Con Ange v Fairfax Media Publications Pty Ltd & Ors

Ace Hire Aust Pty Limited v ADI Limited [2006] NSWSC 969 Adelaide Bank Ltd v Property Builders Pty Ltd [2009] NSWSC 1147 Economos & Co Pty Ltd v Bowlers Club of NSW Ltd [2000] NSWSC 1065 CASES CITED : Ferguson v Mackaness Produce Pty Ltd [1970] 2 NSWR 66 Fruehauf Finance Corporation Pty Ltd v Zurich Australian Insurance Ltd (1990) 20 NSWLR 359 NM Rural Enterprises Pty Ltd v Rimanui Farms Limited [2008] NSWSC 472 Preston v Star City Pty Limited [2007] NSWSC 293 Proctor & Gamble Australia Pty Ltd v Medical Research Pty Ltd [2001] NSWSC 183

Con Ange (Plaintiff) PARTIES : Fairfax Media Publications Pty Ltd (1st Defendant) Fairfax Digital Australia & New Zealand Pty Ltd (2nd Defendant) Jacqueline Magnay (3rd Defendant)

COUNSEL : K. Smark SC, with S.T. Chrysanthou (Plaintiff) T.D. Blackburn SC with A.T.S. Dawson (1st, 2nd & 3rd Defendants)

SOLICITORS : Kalantzis Lawyers (Plaintiff) Johnson Winter Slattery (1st, 2nd & 3rd Defendants)

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

2OO9/297676 CON ANGE v FAIRFAX MEDIA PUBLICATIONS PTY LTD & ORS

JUDGMENT 1 HIS HONOUR: Mr Con Ange, the plaintiff, alleges that an article published in the print version and the online version the Sydney Morning Herald on 21 May 2009, written by Jacqueline Magnay and entitled "The punch that cost the Sharks $20,000", referred in defamatory terms to him. 2 The defendants are the publishers of the Sydney Morning Herald in its print and online versions and the journalist who wrote the article. It is convenient if I refer to them by the single name of Fairfax. 3 On 10 July 2009, Mr Ange commenced proceedings in this Court claiming damages because of the defamatory content of the article. He also claimed aggravated damages on the basis that Fairfax published a series of eight subsequent articles which he claims amount to a "campaign" against him. 4 There is no issue that Fairfax published the principal article. They refute the proposition that the article was about the plaintiff. They plead that they were justified in publishing two of the five imputations pleaded by Mr Ange and they plead a defence of contextual truth in respect of all of the meanings alleged.

Procedural background 5 On 30 July 2009, which was the day upon which they filed a notice of appearance, Fairfax filed a notice of intention to elect for trial by jury in accordance with s 21(2) of the Defamation Act 2005. 6 There have been various interlocutory applications which have been heard and disposed of by Nicholas J and Simpson J. As a consequence of these applications, both of the pleadings have been amended and they are now, so far as the issues relevant to this application are concerned, in their final form. 7 Since 12 November 2009, there have been orders made by the Court on six separate occasions that the plaintiff, Mr Ange, is to serve a verified list of documents by way of discovery by specified dates. Only the last of those has been the subject of apparent compliance. 8 The verified list, which was served on 6 August 2010, listed only a number of newspaper articles published variously by the Sydney Morning Herald, the Daily Telegraph, and the Age Newspapers in the period from 21 May 2009 to 17 March 2010. 9 On 6 September 2010, Fairfax made an application to Simpson J in the Defamation List for various orders to deal with the adequacy of discovery including an order for the cross-examination of the plaintiff on his affidavit which verified the list of documents of 6 August 2010. 10 On the same day, Mr Ange made an application to the Court that the Court should dispense with a jury and proceed to a hearing of the matter without a jury. 11 Simpson J gave procedural directions to ensure that the matters were ready for hearing. The motions seeking orders with respect to discovery and also the dispensing of the jury came on for hearing before the Court on Friday, 5 November 2010. 12 On that day, the hearing of the motions was completed. With respect to the question of whether or not the jury ought be dispensed with I reserved my decision. With respect to the application for orders relating to inadequate discovery, I made orders which determined the application, but indicated that I would give reasons in due course. 13 This judgment provides the reasons for the making of the orders with respect to discovery which were made on Friday, 5 November 2010. I will deliver a separate judgment in respect of the jury application.

