsibly and fairly by the First, Second, Third and Sixth Defendants, which included information from the following sources:
a.individuals from within the Italian Community in Victoria who told the Second and Third Defendants that they did not wish to be identified due to fear of reprisals from the Plaintiff or his associates;

b. Persons with knowledge of “Operation Pandora”[..]
c. Persons with knowledge of:
Operation Inca […]
Operation Mediacy […]

d.accounts of the evidence contained in the affidavit of Sergeant Wayne Bastin […]

All of whom which were and were believed by the First, Second, and Third and Sixth Defendants to be persons or sources of integrity or apparent integrity:
[The defence goes on to list other sources including published media reports, report of the Woodward Royal Commission, Report of the National Crime Authority, searches of ASIC databases and searches of the LANDATA database.]

Examples of use of sources in the articles

Mr McKenzie states he has worked with more than 10 criminal justice sources. These sources include persons who work or have worked in or across a range of policing and security agencies across Australia, the Immigration Department, the National Crime Authority, the Victorian Department of Justice, and solicitors and barristers. Mr McKenzie confirms the extensive reliance by the defendants on such sources in his affidavit.[99]
[99]In particular by the table provided in paragraph 70 of the McKenzie Affidavit.

The plaintiff submitted that the sources are clearly important to the articles and the plaintiff submitted that the defendants derived the advantage that comes from identifying in general terms the sources of the allegations that they make so as to endow them with an aura of authority and authenticity which would be lacking if the imputations rested merely on the newspaper’s and the journalist’s assertions.

The plaintiff gave the following examples of reliance on undisclosed sources. In the First Article, the plaintiff noted the subtitle ‘Victoria Police Operation Pandora Intelligence report’, the references to ‘Police’ and to ‘law enforcement agencies’. In the Second Article, the reference to the plaintiff as having been described by police as a person involved in murder, gunshot wounding and arson, and the reference to a ‘recent police intelligence briefing’. In the Third Article, the reference is:

the most recent law enforcement assessments of the Calabrian businessman and Liberal Party donor, based on extensive police intelligence and the testimony of police informers, goes further. They place him at the apex of a secretive organisation that has concerned police for decades: Melbourne’s secretive Calabrian Honoured Society or Mafia.

The subject of the first article was a Victoria Police intelligence operation investigating unsolved murders that included investigations into organised crime in the Calabrian community. Sources apparent from this article are police who are said to want to question suspected Calabrian mafia figures over shooting attacks, ‘law enforcement agencies’ who identified the businessmen as suspected senior leaders in the Honoured Society and other ‘sources’ who alleged that acquisition of some assets amounted to extortion.

In my view, when the whole article is considered, the first article does not seek to draw authority or reliability for the imputations that the plaintiff alleges arise from it by references to the integrity of confidential sources. The defendants’ particulars identify that much of what appears from the article to have come from law enforcement agencies has come from the different operations that are referred to. This material is mostly written and the identity of the source will be incidental. Mr McKenzie states in his affidavit that Italian sources provided him with information about the structure and activities of L’Onorata Societa, including the plaintiff’s alleged leadership of it. The information from confidential sources is placed in context as the article states, ‘Fairfax has no evidence to suggest Blondie [the plaintiff] is involved in criminal activity’. When the article states that ‘Blondie was involved in a substantial number of crimes, including murder, gunshot wounding and arson’, the 1998 statement is attributed to a ‘senior organised crime detective’, but the article also reveals that the information is sourced from a court hearing, not a confidential source.

The second article dealt with fundraising for the Liberal Party for one of its federal marginal seat campaigns and related issues. Sources referred to in the article included a ‘recent police intelligence briefing’. In his affidavit, Mr McKenzie identifies the recent police intelligence briefing to be the document that was shown to him from which he recorded, and later transcribed, an excerpt (the audio file). In their particulars, the defendants identify the content of the article as being based on the sources who provided information for the first article, political sources, criminal justice sources and persons who were at the fundraising dinner. The article sets out the responses of various identified politicians to questions from Mr McKenzie. The article also notes that ‘the alleged crime boss has never been charged with a criminal offence and denies any involvement in organised crime or political bribery. The Federal Police bribery probe was closed after gathering insufficient evidence.’ I do not consider that the reasonableness of publication of this article will turn in any significant way on reliance on the position and integrity of undisclosed sources.

