Corby v Allen & Unwin Pty Ltd

HEADNOTE [This headnote is not to be read as part of the judgment] The first respondent, Allen & Unwin Pty Ltd, published a book entitled "Sins of the Father" (the "Book") written by the second respondent, Eamon Duff (the "author"). The Book purported to tell the "Untold Story behind Schapelle Corby's ill-fated drug run", revealed after three years of investigation by the author. It concerned the culpability of Schapelle Corby ("Schapelle") for the importation of marijuana into Bali in October 2004. It also described the involvement of her father, Michael Corby ("Mick"), in a drug trafficking syndicate, and linked Mick with the importation by Schapelle that led to her conviction. Additionally, it told the story of the extended Corby family's involvement in those matters. The appellants, Rosleigh Jill Rose, Mercedes Pearl Esma Corby and Michael Corby Jnr ("Michael Jnr") are respectively the mother, sister and brother of Schapelle. Each commenced proceedings seeking to recover damages against the respondents in the Common Law Division of the Supreme Court, alleging that the Book conveyed defamatory imputations of and concerning them. Among the defamatory imputations each appellant pleaded that the Book conveyed were imputations that they were either part of a drug syndicate run by Mick or dishonestly denied any knowledge of the drug syndicate (the "drug syndicate imputations"). In addition, in the case of Michael Jnr, the Book was also said to have conveyed defamatory imputations that he purchased a fish and chip shop with money he made from the drug trade or received knowing it was made from the drug trade (the "fish shop imputations"). Mercedes and Rosleigh also pleaded imputations asserting they each had lied in certain respects (the "lying imputations"). Mercedes also alleged the Book conveyed the defamatory imputation that she worked as a hostess in the Japanese sex industry (the "hostess imputation"). The respondents sought to have these imputations struck out on the basis that they were not, as a matter of law, capable of arising from the Book. Adamson J struck them out as incapable of arising or, in the case of the hostess imputation, on the basis that it was not capable of being defamatory. The strikeouts had the effect that Michael Jnr's proceedings were dismissed. They substantially restricted the scope of the other appellants' cases at trial. In striking out the drug syndicate imputations the primary judge found that the overall tenor of the book swamped any imputations that might have been conveyed. Her Honour was particularly influenced by Chapter 33 of the Book, Thirty Pieces of Silver, which recounted the course of defamation proceedings Mercedes and Rosleigh took against the Seven Network in relation to allegations made against them on the Today Tonight programme. The chapter, which was critical of Channel Seven's broadcasting of "unsubstantiated stories about Mercedes and Rosleigh", described its failure to establish in court that Mercedes had ever dealt in drugs, and Channel Seven's subsequent settlement of Mercedes and Rosleigh's defamation cases. Her Honour concluded that the hostess imputation was not capable of being defamatory as it could not lower Mercedes in the eyes of the ordinary reasonable reader, who "does not make a moral judgment". The appellants sought leave to appeal from Adamson J's strike-out order, as well as her Honour's orders as to costs. The principal issues raised by the appeal were: (i) Whether the Book was capable, as a matter of law, of conveying the struck-out imputations; (ii) Whether the primary judge erred in concluding that the overall tenor of the Book outweighed the drug syndicate imputations; (iii) Whether the judgment of the hypothetical referee on whether something is defamatory imports moral standards Held by the Court, granting leave to appeal and allowing the appeal: As to issue (i) (a) Great caution is mandated before striking out an imputation because a determination that the matter complained of is not capable of conveying the pleaded imputation necessarily means that no reader could reasonably understand the words to bear any meaning outside the range delimited by the judge. (b) The determination of the capacity of a matter complained of to convey imputations is an exercise in generosity, not parsimony. The test to be applied is whether the challenged imputation could reasonably be found by a jury. (c) Per McColl and Gleeson JJA, Bathurst CJ dissenting as to one of the lying imputations, the drug syndicate imputations, the fish shop imputations and the lying imputations could reasonably be found by a jury. Favell v Queensland Newspapers Pty Ltd [2005] HCA 52; (2005) 79 ALJR 1716; Amalgamated Television Services Pty Ltd v Marsden [1998] NSWCA 13; (1998) 43 NSWLR 158 applied; Berezovsky v Forbes [2001] EWCA Civ 1251; Jameel v Wall Street Journal Europe SPRL [2003] EWCA Civ 1694; [2004] EMLR 89 referred to As to issue (ii) (a) The general view is that the jury is the proper tribunal for determining whether the antidote has overcome the bane. (b) It is rare to conclude at the capacity stage that the antidote of the matter complained of swamps its bane. (c) The primary judge erred in concluding that the drug syndicate imputations were not conveyed in respect of Rosleigh and Mercedes because of the overall tenor of the book and in the context of a chapter dedicated to their successful defamation proceedings against the Seven Network. A jury could form the view that the ordinary reasonable reader would not read the Book in such a way that Chapter 33 was an antidote to those imputations. Sergi v Australian Broadcasting Commission [1983] 2 NSWLR 669; Bik v Mirror Newspapers Ltd [1979] 2 NSWLR 679(n) ("Bik") applied As to issue (iii) (a) The question of whether a person has been defamed is determined from the perspective of an audience composed of ordinary decent persons, being reasonable people of ordinary intelligence, experience and education who brought to the question their general knowledge and experience of worldly affairs. The hypothetical referee is taken to share a moral standard common to society generally. (b) Reference to moral standards applied by ordinary decent people is permissible when testing whether a publication was capable of being defamatory. Radio 2UE Sydney v Chesterton [2009] HCA 16; (2009) 238 CLR 460; Reader's Digest Services Pty Ltd v Lamb [1982] HCA 4; (1982) 150 CLR 500 applied