The Publication and the Pleaded Issues 14 In order to understand the issues raised and considered by the Court on this application, it is necessary to recount the substance of the article together with the imputations relied upon by Mr Ange and the contextual implications relied upon by Fairfax. 15 In dealing with the various pleaded allegations I will proceed on the assumption, but only for the purposes of this judgment, that the facts and matters pleaded are allegations which are properly made and which are capable of being substantiated. 16 The article appeared under a headline: "The punch that cost the Sharks $20,000". Under the headline was a large photograph of the face of a woman, who was badly bruised about one eye (possibly both eyes). The photograph was captioned: "Trauma and bruising", and named the woman, who was said to have been accidentally hit by "the Sharks' chief executive". The Sharks was identified as the Cronulla Rugby League Club. The article included two other photographs of the faces of men neither of whom are said to be Mr Ange. 17 The article contained the following passages relevant to the present proceedings. It is appropriate to set out the whole of those passages. They are: "The Herald has learnt that a club culture that became public with revelations of a group sex incident in Christchurch in 2002 has continued in recent years. Sex toys have been distributed to players and sex workers have entered the dressing room with a club supporter after a game.

Sources have confirmed that early last year players were offered sex toys to take home to their wives and girlfriends. The items were stored in and distributed from the club's offices. Some players' partners were horrified that players and officials might judge their sex lives on the choice of 'toy'.

Also last year an unofficial supporter of the club, a sex shop owner, Con Ange, entered the dressing room after a game at Shark Park with two scantily dressed female friends, who were introduced as 'Bitch One and Bitch Two'. That phrase is understood to have been used in reference to other women around the club in other introductions.

'It was pretty clear what was on offer and it wasn't Con,' a club source said of the two women in the dressing room.

Mr Ange owns more than 20 adult shops known as 'Everything Adult'. He was an associate of the Kings Cross identities Ashtray Frank and Fatty and Skinny Steve who worked at Porkys and the Love Machine. He was the focus of the Pandora police taskforce in 1996 and charged in relation to $1.7 million worth of stolen property. The charges were dropped.

Last year the Queensland Department of Fair Trading fined him $5000 for selling hardcore items that had been refused classification in any state." 18 In paragraph 5 of the amended statement of claim, Mr Ange pleads that five imputations defamatory of him were conveyed by this publication. They are: "5 (a) That he contributed to an offensive sexual culture at the Cronulla Sharks rugby league club; (b) That he horrified Sharks' players' partners by distributing sex toys to the players; (c) That he procured two prostitutes to enter the Sharks' dressing room after a game, offering their services to players; (d) That he used deeply offensive words when he introduced two prostitutes he had procured for Sharks' players as 'Bitch One' and 'Bitch Two'; (e) That he had so conducted himself as to warrant police investigation for stealing property worth $1.7 million." In the alternative to (e), (f) That he had so conducted himself as to be reasonably suspected by police of stealing property worth $1.7 million."

19 Fairfax pleads only two defences: truth, pursuant to s 25 of the Defamation Act, and contextual truth, pursuant to s 26. Fairfax pleads particulars of the defence of truth to the plaintiff's imputations, and of the truth of the contextual imputations. By way of mitigation of damages, Fairfax pleads that the plaintiff is of bad reputation. That plea is also particularised. 20 The contextual imputations are pleaded by Fairfax in para 8 of the defence. They are:

(ii) that the Plaintiff is a distributor of illegal hard-core pornography;

(iii) that the Plaintiff has been fined for distributing illegal, hard-core pornography;

(iv) that the Plaintiff has engaged in deeply offensive conduct;

(v) that the Plaintiff shamelessly exploited women." 21 In accordance with Uniform Civil Procedure Rules 2005, r 14.33(2), the defence pleads that each contextual imputation was substantially true and that, accordingly, the imputations pleaded by Mr Ange did not further harm his reputation. 22 Having considered the pleadings, including the particulars, I am satisfied that, at least, the following matters are in issue, or else relevant to a fact in issue, for the purposes of this application:

(a) Whether Mr Ange was engaged in the business of creating, writing, making, participating in, distributing or selling pornographic literature, films, videos and DVDs, which had access to sex toys for adults;

(b) Whether Mr Ange was the owner in whole or in part, director, or else engaged in the management of any entity which engaged in the business described in the subparagraph (a) above;

(c) If Mr Ange was engaged in the businesses or entities described broadly in para (a) and (b), what the nature, extent and content of those business activities were, including the business structure, by which the plaintiff engaged in the various activities;

(d) What the nature and extent of Mr Ange's association was with the Cronulla Sharks Rugby League Club, its senior executives, players and the partners of players;

(e) What the nature and extent of Mr Ange's conduct was which led to a police investigation into whether he was engaged in criminal activity surrounding the stealing of property worth $1.7M; and

(f) Whether Mr Ange's business activities, of the kind broadly described in subparagraph (a) above, were illegal, in whole or in part, including whether Mr Ange or any of the business entities through which he conducted his business had been investigated for illegal conduct, had been prosecuted for illegal conduct, and the results of such prosecutions. Mr Ange's attitude to such investigations and prosecutions may also be relevant. 23 These issues, and apparently relevant facts, are not meant to be an exhaustive list. Nor are they to attain some special significance as if they were part of a statute. However, they are issues which can be readily and reasonably derived from the content of the impugned article, the pleadings and the particulars to which I have earlier made brief reference. They are obvious issues which would need to be considered by a party when discharging its discovery obligations. 24 I also note that having regard to the current state of the pleadings, each of the issues remains a matter of dispute between the parties.

Application for Discovery 25 The orders which Fairfax seek are set out in a letter dated 26 August 2010 in the following terms: "We advise that our clients will seek the following orders on that occasion: (a) That the Plaintiff attend Court, on a date to be set, for cross-examination upon his affidavit verifying his List of Documents affirmed 6 August 2010. (b) Costs. (c) Such further or other order as the Court thinks fit. Following any hearing at which the Plaintiff is cross-examined or even if that application is refused, our clients propose to seek the following further orders: (d) That the Plaintiff give further and better discovery in accordance with the Orders of the Court made on 30 July 2010 on or before a date in September or October 2010. (e) Further, on or before the same date in (d), the Plaintiff give discovery in accordance with the categories of discovery documents specified in the letters upon the Defendants Solicitors to the Plaintiff's Solicitors dated 20 January and 30 June 2010, such discovery to include documents that are not, but within the last three years, have been, in the possession, custody or control of the Plaintiff."

Court's Power to Order Discovery 26 Rule 21.2 of the UCPR deals with the provision of discovery. The rule specifically provides for discovery of documents within a class or classes specified in the order for discovery. 27 Specifically, r 21.2(3)(c) permits the Court to specify the class of documents in a manner which it considers appropriate. 28 The order for discovery which the Court made with the consent of both parties was, so it seems to me, in the nature of an order for general discovery. It is clear that Mr Ange's solicitors so regarded it. 29 Whilst the order was perhaps vulnerable on that account, no submission was made that it ought to be wholly set aside. Commendably, Mr Smark SC, who appeared with Ms Chrysanthou for Mr Ange, accepted that an order for discovery might be made properly within the rules, and did not engage in an arid debate merely about the form of the order. He was content to proceed with submissions which addressed the substance of the issues. 30 Accordingly, there is no need for me to express any concluded view as to whether an order for general discovery is any longer permissible under the UCPR. 31 It is important to note however that r 21.2(4) prohibits an order for discovery being made in respect of a document unless "… the document is relevant to a fact in issue". 32 This rule reinforces the underlying proposition with respect to all discovery, namely, that discovery is only appropriate with respect to documents which are relevant to the issues joined between the parties, or else relevant to a fact in issue. 33 The phrase "relevant to a fact in issue" which is included in r 21.2(4) is defined in r 21.1(2) in the following terms: "(2) For the purposes of this Division, a document or matter is to be taken to be relevant to a fact in issue if it could, or contains material that could, rationally affect the assessment of the probability of the existence of that fact (otherwise than by relating solely to the credibility of a witness), regardless of whether the document or matter would be admissible in evidence." 34 There are no specific rules in the UCPR dealing with situations which may arise where one party asserts that the discovery provided by the other party is inadequate. The two remedies commonly encountered for such circumstances are:

(a) an order for the filing of another verified list by way of further and better discovery; and

(b) an order granting leave to cross-examine the deponent on the affidavit that verifies the original list of documents which is said to be inadequate or defective. 35 Senior Counsel for Mr Ange conceded that, and did not put in issue that, the Court had the jurisdiction, and any necessary power, to make either of the orders described in the preceding paragraph.