Mr McKenzie deposes that at or about the time of publication of the second article, he deleted the audio file and destroyed the recorder. Mr McKenzie sets out in his affidavit the words that were transcribed from the dictaphone. The plaintiff can explore those circumstances in evidence at trial and has not persuaded me that he is disadvantaged in meeting the qualified privilege defence in respect of this article by not knowing the identity of the criminal justice source that permitted him to view the briefing prepared for the Pandora intelligence probe from which the deleted material was dictated.

The third, fourth, fifth, and seventh articles were on similar topics to the second article. The third article refers to ‘the most recent law enforcement assessments of the Calabrian businessman and Liberal Party donor’, to ‘[w]ell-placed sources’, to ’[s]ources familiar with [the Plaintiff’s] affairs’, a source ‘who observed the pair’s [the Plaintiff and another named person] political activities’, a police briefing seen by Fairfax Media, a person said to have ‘inside knowledge’. Again, Mr McKenzie has identified the relevant law enforcement assessment. The defendants’ particulars state that the article was based on information from the same sources as the second article. On reading the whole article, there is a substantial basis in historical documents that have been researched by the journalist. Further, the plaintiff’s denials are reported.

In this article, there are instances where information provided by sources could possibly be unreliable and that the plaintiff might be better placed to demonstrate that the defendants did not act reasonably if sources were identified. However, on carefully considering the way that the defence has been particularised, Mr McKenzie’s affidavit, and on reading the article as a whole, I am not persuaded that any disadvantage to the plaintiff will be significant.

The seventh article also dealt with Liberal party donations. The article refers to ‘underworld sources’, and a ‘sources close to the Calabrian underworld’. The defendants’ particulars disclose that the information for the article came from the same sources and an identified person employed at the Magistrates’ Court.

The ninth article concerned the Victoria police investigation into unsolved murders, the Crown Casino banning order issued by the Chief Commissioner and the propriety of the conduct of the Chair of the Adult Parole Board. The article refers to ‘a source close to the Italian community’ who said the plaintiff gave Mr Gillard the gift of a food hamper. The defendants’ particulars of reasonableness state that the sources for the article included criminal justice sources and ‘persons of integrity or apparent integrity’. That is relevant to the defendant’s belief’s when deciding to publish. However it is not apparent on reading the article that the defendants have sought, for the consumption of the reader, to add that particular gloss to the statements they make.

Other considerations

The plaintiff argued, as acknowledged in Cojuangco, that there is a general injustice the defendants receiving a commercial advantage by amplifying, through use of high reliability confidential sources, the impact of their defamatory articles. The public interest against the defendant receiving a commercial advantage through its use of confidential sources was not a proposition that was sufficiently articulated in any way other than that set out above. For the reasons set out, I remain unpersuaded that the impediments on his answer to the qualified privilege defence articulated by the plaintiff will have a substantial impact on the interests of justice in litigation in this case. Absent identification of the sources, the plaintiff does not lose an effective remedy or the opportunity to ‘nail the lie’.

I have taken into account that there is, in the absence of immediate disclosure, some uncertainty as to whether the plaintiff will ever know the identity of the sources, which includes not knowing whether at any point he will succeed in compelling the disclosure of their identity during the trial. I accept that there is some disadvantage for the plaintiff in assessing the strength of the defences in the period leading up to the trial. If there is any prospect of his learning the identity of the sources, there is an obvious risk that that will only occur at trial. However, for the reasons given I am not persuaded this detriment is a significant or substantial one.