Judgment 1Bathurst CJ: I have had the privilege of reading the judgment of McColl JA in draft. I agree with her Honour's analysis of the legal principles and her conclusion on all the alleged imputations with one exception. 2Even accepting the relatively low threshold at which the issue of capacity is to be decided, I am unable to agree that the imputations her Honour described in her judgment (at [60]) as the "Trembath lying imputation" should be left to the jury. 3The statement in the book that at some unnamed time Ms Mercedes Corby tried to discredit Mr Trembath, calling him a liar and a drunk, does not convey the imputation that Ms Mercedes Corby was lying when she made that statement. The fact that the statement in the book is juxtaposed with the exchange in The Daily Mercury between Mr Trembath and Ms Rose, does not assist in conveying the imputation. Nor would the fact that a jury could conclude Ms Mercedes Corby would do all she could to protect her family, lead to the conclusion that the statement is capable of conveying the alleged imputation. Because mine is a dissenting opinion on this matter, it is not necessary to elaborate further. 4There is one further matter. McColl JA suggests in her judgment (at [16]) that leave should be granted as the striking out of the imputations could form part of a final appeal and success on that ground could lead to a new trial, which would be inimical to the just, quick and cheap resolution of the proceedings. Although that may be true in some cases, it should not be concluded that this factor should invariably lead to the grant of leave even if the matters sought to be raised are arguable. 5This is for two reasons. First, there is no reason that the criteria for leave in defamation proceedings should be different to any other proceedings. Leave should not be granted unless the issue involves issues of principle, questions of general public importance or an injustice which is reasonably clear in the sense of going beyond what is merely arguable. 6Second, dealing with issues such as those raised in the present proceedings by way of an interlocutory appeal is not necessarily conducive to the just, cheap and quick resolution of the real issues in the proceedings. That is amply illustrated by the fact that the proceedings brought by Ms Mercedes Corby were instituted on 1 November 2012 and a defence is yet to be filed. 7Subject to her Honour's orders concerning the Trembath imputation, I agree with the orders proposed by McColl JA. 8McColl JA: STATEMENT OF THE CASE [10] The Book [18] Thirty Pieces of Silver [28] Mercedes' statement of claim [40] Rosleigh and Michael Jnr's statements of claim [43] The first judgment [48] The drug syndicate imputations [51] The lying imputations [56] Mercedes' hostess imputation [72] Subsequent Developments [74] The second judgment [83] The costs judgment [90] Issues on Appeal [93] SUBMISSIONS [94] Appellants: general propositions [94] Respondents: general propositions [100] The drug syndicate imputations: appellants' submissions [105] The drug syndicate imputations: respondents' submissions [109] The lying imputations [120] The hostess imputation: defamatory [128] The costs judgment [130] CONSIDERATION [131] Approach on appeal [131] The capacity determination [132] Publication of defamatory hearsay [139] Bane and antidote [142] CONCLUSION [147] The drug syndicate imputations [155] The lying imputations [168] The fish shop imputations [174] The hostess imputation: defamatory meaning [177] Costs [189] ORDERS [190] In appeal 2013/126155: Rosleigh Jill Ross v Allen & Unwin Pty Ltd [190] In appeal 2013/ 126157: Michael Corby Jnr v Allen & Unwin Pty Ltd [190] In appeal 2013/140999: Mercedes Pearl Esma Corby v Allen & Unwin Pty Ltd [190] SCHEDULE A. Drugs, knowledge and the Corby family Sch [1] B. The Syndicate and the Corbys Sch [29] C. Lies by the Corbys Sch [31]

9In about November 2011 the first respondent, Allen & Unwin Pty Ltd, published a book entitled "Sins of the Father" (the "matter complained of" or the "Book") written by the second respondent, Eamon Duff, (the "author"). The Book purported to tell "[t]he Untold Story behind Schapelle Corby's ill-fated drug run", a story revealed after three years of investigation by the author who had access, among others, to a Mr Malcolm McCauley, said to have been a member of a drug syndicate in which Schapelle's father, Michael Corby ("Mick") was also involved. It concerned the culpability of Schapelle Corby ("Schapelle") for the importation of marijuana into Bali in October 2004. It also concerned the involvement of her father in a drug trafficking syndicate, and, in particular, in the importation by Schapelle which led to her conviction. It also told the story of the Corby clan's involvement in those matters. The critical issue is whether in so doing it implicated members of that clan of either being involved in the drug trafficking syndicate, or knowing about it.

STATEMENT OF THE CASE 10The applicants, Rosleigh Jill Rose (Schapelle's mother), Mercedes Pearl Esma Corby and Michael Corby Jnr ("Michael Jnr") (Schapelle's sister and brother) each commenced proceedings against the respondents alleging that the Book defamed them. They seek leave to appeal from decisions of Adamson J in which her Honour struck out certain imputations pleaded in their statements of claim and amended statements of claim. Her Honour did so because she concluded that the imputations were not, as a matter of law, capable of arising from the matter complained of or, in one case, although capable of arising, was not capable of being defamatory. For clarity of understanding where necessary I will refer, without meaning any disrespect, to the applicants as Mercedes, Rosleigh and Michael Jnr respectively. 11Mick died in January 2008. As far as the Court was informed, Schapelle, Mick and Rosleigh's daughter, has not brought defamation proceedings in respect of the Book. 12Rosleigh appeals from orders made in her Honour's judgment of 10 April 2013: Corby v Allen & Unwin Pty Limited [2013] NSWSC 308 (the "first judgment"). Mercedes and Michael Jnr appeal both against orders made in the first judgment as well as orders made in her Honour's judgment of 23 May 2013: Corby v Allen & Unwin Pty Ltd (No 2) [2013] NSWSC 617 (the "second judgment"). The applicants also contend the primary judge erred in ordering them to pay the respondents' costs of the strike-out applications: Corby v Allen & Unwin Pty Ltd (No 3) [2013] NSWSC 631 (the "costs judgment"). 13The primary judge heard the strike-out notices of motion as a separate trial of the capacity of the matter complained of to convey the imputations the applicants pleaded. An appeal by leave lies to this Court from a decision on such a separate trial: s 103 Supreme Court Act 1970 (NSW). 14This is the concurrent hearing of the applicants' application for leave to appeal and, if leave be granted, the hearing of the appeal. I would grant leave to appeal to the applicants (henceforth "the appellants"). The effect of the strike-out orders is to restrict substantially the scope of the appellants' case at trial. In such circumstances, it may be more appropriate for an appellate court to intervene than in circumstances where the primary judge has permitted imputations to go to a jury: Berezovsky (at [16]) per Sedley LJ delivering the judgment of the court 15Another reason to grant leave to appeal in Michael Jnr's case is because the consequence of the separate trial hearing was that his proceedings were dismissed. However as the primary judge held there was no triable issue, the dismissal order was not final in legal effect so as to give Michael Jnr a right of appeal pursuant to s 101 of the Supreme Court Act (assuming the monetary threshold referred to in s 101(2)(r) could be established): Macatangay v State of New South Wales (No 2) [2009] NSWCA 272 (at [11]). 16Further, should leave not be granted, it would be open to the appellants to raise the striking out of the imputations as part of any final appeal (David Syme & Co Ltd v Lloyd [1984] 3 NSWLR 346). Were such ultimate appeal to be successful on the basis that the strike-out orders were erroneous, whether in whole or in part, a new trial may have to be ordered. That would be inimical to the overriding purpose of the just, quick and cheap resolution of the real issues in proceedings: Alexander v Arts Council of Wales [2001] EWCA Civ 514; [2001] 1 WLR 1840 (at [45]) per May LJ (Woolf LCJ and Jonathan Parker LJ agreeing). 17For the reasons that follow I am of the view that the appeal should be upheld and the primary judge's orders striking out the appellants' imputations and dismissing Michael Jnr's proceedings should be set aside.