The Applicable Authorities 36 A number of cases have discussed the principles to be applied in considering the relief sought by Fairfax. As to whether the Court should allow cross-examination of the deponent as part of its determination on the adequacy of discovery, Giles J said in Fruehauf Finance Corporation Pty Ltd v Zurich Australian Insurance Ltd (1990) 20 NSWLR 359 at 363F (after discussing the applicable principles for allowing further discovery): "Consistently with this approach, cross-examination of the maker of the affidavit of discovery has not been permitted. To permit cross-examination would be to open up the prohibited areas of investigation, and nullify the restrictions upon contesting both the amplitude of discovery and any claim for protection from inspection…" 37 It should be noted that the issue in that case was whether a claim for legal professional privilege in the affidavit of discovery could be sustained, although Giles J treated that issue as the same in substance as an application to cross-examine the deponent of an affidavit of discovery about the adequacy of discovery.

38 In Proctor & Gamble Australia Pty Ltd v Medical Research Pty Ltd [2001] NSWSC 183 at [64], Hunter J summarised the principles for granting an order for further discovery as follows: "The affidavit verifying discovery is conclusive of the question unless it can be shown (i) by recourse to the documents discovered; (ii) from the content of the affidavit verifying discovery; (iii) from the pleadings, or "from any other source that constituted an admission of the existence of a discoverable document" that the discovery has been insufficient. Further, where the discovering party has misconceived the nature of the obligation of discovery it is not necessary to infer the existence of relevant documents other than those discovered…" 39 The principles were further discussed by Hoeben J in Preston v Star City Pty Limited [2007] NSWSC 293 at [21]: "Although the basic rule remains that an affidavit of discovery is conclusive, some exceptions to that rule have been recognised by the common law and by the rules of court ( Mulley v Manifold (1959) 103 CLR 341, Fruehouf Corporation Pty Limited v Zurich Australian Insurance Ltd (1990) 20 NSWLR 359). Those exceptions are narrow and require that the insufficiency of the affidavit of discovery appear either from the documents themselves or from any other source that constitutes an admission of the existence of a discoverable document. In applying one of those exceptions the court has to "on the face of it or from admissions in other documents … have reasonable grounds for being fairly certain that there were other relevant documents which ought to have been disclosed …" ( British Association of Glass Bottle Manufacturers Limited v Nettlefold (1912) AC 709 at 714, Beecham Group Ltd v Bristol Myers Co (1979) VR 273 at 276)." 40 The same principles were applied by James J in Economos & Co Pty Ltd v Bowlers Club of NSW Ltd [2000] NSWSC 1065 at [45]-[67], by Harrison J in NM Rural Enterprises Pty Ltd v Rimanui Farms Limited [2008] NSWSC 472 at [11], by R.A. Hulme J in Adelaide Bank Ltd v Property Builders Pty Ltd [2009] NSWSC 1147 at [20]-[38], and by Einstein J in Ace Hire Aust Pty Limited v ADI Limited [2006] NSWSC 969, in circumstances which may have some similarity with the current proceedings. 41 I note that Giles J in Fruehauf (at 366F) expressed his disquiet as to whether the "old Chancery aversion to a "conflict of affidavits" was a proper justification for limiting the investigation with which the matter before him was concerned. 42 For my part, particularly in light of the provisions of s 56 of the Civil Procedure Act 2005 and the extensive use of the modern tools of case management to ensure that the real issues in dispute are addressed in a cost effective manner, I share in the disquiet of Giles J. I see no compelling reason to accord to an affidavit verifying a list of documents by way of discovery any special status. Proper compliance with a party's obligations of discovery under the overall supervision of the Court is an important and necessary part of modern litigation. The Court has the capacity to limit discovery, or control the process of giving discovery, so that it does not become unduly onerous. 43 That said, it is appropriate in determining this application that I pay regard to the existing authorities.