The plaintiff submitted, and I accept, that some possible sources were demonstrably unreliable. If some of the sources relied on were the same persons who gave unreliable evidence about the plaintiff in other earlier proceedings, the plaintiff contended that he was denied the significant opportunity to demonstrate that the defendant had, at least in some instances, acted unreasonably by using plainly unreliable sources. The defendants referred to a number of published press reports of evidence given at coronial inquests into the deaths of Antonio Peluso in 1993 and Alphonse Muratore in 1995. It may be accepted for the purposes of this application that when those witnesses were cross-examined by counsel for the plaintiff on another occasion, it became apparent that their evidence was unreliable hearsay. The plaintiff asserts that although it is by no means clear from Mr McKenzie’s affidavit those same witnesses and their unreliable allegations are the basis for some imputations.

I do not accept the thrust of this submission because I am not persuaded that the defendants consider, and have used, as reliable, the sources that the plaintiff submits can be demonstrated to be unreliable. So much appears clear from the text of the articles. There are references in the articles to the evidence given at the coronal inquests noting that it was not accepted by the court. The articles also identify that the statement of Sgt Bastin was unreliable because it was based on the testimony of unnamed informers. These riders appear more than once.

Further, the plaintiff, by his reply, puts the reasonableness of the defendants’ conduct in issue, with extensive particulars. It is open to the plaintiff to allege and prove that from the context, or other identified circumstances, a person who is demonstrably unreliable as a source was likely to have been the source used by the plaintiff.

The plaintiff contended that he is entitled to know the basis on which serving and former members of law enforcement agencies and the Department of Justice have provided highly confidential material to a member of the media. The police have not questioned, or charged, the plaintiff about, for instance, the shooting at the Woodstock pizza restaurant that is the subject of the First Article. Nor has he ever been charged with any criminal conduct. He is not, to his knowledge, the subject of any investigation. The plaintiff contends that in these circumstances, there could be no legitimate basis for any member of the police or any law enforcement officer to discuss these matters with a member of the media.

What these assertions may demonstrate is that the plaintiff might put forward other evidence, from which the court could infer the probable identity of a source or even a category of sources and assess the reasonableness of the defendants’ reliance on such sources. That he has not done so does not require that I assess as of greater significance the weight, or degree of significance, of the public interest in favour of disclosure.

Finally, it is the experience of the courts that a qualified privilege defence is not easily established by a defendant and establishing the requirement of reasonableness is onerous.

In all of the circumstances, I assess the impact of non-disclosure of the sources on the plaintiff’s capacity to defeat the qualified privilege defence to be negative but not critical. It is possible that disclosure would assist the plaintiff to challenge the proposition that the defendants had reasonable grounds to believe that the imputations were true but I am far from persuaded that the capacity for a fair trial on the issue of reasonableness is compromised to the extent of concluding that the plaintiff may not have an effective remedy.

Balancing Test- Application

Although I have accepted that the plaintiff may suffer disadvantage from not being able to directly attack the reliability and credibility of confidential sources, I remain unpersuaded that in all the circumstances as I have set them out above the plaintiff faces a substantial or significant hurdle in properly challenging the qualified privilege defences that outweighs both the likely adverse effect of disclosure on the informant and on other person’s and the public interest in the communication of facts and opinion to the public by the news media. I have determined that in the circumstances of this application, each of those matters is deserving of significant weight and I am not persuaded that the public interest in the disclosure of the identity of the informants would be compromised by nondisclosure in a manner that outweighs those considerations.

On the basis of the application that has been presented to the court, the plaintiff’s application for a declaration that the defendants are compellable to give evidence that would disclose the identity of the informants or would enable that identity to be ascertained is refused.

Preliminary Discovery

I will also refuse the application for preliminary discovery pursuant to r 32.03 to identify the sources referred to in the articles in order that the plaintiff might join them as defendants on the basis that they are publishers, alternatively that the plaintiff has a remedy against them or some of them for breach of confidence.

The plaintiff cited Liu v The Age[100] where there was an application for preliminary discovery to identify a source of information. McCallum J referred to the newspaper rule and to journalist’s privilege under s 126B of the Evidence Act (NSW). McCallum J found that if the newspaper and journalist were to relinquish any qualified privilege defence, the interests of justice would require an order for preliminary discovery.[101] The plaintiff now submits that it follows that if the defences are not relinquished, and the defendants have stated that under no circumstances will they reveal the identity of their sources, preliminary discovery is now necessary.
[100][2012] NSWSC 12.
[101]Ibid, [29].