The Book 18The primary judge set out many of the passages from the Book that the appellants relied upon as directly relevant to their imputations in the course of her reasons. I have reproduced those passages where appropriate. The appellants also prepared an outline of passages from the Book that illustrate its tenor. The outline appears as a Schedule to these reasons. I have also inserted in the Schedule in bold other passages of the Book that appear to me to add context. 19It is convenient to set out the structure of the Book at this stage. 20The title on both the cover and the title page is "Sins of the Father - The untold story behind Schapelle Corby's ill-fated drug run". On the page following the title page the Sir Walter Scott quote, "Oh! what a tangled web we weave/When first we practise to deceive!" is set out. The back cover of the Book catalogues it as being in the "True Crime" series - placing it in a genre, as the primary judge accepted, of "a serious work of investigative journalism": first judgment (at [11]). 21The broad thesis of the Book is set out in the Prologue. It introduces the author's principal informant, Malcolm McCauley. He is a "drug dealer" who was "busted by South Australian Police for his key role in the multi-million dollar cannabis trafficking syndicate operating between Queensland and South Australia." At the time he was busted the police found a photograph of him posing with Schapelle taken in Bali's Kerobokan Prison on 13 May 2005. 22Mr McCauley explains the photograph was taken because he had "a history of dealing with Schapelle's father, Mick Corby, which led him to fly to Bali twice and speak with Schapelle in the lead up to her verdict trial." The "Corby family - especially Rosleigh" maintain he was a "random Aussie holidaymaker in Bali who approached them with offers of sympathy for Schapelle and free drinks at the bar" (Prologue (x)). The Prologue leaves it to the reader to assess the competing versions ("whatever the truth may be ... "). It then says that McCauley "for a long time ... stuck faithfully to Rosleigh's version of the story". By the time he talks to the author, it was all, according to him "a desperate disguise born from a pact he made with Mick - to save everyone's skin, not least his own." The "Australian media accepted the story he was touting and moved on" (Prologue (x) - (xi)). 23McCauley then went to gaol for 14 months having been convicted of trafficking cannabis in his "supposedly unrelated court case". While he was there, however, "[e]very week he waited to receive word from the Corby clan - specifically Schapelle's father, Mick [but] [t]here was nothing, not even a Christmas card." "Since his imprisonment, it was clear he had been dropped, even though he had stuck to an agreed code of silence" (Prologue (xi)). 24The Prologue then refers to a meeting the author had had with Mick seven months after Schapelle's arrest. Mick insists his daughter had been framed: "This family has no 'links to marijuana in any way, shape or form ... We don't know anyone who moves in those sorts of circles"; he was "still trying to work out how this possibly could have happened" (Prologue (xi)). The author then asserts that after the three years of research into that claim, and even if Mr McCauley's claims were not taken into account, he concluded that "Mick Corby lied to me that day" (Prologue (xii)). 25The prologue next refers to the fact that "Schapelle has grown to become a mass media commodity" around whom an "industry of innocence" has "flourished" (Prologue (xii)). Mr McCauley is said to have emerged from his prison term "in the mood to set the record straight" and has "released his inner demons in a series of revealing interviews for this book" (Prologue (xii)). 26The Prologue concludes (Prologue (xiii)): "As the journey of the pot from South Australia to the Gold Coast and across international waters to Bali is charted, the hidden narrative of Australia's most intriguing drug case unravels from behind the headlines of blatant media spin partly orchestrated by the Corbys. This is the story of a reckless father with a dark past, an old Adelaide drug trafficker who knew too much, and of the Gold Coast beauty school dropout who kept her mouth shut and took the fall for the syndicate." 27Each chapter of the Book is introduced by a quotation which arguably frames its thesis.

Thirty Pieces of Silver 28Chapter 33, Thirty Pieces of Silver, was pivotal to the primary judge's decision to strike-out the more serious imputations the appellants relied upon concerning their involvement in Mick's drug syndicate. It warrants close scrutiny. 29Chapter 33 is introduced by a quotation from Mercedes in which she acknowledges that: "We all know that we're under watch, under scrutiny, everyone's trying to pick, pick, pick ...anything at our family. Reporters even ring friends, trying to get dirt on me. They're not going to find any." 30Chapter 33 recounts defamation proceedings Mercedes and Rosleigh took against the Seven Network in relation to allegations made by Jodie Power on the Today Tonight programme. Jodie is identified as having been friends with "Mercedes and the Corby clan for more than 14 years" (324). She was "wired up to a lie detector" and "delivered a series of sensational allegations against both Mercedes and her mother ... she alleged that Mercedes smoked and dealt with marijuana" (325). 31Mercedes' defamation case is related to "allegations that [she] was knowingly involved in Schapelle's drug importation to Bali, that she sold drugs, that she was a drug importer and that she had ruined Schapelle's legal defence." Rosleigh's defamation proceedings concern "drug dealing allegations Jodie had made against her" (326). 32Only after the proceedings were commenced, the Book suggests, did Channel Seven embark upon investigations they "should have undertaken before broadcasting their unsubstantiated stories about Mercedes and Rosleigh" (327). Eventually they tracked down a "strong lead", Mr McCauley's drug associates, who speak of "a relationship that existed with a Gold Coast buyer called 'Corby'" (327). However Channel Seven receives advice that Mr McCauley would never cooperate and, in any event, he was in gaol and might have tainted "other potential witnesses who didn't possess his criminal history" (327 - 328). 33Channel Seven decides to subpoena Mr McCauley's wife, even though her evidence "would not have directly implicated either Mercedes or Ros" (328). Ultimately they decide not to call her (329). Channel Seven was also "desperate to land ... the elusive David McHugh ... [who] 'held the key' says the insider [but] ... he refused to come anywhere near it" (329). 34Elsewhere in the Book Mr McHugh is identified as an "Adelaide-based commercial marijuana grower - ... one of McCauley's regular suppliers" (162). He is also someone who had had "random meetings ... [which] had always seemed far-fetched" - an allusion to chapters 28 and 30 when he met the appellants in Bali. He, too, becomes one of the author's sources when he is "cast aside by Ros" and "banished" (371). After the author explains to him that he has "uncovered numerous friends, associates and sources all now naming Mick Corby as a man deeply entrenched in the marijuana trade", McHugh says, "[b]ut the Corbys will keep denying". The author's response is, "[t]hey can deny it all they like ... Mick Corby was smuggling pot to Bali", an activity said to have taken place "every week to ten days for several years" (371 - 372, 375). 35Returning to chapter 33, when the trial begins Mercedes "had undergone a massive transformation ... [and] looks like a 'frumpy mum' dropping her kids off to school." Through cross-examination, Jodie's evidence is exposed as damaging "tittle-tattle"; the only thing she seemed able to prove was that Mercedes had once used pot (331). Further, Jodie was revealed as a "junkie Mum" who had "lost the plot" and was "delusional". The "accurate information" another witness, Kim Moore, had previously supplied to police "which had led to a successful drug bust" on the property of one of Mick's associates, is "lost in all the courtroom drama" (332). 36The jury concludes at the end of "this very public show trial" that "Channel Seven was only able to establish, on the balance of probabilities, that Mercedes Corby had possessed and smoked marijuana but not that she had dealt in drugs in any way" (333). 37When the verdict is announced Jodie yells "Liar" at Mercedes. (333) Finally, chapter 33 announced that Channel Seven had settled with Mercedes and Rosleigh. It states that the "allegations against Ros were "never tested in court". 38The case is said to have made the Australian media reluctant to conduct any further investigations into the Corbys. Michael Jnr is quoted as taunting people who had alleged he was involved in the marijuana trade on the Gold Coast with "prove it, go on, prove it" (334). 39The penultimate paragraph quotes Schapelle's biographer hoping that the failed case would "make people realise the Corbys are not involved in drugs" (334). The final paragraph contends that "the effect of the dramatic and often tawdry defamation trial was the exact opposite" and that the enduring image of the trial was the photograph of Mercedes "holding the penis pipe to her mouth" and that, "[s]he may not have inhaled, but an impression had been indelibly left in the public's mind." (334)