The Evidence 44 The evidence was in relatively short compass and was largely undisputed. 45 Mr Vasilios Kalantzis, Mr Ange's solicitor, gave oral evidence. I accepted the evidence of Mr Kalantzis. It satisfied me of the following:

(a) Mr Kalantzis had provided his client with copies of the amended pleadings, which included the imputations and contextual imputations to which I have referred earlier in this judgment;

(b) Mr Kalantzis had diligently and carefully explained to Mr Ange in writing, in a four page letter what his obligations of discovery were;

(c) Mr Kalantzis had diligently and carefully explained to Mr Ange orally, in conference, on more than one occasion, his obligations of discovery. Mr Kalantzis had taken his client through, and asked him specifically about, the categories of documents outlined in the latter from Fairfax's solicitors dated 20 January 2010;

(d) Ms Otarski, a solicitor employed by Mr Kalantzis, had informed Mr Kalantzis that she had carefully explained to Mr Ange his obligations of discovery, and that she had taken him through, and asked him specifically about the categories of documents set out in the letter from the solicitors for Fairfax dated 30 June 2010;

(e) Mr Ange had consistently denied to Mr Kalantzis (and Ms Otarski) that he had any documents which fell within the descriptions in the letters to which I have made reference; and

(f) In respect of at least some of the categories of documents, it seemed to Mr Kalantzis that it was both strange, and highly improbable that his client would not have had any documents which fell within the descriptions given. 46 The evidence for Fairfax, which consisted of an affidavit of Mr Svilans sworn on 31 August 2010 and a documentary exhibit, was not objected to. The evidence was not the subject of any challenge. 47 The evidence of Fairfax satisfied me sufficiently for the purposes of this application, and in the absence of any direct evidence from Mr Ange, of, at least, the following facts and matters:

(a) The business enterprises with which Mr Ange was associated were extensive throughout Australia and involved the distribution of pornographic material and adult sex toys. They have been in operation for many years;

(b) The business enterprises ranged over the production of pornographic films, the ownership and operation of 23 adult product shops, and the ownership and operation of an online adult products business. These businesses were in Australia and overseas;

(c) At one time in 2007, Mr Ange had a storeroom in Sydney in which he kept around 100 boxes of his stock of adult products, large quantities of magazines and videos;

(d) Mr Ange, in his personal capacity but using the pseudonym Con Aussie, was the executive producer of a series of pornographic films called "Manila Exposed". In one of the movies in that series, Mr Ange played a role as an actor, apparently following a script; and

(e) Mr Ange had been involved as a party to legal proceedings in the Supreme Court of NSW, the Local Court of NSW, the Magistrates Court of Queensland and has been involved as a witness in proceedings in the Supreme Court of Victoria.

The Obligations of Discovery 48 Shortly put, it is the obligation of a party, when ordered to give discovery, to provide a list in the appropriate form of all documents which are relevant to the issues in the proceedings or else to a fact in issue in the proceedings. 49 The term document is not interpreted narrowly. It includes both a part of a document which might be relevant, and a copy of any document which might be relevant: see UCPR Dictionary. As well the term is caught by the meaning attributed to it in the Interpretation Act 1987. Section 21 relevantly provides: "Document means any record of information, and includes: (a) anything on which there is writing, or (b) anything on which there are marks, figures, symbols or perforations having a meaning for persons qualified to interpret them, or (c) anything from which sounds, images or writings can be reproduced with or without the aid of anything else, or (d) a map, plan, drawing or photograph." 50 This definition is sufficient to encompass documents held in electronic form, as well as paper documents. It is sufficient to include emails, and other forms of electronic communication. 51 The obligation to provide discovery extends to documents which may not be admissible in proceedings. In other words, the obligation is not constrained by the same considerations which apply to the admissibility of evidence in the ultimate hearing of the proceedings in Court: Ferguson v Mackaness Produce Pty Ltd [1970] 2 NSWR 66 at 68 per Macfarlan J. 52 The term "possession" includes power and control: see s 3 of the Civil Procedure Act. Although that definition is applicable to the term as used in the Act, it would be anomalous to interpret the term in any other way in the UCPR in the absence of any contrary provision in the UCPR. The usual principles of statutory interpretation including those of coherence and concordance in the interpretation of the principal statute and the subordinate legislation are sufficient to justify this approach. 53 Accordingly, the obligation falling on a party is to include documents in a verified list provided by way of discovery, which are not only in the possession of the party, but also in its power and control.