It is implicit in r 32.03 that the plaintiff show reasonable cause to believe that he has or may have the right to obtain relief against any particular source. The plaintiff has not done so.

I am satisfied that, as the defendants submit, the plaintiff has not demonstrated reasonable cause to believe that defamation proceedings would or could be brought against the undisclosed sources as most causes of action between sources and the defendants occurred more than one year ago and are statute-barred. The first to seventh articles were first published over the period 8 March to 1 September 2014. It follows that communications between confidential sources and the defendants of information contained in those articles occurred more than one year ago, perhaps significantly earlier. Any damage to the plaintiff’s reputation has, in substance, been caused by the publication of the articles, and in respect of that publication (including republication in the articles of matters communicated to the defendants by their confidential sources), there is reasonable cause to believe that the defendants will either be able to make out their defences, in which case, as the defendants submit, the proposed sources would likely be derivatively entitled to the benefit of those defences. If the defendants fail to establish their defences, they will be liable to pay damages to the plaintiff.

I am also persuaded that the plaintiff has not articulated a tenable claim for breach of confidence. It has long been established that to bring such a claim a plaintiff must be able to specify with some precision the confidential information that is the subject matter of the cause of action, show that the information has the necessary quality of confidentiality, prove that the information was received by the defendant in circumstances that import an obligation of confidence and, finally, demonstrate an actual or threatened misuse of that information.[102]
[102]O'Brien v Komesaroff (1982) 150 CLR 310, 326, Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) (1987) 14 FCR 434, 443.

I am not persuaded that proof of the fact that there was a meeting between the Hon EW Gillard QC and the plaintiff and that the plaintiff gave Mr Gillard a food hamper or a gift of fruit in return for ‘tips or advice’ or ‘advice about how to fight the casino ban’ discharges the plaintiff’s obligation to articulate a tenable claim for breach of confidence. As s 118 of the Evidence Act makes clear, it is the content of any communication between a client and a lawyer that may not be disclosed rather than the fact that they met or the purpose of such a communication. The plaintiff alleges that the confidential information concerned the plaintiff’s private legal affairs, and that this information was confidential. The substance of the ‘tips and advice’ is unclear. It is not identified at all let alone with any precision. The fact that the parties met is not confidential or a communication. A potential claim for breach of confidential information must be formulated in a specific way, with precision.

The plaintiff’s solicitor deposes that his client may wish ‘to assert malice’ in the proceeding. The plaintiff bears the burden of establishing malice,[103] which is an allegation of dishonesty that must be established by cogent evidence commensurate with the seriousness of such a charge. A plaintiff may not proceed simply in the hope that something will turn up.[104] The plaintiff’s allegations of malice are at present mere speculation.[105]
[103]Rackham v Sandy [2005] EWHC 482 (QB), [17].
[104]Seray-Wurie v The Charity Commission of England and Wales [2008] EWHC 870 (QB), [35] (Eady J).
[105]Mr Tatti conceded in his affidavit that his present instructions in respect of a possible malice claim ‘are mere speculation’.

By operation of s 131A of the Act, journalist’s privilege is available on preliminary discovery to avoid compulsion to disclose identity. Because the plaintiff has not discharged his burden of establishing any compelling public interest in disclosure of the defendants’ sources which is capable of being balanced against the public interest in protection of the sources, I would also refuse on discretionary grounds the application for preliminary discovery to identify the defendant’s sources to join them as publishers. The plaintiff asserted[106] that the newspaper rule has no application in a proceeding for breach of confidence. I see no reason why s 126K of the Evidence Act does not apply in a proceeding for breach of confidence given the extension of the privilege to pre-trial proceedings by operation of s 131A.
[106]Citing British Steel Corporation v Granada Television Ltd [1981] AC 1096.

For these reasons, I refuse the application for an order for preliminary discovery.

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[2015] VSC 687

9 DECEMBER 2015