Mercedes' statement of claim 40Schapelle's sister, Mercedes, commenced defamation proceedings against the respondents in respect of the Book by statement of claim filed on 1 November 2012. She sought, inter alia, damages, aggravated damages, and orders that the Book be recalled and destroyed, that future printings exclude certain specified pages, and that the defendants be permanently restrained from publishing the Book. 41Mercedes pleaded that the Book conveyed the following imputations of and concerning her, and that each was defamatory of her: (a)she severely damaged her sister Schapelle's chance of an early release from a Bali gaol by giving interviews to the media; (b)she was part of a drug syndicate run by her father Michael [Mick] Corby; (c)alternatively to (b) she dishonestly denied knowing that her father Michael Corby was part of a drug syndicate; (d)she lied to the media in an attempt to discredit Alan Trembath by calling him crazy and drunk; (e)she worked as a hostess in the Japanese sex industry; (f)she lied to the media when she told them that she could not even remember Schapelle's ex-husband Kimi's surname; (g)she lied to the media when she told them that she and her husband Wayan had planned to stay in Bali for six months in 2004 only in order to give their children a taste of Balinese culture; (h)she lied to the media about the criminal history of members of her family when she gave an interview to Ross Coulthard; (i)she exploited her sister's incarceration by making a fortune from media deals; (j)she was an uncaring sister, in that she cared more about money and celebrity than comforting her sister Schapelle in gaol; (k)she only told the truth in court because she was forced to as a result of incriminating photographs; (l)she, together with her family, has benefited by receiving over two million dollars' worth in media deals despite the fact that the media attention was not always in Schapelle's best interest. 42The respondents accepted that the underlined imputations ((a), (e) (once it was clarified in a manner to which I refer later in these reasons) and (l)) ought to go to the jury. The primary judge found that the italicised imputations should go the jury: first judgment (at [56], [62] and [83]). Her Honour found that the bolded imputation (h) was not capable of arising, but granted leave to replead: first judgment (at [79]). Her Honour struck out the remainder of the imputations.

Rosleigh and Michael Jnr's statements of claim 43Rosleigh and Michael Jnr also commenced defamation proceedings against the respondents in relation to the Book by statements of claim filed on 8 November 2012. Their statements of claim essentially sought the same relief as Mercedes'. 44Rosleigh ultimately contended, following amendments made in the course of the strike-out hearing, that the following defamatory imputations were conveyed by the matter complained of: (a)she lied to the media when she told them that Malcolm McCauley was a random Aussie holidaymaker who approached her to wish her daughter Schapelle luck; (b)she dishonestly denied knowing David McHugh prior to his visits to Bali; (c)she severely damaged her daughter Schapelle's chances of an early release from a Bali gaol by giving interviews to the media; (d)she was part of a drug syndicate run by her ex-husband Michael Corby; (e)Alternatively to (d), she dishonestly denied knowing that her ex-husband Michael Corby was part of a drug syndicate; (f)she lied to the media when she told them that her ex-husband Michael Corby was not interested in drugs; (g)she lied to the media when she told them that she could not even remember Schapelle's ex-husband Kimi's surname; (h)she had ungratefully terminated the services of Ron Bakir and Robin Tampoe for no good reason; (i)she was an uncaring mother, in that she cared more about money and celebrity than about comforting her daughter Schapelle in gaol; (j)she, together with her family, has benefited by receiving over two million dollars' worth in media deals despite the fact that the media attention was not always in Schapelle's best interests. 45The respondents accepted that the underlined imputations ((a), (c) and (j)) ought go to the jury: first judgment (at [16]). The primary judge found that the italicised imputations should go to the jury: first judgment (at [56] and [62]). Her Honour found that the bolded imputation (b) was not capable of arising, but granted leave to replead (at [49]). Her Honour struck out the remainder of the imputations. Rosleigh has abandoned imputation (h). 46Michael Jnr contended, following amendments made in the course of the strike-out hearing, that the following imputations were conveyed by the Book: (a)he was part of a drug syndicate run by his father Michael [Mick] Corby; (b)he had bought a fish and chip shop with money he made from the drug trade; (c)he had bought a fish and chip shop knowing that it was with money that his father had made from the drug trade. 47The primary judge struck out all Michael Jnr's imputations and refused leave to replead: first judgment (at [41]).