Discernment 54 I have to be persuaded that there are before me reasonable grounds for being fairly certain that there were other relevant documents which ought to have been disclosed in the list of documents and which have not been disclosed. 55 I regarded this as being a matter upon which a decision could be reached easily, and without hesitation. 56 The evidence is strongly to the effect that there is likely to be more documents than those disclosed. The taxation laws mandate the continued possession of a variety of documents by income earning individuals and legal entities for a period of at least 5 years. Those taxation and financial records would be relevant to the issues which I have outlined above. As well, the Corporations Act 2001 requires the maintenance and retention of proper records of the operation of a corporation. It might also be reasonably expected that the operation of the many businesses with which Mr Ange was associated involved the sending and receipt by him of electronic communications such as emails. 57 I am not prepared to accept, on the evidence before me, that Mr Ange has been able to operate these businesses for a number of years, without there being one piece of paper retained by him, or else in his power and control. Equally, I am not prepared to accept that there has not been one email retained or stored by him or else stored in a way which is within his power and control. I regard any suggestion that this is the fact as being quite exceptional. It is not one which without proper direct evidence I would be prepared to accept. 58 I agree with the assessment made by Mr Kalantzis that it was "highly improbable" that Mr Ange had no discoverable documents other than those to which the affidavit of 6 August 2010 referred.

Appropriate Orders 59 Senior Counsel for Mr Ange accepted that at face value the evidence suggested that the discovery by his client had been inadequate. Appropriately, he did not make any specific concession in that regard. He submitted that, if the Court was satisfied that the discovery was inadequate, it should make an order which gave Mr Ange the opportunity to provide a further verified list of documents. He seemed to me to submit that having regard to the airing of the submissions of Fairfax in Court, together the ordinary exchanges between the bench and the bar in the course of the hearing of the motion, it was likely that his client would have a better understanding of the obligations and that a further opportunity to file another verified list would be productive. 60 He opposed the making of an order permitting the cross examination of his client. 61 I did not accept those submissions and made an order permitting the cross examination of his client. I did this because I was satisfied that Mr Ange's solicitor had properly and fully explained his obligations of discovery to him and on more than one occasion. It seemed to me that the issues in the proceedings were clear to anyone who read the pleadings as Mr Ange apparently had. As well, so poor was the verified list in terms of the number, range of documents produced and attention to documents likely to be in Mr Ange's possession, power and control, that there had been a wholly inadequate provision of discovery which was not likely to be remedied by the provision of a further list of documents. 62 It was for those reasons that I made the orders which I did on Thursday, 4 November 2010. I will set those orders out again at the conclusion of this judgment for ease of reference. 63 I note that since the orders which I made are interlocutory, it is always open to Mr Ange to seek to have them discharged if circumstances change. Orders which would enable that to happen in an orderly way were also made.

Orders 64 On Thursday, 4 November 2010, the Court made these Orders:

(1) The plaintiff, Mr Con Ange, is to attend court to give evidence at 10am on Friday, 12 November 2010.

(2) Grant leave to counsel for the defendants to cross-examine the plaintiff, Mr Con Ange, on that day in respect of the plaintiff's affidavit of 6 August 2010 relating to discovery of documents.

(3) In the event the plaintiff seeks to discharge the order for Mr Ange to attend court and give evidence on Friday, 12 November 2010, then he is to file and serve a notice of the order which is sought and any affidavit in support on or before 12noon on Thursday, 11 November 2010.

(4) Adjourn the defendants' motion in relation to discovery until 10am on Friday 12 November 2010.

(5) Reserve question of costs. **********

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.