The first judgment 48The parties' essential contentions about the nature of the Book and the primary judge's observations were as follows: "4 Mr Smark SC, who appeared with Ms Chrysanthou on behalf of each of the plaintiffs, submitted that the matter complained of is presented to the reader as a non-fiction account of events by the Author, who is described as a journalist. Mr Smark submitted that many of the events are described as if from the standpoint of an observer, and as matters of incontrovertible fact. He emphasised that the matter complained of begins with a quote from Sir Walter Scott 'Oh! What a tangled web we weave when we first practise to deceive!'. 5 He submitted that there were three themes or strands in the book: drugs, lies and greed and that these strands were interwoven. 6 Mr Smark summarised parts of the matter complained of and submitted that the summary: '... demonstrates the tenor of the publication - namely that Mick Corby ran drugs for over a decade from Adelaide, to Queensland and to Bali. The Corby family are all so close they clearly were all involved in it, or at least knew about it. To the extent that they have publicly denied being involved in drugs, they are liars. They lied about knowing Malcolm McCauley and Dave McHugh, they lied about Schapelle being innocent and they lied about Mick Corby's drug business. They each also callously profited from Schapelle's incarceration, at times to her detriment.' 7 Mr Dawson, who appeared for the defendants, submitted that the matter complained of principally concerned the culpability of Schapelle Corby, the sister of Mercedes and Michael Jnr and Rosleigh's daughter, for the importation of marijuana into Bali in October 2004. It also concerned the involvement of Schapelle's father, Michael Corby (Mick), a former husband of Rosleigh, in drug trafficking, and in particular in the importation by Schapelle which led to her conviction. The title of the matter complained of, 'Sins of the Father' is a reference to Mick's involvement in the importation. The secondary title, 'The Untold Story behind Schapelle Corby's ill-fated drug run' is a reference to Schapelle's responsibility for the importation. 8 Mr Dawson submitted that the references to the plaintiffs' conduct principally involved their actions and words after Schapelle was apprehended. He submitted that the matter complained of makes plain that members of Schapelle's family received a substantial amount of money from media appearances and interviews relating to Schapelle's case and her fate in Bali. 9 The matter complained of squarely raises the thesis that Mick had been a drug-trafficker since late 1999 or 2000 who had been supplied by Malcolm McCauley with high quality marijuana grown by Mr McHugh in South Australia, which was couriered to Queensland. The matter complained of purports to establish that Mick had, on a single occasion in October 2004, used his daughter Schapelle as a drug courier to deliver 4.2 kgs of marijuana to Bali and that Schapelle well knew that she was taking marijuana in the bag which also contained her boogie board. There is a significant amount of background material relating to the cultivation and provenance of Mick's drug supply, which was grown in South Australian and transported to Queensland, where Mick was located. The matter complained of emphasises Schapelle's well-published insistence that she is innocent and documents the actions and motives of the members of the Corby clan, and in particular the plaintiffs, in connection with Schapelle's arrest, trial and conviction and the attendant publicity. 10 The matter complained of is written in a racy, vernacular style. Its chapter headings and accompanying quotations point to the conclusion the Author seeks to have the reader draw. Mr Smark described the matter complained of as an exercise in 'Gonzo journalism', a term coined to describe an article written by Hunter S. Thompson. So-called Gonzo journalism tends to include the reporter as part of the story and the discovery of the 'truth' as part of the plot. 11 Although I accept that there are elements of Gonzo journalism in the matter complained of, in that the meeting between the Author and the primary source, Mr McCauley, is described, as are the techniques used by the Author to persuade Mr McCauley to tell his story, the matter complained of also has hallmarks of more traditional investigative journalism. It supports its contentions by facts or quotations that it says can be verified by third parties. It purports to be a serious work of investigative journalism." 49The primary judge set out the following principles as applicable to the task she was required to undertake in dealing with the strike-out motions: "19 Whether certain imputations are capable of arising is to be adjudged from the standpoint of the ordinary reasonable reader who has read the whole of the matter complained of. 20 The principles which inform whether or not an imputation is capable of arising were authoritatively stated by Hunt CJ at CL (with whom Mason P and Handley JA agreed) in Amalgamated Television Services Pty Ltd v Marsden [1998] NSWSC 4; (1998) 43 NSWLR 158 at 164-167 (Marsden) and more recently summarised by Tobias JA (with whom Sheller JA and Young CJ in Eq agreed) in Griffith v John Fairfax Publications Pty Ltd [2004] NSWCA 300 at [19] - [20], McHugh J in John Fairfax Publications Pty Ltd v Rivkin [2003] HCA 50; 201 ALR 77 at [23] and [26] and by Gleeson CJ, McHugh, Gummow and Heydon JJ in Favell v Queensland Newspapers Pty Ltd [2005] HCA 52; 221 ALR 186 (Favell) at [8] to [12] in which passages from Lord Devlin's judgment in Lewis v Daily Telegraph Ltd [1964] AC 234 (Lewis), at 285 are quoted with approval. 21 These principles, relevantly, include the following: (1) The reader of a written document has the opportunity to consider or to reread the whole document at leisure, to check back on something which has gone before to see whether his or her recollection of it is correct, and in doing so to change the first impression of what message was being conveyed (Marsden at 166). (2) One must consider the broad impression conveyed by the matter complained of and not the meaning of each word under analysis. (3) A man who wants to talk at large about smoke may have to pick his words very carefully if he wants to exclude the suggestion that there is also a fire. Loose talk about suspicion can very easily convey the impression that it is a suspicion that is well-founded (Favell at [11], quoting Lewis). (4) There is a wide degree of latitude given to the capacity of the matter complained of to convey particular imputations where the words published are imprecise, ambiguous, loose, fanciful or unusual (Marsden at 165). (5) An ordinary reasonable reader is a person of fair average intelligence, who is neither perverse, morbid nor unduly suspicious, nor avid for scandal (Marsden at 165). (6) An ordinary reasonable reader does not live in an ivory tower and is not inhibited by rules of construction. He or she can, and does, read between the lines (Favell at [10], quoting Lewis). (7) If ordinary reasonable readers may differ as to whether the matter complained of was capable of carrying the imputation then the issue must be left to the jury; otherwise it is a matter for the Court (Marsden at 164). (8) The mere publication of defamatory hearsay amounts to adoption of that statement but the nature of the imputation conveyed may depend on whether it is adopted, repudiated or discounted (John Fairfax Publications Pty Ltd v Obeid [2005] NSWCA 60; 64 NSWLR 485 at [98]-[100] per McColl JA, Sheller JA and McClellan A-JA agreeing)." 50The primary judge considered the imputations by grouping them into the following categories. I have only set out her Honour's reasons in respect of the imputations challenged on appeal.

The drug syndicate imputations 51This category concerned the imputations that the appellants were either part of the drug syndicate run by Mick or dishonestly denied any knowledge of the drug syndicate (the "drug syndicate imputations"). They included Mercedes' imputations (b) and (c), Rosleigh's imputations (d), (e) and (f) and all of Michael Jnr's imputations. 52The primary judge summarised the parties' arguments concerning these imputations as follows. "[23] Mr Smark contended the ordinary reasonable reader would draw from the matter complained of imputations that each of the plaintiffs was involved in, or aware of, Mick's drug trafficking by reference to the following line of reasoning: (1) The family was a close family. (2) Each of the plaintiffs socialised with Mick and would visit him at his house at Tugun (near the Gold Coast) and also his farm at Inveragh. (3) For some periods Schapelle, Mercedes and Mick Jnr lived with their father in his house at Tugun, which was not far from the carpark at Jupiter's Casino, the handover point for the drugs which had come from South Australia. (4) Schapelle knew that her father had been trafficking in drugs since late 1999 or 2000. (5) There is no reason to suppose that Schapelle would know of her father's criminal activities but that her mother, Rosleigh, her sister, Mercedes and her brother, Michael Jnr, would be unaware of such activities. [24] Mr Dawson submitted that the children were closer to Rosleigh than they were to Mick and that although they visited their father and stayed with him from time to time, his drug operations were deliberately conducted away from his residences. Mr Dawson also emphasised that Mick and Rosleigh had separated in 1979, some 20 years before, Mick, according to the Author, established the drug syndicate. [25] Mr Smark submitted that there is a significant amount of innuendo, insinuation and suspicion created by the matter complained of which had the effect that the ordinary reasonable reader would be left with the impression that the plaintiffs either participated in the syndicate or must have known what was going on. [26] Mr Smark referred in particular to the chapter dealing with the defamation suit brought by Mercedes and Rosleigh against Channel 7*. He submitted that the tenor of that chapter was that Mercedes was in fact involved with drugs, beyond that which could be proved, namely that she had smoked marijuana in her youth, but that Channel 7 had not done sufficient legwork to prove the truth of the allegations made against her which resulted in Channel 7 having to settle the proceedings for a substantial, but undisclosed, sum. He submitted that the ordinary reasonable reader would have gained the impression that the imputations made by Channel 7, though they could not be proved, were nonetheless true. He emphasised the Author's juxtaposition of truth, on the one hand, and proof on the other. [27] By contrast, Mr Dawson submitted that the Author disparaged Channel 7 for broadcasting something which had little or no basis and concluded that Mercedes was cleared of any involvement whatsoever. That Channel 7 settled on the basis that they would pay both Mercedes and Rosleigh a substantial sum meant, according to Mr Dawson, that there was no basis for the defamatory imputations that arose from the Channel 7 broadcast. The ordinary reasonable reader would get the impression that all that Channel 7 had was 'tittle-tattle' from Jodi Power, an old friend of Mercedes, who had been completely discredited in the witness box and that the case was, as far as Channel 7 was concerned, an unmitigated disaster. Although the Author refers to Kim Moore, who knew Tony Lewis, one of Mick's associates, her evidence implicated Mick, but did not implicate the plaintiffs. [28] I do not consider that the ordinary reasonable reader could have gained the impression for which Mr Smark contends. Although latitude is given for loose thinking, particularly where, as in the course of the matter complained of, sensational language is used, I do not consider the imputations are capable of being conveyed. The Author is careful to distance himself from the allegations made by Channel 7 and from its almost baseless broadcast. The ordinary reasonable reader is not unduly suspicious and does not, unless invited, indulge in conspiracy theories. [29] Mr Dawson submitted that were I to find that the bane of the imputations was capable of being conveyed, the imputations were swamped by the antidote of the corrective parts of the matter complained of. He contended that this is one of the rare cases referred to in Bik v Mirror Newspapers Ltd [1979] 2 NSWLR 679 where it would not be open to ordinary reasonable readers, reading the matter complained of as a whole, to come to the conclusion that the plaintiffs were implicated in the drug syndicate or had knowledge of it when the book itself emphasised that the plaintiffs had been accused without cause. [30] I agree that the whole tenor of the book, particularly in the context of the chapter devoted to the defamation proceedings against Channel 7, is such that no fair-minded reader would infer that Mercedes had any connection with drugs beyond her admitted youthful experimentation. Although Channel 7's defamation of Mercedes was repeated in the book, what followed so plainly swamped any potential defamatory meaning, in my view, as to require striking out those imputations on the grounds of capacity. [31] Mr Dawson accepted that there was a sentence in the book which supported Schapelle's knowledge, in the following passage at page 358 of the matter complained of: 'The truth is, she [Schapelle] always knew her dad was a drug dealer. She knew about the trips to Bali, she knew about the system, the bribes, she knew the lot.' [32] Mr Dawson said that although Mr McCauley is quoted as telling the author of Schapelle's long-standing knowledge, there was otherwise no indication in the matter complained of that Schapelle was other than a first-time drug courier in October 2004 or that she was in any way accustomed or inured to the risks of such an activity. Mr Dawson instanced the descriptions of her appalling behaviour on the plane and her excessive consumption of alcohol which was consistent with nervousness and inexperience. [33] Mr Smark submitted that the ordinary reasonable reader would infer that because Schapelle knew of her father's drug syndicate, each of the plaintiffs also knew of his activities, because they were a close family. Although there is neither investigation nor explanation in the book of how it was that Mr McCauley knew that Schapelle had the knowledge he attributed to her, I do not consider that an ordinary reasonable reader would draw the inference alleged. Indeed, Mr McCauley's specific reference to Schapelle's knowledge as distinct from the collective knowledge of the "Corbys" would, in my view, lead the ordinary reasonable reader to gain the impression that, with the exception of Schapelle, none of the Corbys knew of Mick's criminal activities."

• This was a reference to chapter 33, "Thirty Pieces of Silver". 53Accordingly the primary judge concluded (at [34]) that none of Mercedes' or Rosleigh's drug syndicate imputations were capable of arising. 54Michael Jnr's imputations all fell within the drug syndicate category. The gist of his argument in their support was that "the ordinary reasonable reader would have gained the impression that the only way [he] would have been able to afford to buy the fish and chip shop...would have been either if he was part of his father's drug syndicate, or with money he himself had earned from the drug trade or with money that he knew his father had made from the drug trade." He also argued that "the Author has aroused the suspicion by making the point that, although apparently lacking in means, Michael Jnr nonetheless purchased a fish and chip shop": first judgment (at [36]). 55Her Honour did not consider the matter complained of was capable of conveying any of Michael Jnr's drug syndicate imputations to the ordinary reasonable reader: first judgment ([37]). Her Honour held: "[37]...The impression created by the Author is that Michael Jnr is a surfer who has neither motivation nor discipline to earn a living. Although the matter complained of states that Michael Jnr bought the fish and chip shop, it is fairly obvious that not only that he did not have the means to buy it but also that he did not actually want it, did not like working in it and that it was, effectively, his mother's business. [38] That the money to buy the shop was provided by one or other of his parents is an inference that the ordinary reasonable reader is likely to draw. Other references to the shop in the matter complained of describe it as 'the family shop'. The ordinary reasonable reader might consider that, if the money happened to come from Mick, then it was likely, having regard to the thesis for which the Author contends, that the money came from drugs. However, in my view the ordinary reasonable reader would not infer that Michael Jnr himself knew of the likely source of the funds, if they had come from his father. [39] There is also a reference elsewhere in the matter complained of to the opinion held by one of Schapelle's Indonesian lawyers that Michael Jnr looked like a drug dealer and therefore should be kept out of sight. However, there is otherwise no suggestion that Mick Jnr resembles anything other than what he is portrayed to be: a surfer. I do not consider that the ordinary reasonable reader would get the impression that the assessment by Schapelle's Indonesian lawyer of Mick Jnr's appearance was other than either a cultural curiosity or an idiosyncratic view."

The lying imputations 56Both Mercedes and Rosleigh pleaded imputations which essentially asserted that each had lied in certain respects (the "lying imputations"). 57This category included Rosleigh's imputation (b), that she dishonestly denied knowing David McHugh prior to his visits to Bali. 58The primary judge described the sections of the Book Rosleigh relied upon in respect of this category and her submissions as follows: "[42] The matter complained of describes Mr McCauley and Mr McHugh as Mick's long-standing regular drug suppliers. There is a close connection between them. [43] Mr Smark submitted that the ordinary reasonable reader would get the impression that Rosleigh knew Mr McCauley and Mr McHugh prior to their visits to Bali and the role they played and that they needed to see Schapelle before her trial to make sure she did not crack under pressure and implicate them in the importation. [44] The matter complained of recounts three visits made to Bali by Mr McHugh and two by Mr McCauley. The first visit was made in late 2004 shortly after Schapelle's arrest. Mr McCauley, together with his wife, travelled with Mr McHugh to Bali. They did not make contact with Schapelle or any member of the Corby family. Mr McHugh made the second visit by himself, for the trial in January 2005. He managed to see Schapelle in the holding cell. The Author describes how overwhelmed and impressed Mr McHugh was with Schapelle in the following terms: 'Strongly affected by her glamorous vulnerability, McHugh felt as if he was in the presence of a movie star.' [45] The third visit is the subject of a chapter entitled 'Jailhouse Visit'. The Author describes a documentary film that shows Mr McHugh and Mr McCauley meeting Schapelle for the first time in the holding cells. It is said that the Corby family regularly met to drink at an establishment known as the Secret Garden and that Mr McHugh and Mr McCauley also frequented it. Mr McHugh and Mr McCauley eventually arranged with Rosleigh to see Schapelle. On the day they visited Schapelle in gaol, Rosleigh and her husband Greg were also there and both Rosleigh and Greg took photographs of the assembled company. [46] Mr Smark heavily relied on this chapter as giving the ordinary reasonable reader the impression that Rosleigh knew Mr McHugh before Schapelle's arrest. He submitted that the special access that he and Mr McCauley were given would tend to signify to the ordinary reasonable reader that already knew Mr McHugh." 59The primary judge concluded (at [48]) that this imputation was not capable of being conveyed to an ordinary reasonable reader apparently because her Honour accepted (at [47]) Mr Dawson's submission "that there was no suggestion that Rosleigh had met Mr McHugh prior to his trips to Bali". She granted leave to replead. 60Mercedes pleaded that the Book conveyed four imputations that she had lied in various ways. The primary judge permitted two ((f) and (g)) to go to the jury and struck-out two: Mercedes imputation (d) that "she lied to the media about Alan Trembath" (the "Trembath lying imputation") and imputation (h) that she "lied to the media about the criminal history of members of her family when she gave an interview to Ross Coulthard" (the "Coulthard lying imputation"). 61The Book states (at 19) that "Mercedes Corby later tried to discredit Alan, saying he was 'crazy and a drunk'". 62It is convenient at this stage to set out the context for this imputation. 63Mr Trembath was Mick's first cousin who grew up around him as a child (6). In 2008 he "broke family ranks to speak out about Mick's long association with drugs" (11). He described seeing Mick trying to sell marijuana in a hotel in Mackay (18). He also said he rejected an offer Mick made to pay him $80,000 to "pick up a load of marijuana [from Cedar Bay] and bring it back down to Mackay". Although Mr Trembath thought he would more likely have received $500 for the job, he "thought that Mick was serious and had wanted to get into the marijuana business in a bigger way". In July 2008 he "told Mackay's Daily Mercury that he believed Mick had been using his car to sell grass around the town all those years ago ..." (18 - 19). 64The Book then stated: "Mercedes Corby later tried to discredit Alan, saying he was 'crazy and a drunk'." 65It quoted Rosleigh as also having "hit back at Alan" in the local paper, then set out Alan's response as told to the Daily Mercury. 66Mr Dawson submitted that the critical passage concerning Mercedes trying to "discredit Alan" was incapable of conveying the imputation that Mercedes was lying, that there was nothing in the matter complained of that provided information to contradict what Mercedes said about Mr Trembath, or that she knew that what she said was untrue. Mr Smark submitted that the Trembath lying imputation was capable of arising in the context of much of the matter complained of which created the impression that Mercedes was unreliable, and, at times, dishonest, and would lie if it suited her purposes: first judgment (at [64] - [65]). 67The primary judge did not accept that an ordinary reasonable reader of the Book would consider that just because Mercedes had admitted lying, and has been shown, at times, to be unreliable, that every time she said anything, she was lying: first judgment (at [66]). Accordingly she struck out the Trembath lying imputation. 68The Coulthard lying imputation concerned an interview between Mercedes and a journalist, Ross Coulthard, that was broadcast on Channel 9's then Sunday programme. During the interview Mercedes was asked whether anyone in the family, including distant family, had been convicted of a drug offence. She denied that they had. It subsequently emerged that Mick had been convicted of small scale marijuana possession many years before and her half-brother, Clinton "Badger" Rose had, to her knowledge, been convicted of drug offences. 69The reference to Mick said he had been charged with possessing marijuana in the 1970's for which he was apparently fined $400 although, according to Mick, "the charges were all scrubbed". The Book then said: "When Mercedes was asked by the Australian about her comments on the Sunday program and her father's drug history, she said that she was not even alive when that happened and 'wouldn't even bloody know'. However she did know about Clinton's criminal record, which included drug charges, and had now been caught out on national television." 70Her Honour concluded (first judgment at [77]) that an ordinary reasonable reader would not "gain the impression that Mercedes had lied about her father's criminal history." Both "its antiquity and the fact that the charges had been scrubbed", meant "there could be no reasonable suggestion that when Mercedes was interviewed she had any idea that her father had been charged in the 1970's." 71Insofar as the Coulthard lying imputation concerned lying about Mr Rose's convictions, her Honour considered (at [78]) the imputation as pleaded was too broad to be capable of arising and could not go to the jury in that form, but granted leave to replead.

Mercedes' hostess imputation 72The sixth "category" of imputation was that Mercedes worked as a hostess in the Japanese sex industry (the "hostess imputation"). 73Mr Smark made it clear during the strike-out argument that the meaning of the hostess imputation was that Mercedes worked as a hostess in the Japanese sex industry, but did not have sex for money. The respondents accepted that the imputation could go to the jury on that basis: first judgment (at [69]). However, they argued that the imputation was not capable of being defamatory. Her Honour determined this issue in the second judgment (at [13]).

Subsequent Developments 74On 24 April 2013 pursuant to the leave granted to replead, Mercedes filed an amended statement of claim. Michael Jnr also filed an amended statement of claim. It does not appear Rosleigh took advantage of the liberty to replead imputation (b). She seeks to challenge the order striking out that imputation on appeal. 75Mercedes amended the hostess imputation in a manner said to reflect her concession that she would not suggest at trial that the imputation meant that she had sex for money but, rather, that she worked as a hostess in the Japanese sex industry: second judgment (at [6]). 76The amended hostess imputation (which was also re-badged as imputation (b)) read: "(e) (b) Mercedes Corby worked as a hostess in the Japanese sex industry." 77As I have said, the respondents objected to new imputation (b) on the ground that it was not capable of being defamatory. 78Mercedes also amended the Coulthard lying imputation to read: "Mercedes Corby lied to the media about the criminal history of a members of her family Clinton Rose when she gave an interview to Ross Coulthard." 79The respondents did not challenge this repleaded imputation - to which the appellants referred on appeal as "(hi)". The appellants will not press it, however, if they are successful in restoring (h). 80Michael Jnr's amended statement of claim pleaded the following imputation: "(a) Michael Corby Junior was a drug dealer involved in the marijuana trade on the Gold Coast." 81The respondents objected to that imputation on the grounds that it was outside the leave to replead granted in the first judgment, that it involved an impermissible challenge to the reasons in the first judgment and, in any event, was incapable of arising: second judgment (at [15]). 82The matter was re-listed before the primary judge on 17 May 2013 for the hearing of arguments in relation to the amended imputations.

The second judgment 83Adamson J delivered the second judgment on 23 May 2013. 84Her Honour concluded that the hostess imputation was not capable of being defamatory. Once it was clarified that Mercedes would not submit at trial that the matter complained of suggested she sold sex in connection with her role as a hostess, the imputation was not "capable of lowering her in the eyes of the ordinary reasonable reader, who, by definition, does not make a moral judgment but shares the standards of the general community and will apply them": second judgment (at [13]). 85As to Michael Jnr's amended imputation, the primary judge concluded that it differed in substance from those she had struck out in the first judgment although it concerned the same subject matter, Michael Jnr's involvement in the drug trade. Accordingly her Honour determined as a matter of substance whether the imputation was capable of arising as she had not earlier determined this question: second judgment (at [16]). The respondents do not challenge her Honour's conclusion in this respect. 86Michael Jnr submitted that his amended imputation was conveyed by a passage appearing in chapter 33 reporting accusations apparently made to him by people on the Gold Coast that he was involved in the marijuana trade, to which his response was, "[p]rove it, go on, prove it". Mr Smark submitted that by repeating the accusations made to Michael Jnr, the respondents were themselves making a statement which was capable of being defamatory: second judgment (at [19]). 87The primary judge accepted (at [21]) that "[t]aken out of context, it is certainly arguable the imputation would be capable of arising from the particular passage." However, her Honour considered (at [25]) that, when read in context, "[t]he ordinary reasonable reader would not ... give any credence to the accusations reported to have been made to Michael Jnr in these circumstances". The reported accusations came "at the end of a chapter in which the allegations made by Channel 7 against Mercedes to the effect that she was connected with drugs were proved to be baseless...". 88Her Honour said: "[22] The Channel 7 broadcast was not about Michael Jnr. Nor was he involved in the proceedings brought by Mercedes and Rosleigh against Channel 7. The only substantive reference to him in this chapter is in the passage set out above. The matter complained of refers to the accusations made against him by 'people' on the Gold Coast in the context of statements about Mercedes which were shown to be without foundation and statements about Rosleigh which had not yet been the subject of evidence when the matter was settled but which the ordinary reasonable reader would infer, from the substantial settlement sums that were paid to Mercedes and Rosleigh, were also without foundation. [23] If the repetition of allegations of drug involvement against him is the bane, Michael Jnr has the benefit of the antidote which has been administered by the victory that Mercedes and Rosleigh enjoyed in the Channel 7 proceedings." 89Accordingly her Honour struck out both amended imputations. The effective consequence was that Michael Jnr's case was at an end. Her Honour formally dismissed his proceedings in the costs judgment.

The costs judgment 90The primary judge ruled on costs the day she delivered the second judgment. Her Honour concluded each party had had "a measure of success" in respect to the proceedings that led to the first judgment. The respondents' success had "largely related to imputations alleged to have been carried that concerned the involvement by each of the three members of the Corby family with drugs", all of which were struck out. Argument on that issue had taken a substantial proportion of the two-day hearing: costs judgment (at [4]). However her Honour accepted that the appellants had enjoyed substantial success in defending the imputations not relating to drugs: costs judgment (at [10] - [11]). 91The respondents had been wholly successful in respect of the second judgment. Her Honour accepted the appellants' submission "that it would be simpler if Michael Corby Jnr were ordered to pay the costs of the [second] hearing, rather than to split those costs equally between Mercedes and Michael Corby Jnr": costs judgment (at [8]). 92Her Honour made the following orders: "(1) In respect of proceedings brought by Michael Corby Jnr: (a) dismiss the proceedings; and (b) order the plaintiff to pay: (i)25% of the defendants' [respondents'] costs of the two day hearing on 27 and 28 March 2013; and (ii)all of the defendants' costs of the hearing on 17 May 2013; and (iii)the defendants' costs of the proceedings other than included in (a) and (b). (2)In respect of the proceedings brought by Rosleigh, order that 37.5% of the costs of the hearing on 27 and 28 March 2013, being the costs referable to those proceedings, be costs in the cause. (3)In respect of the proceedings brought by Mercedes, order that 37.5% of the costs of the hearing of 27 and 28 March 2013, being the costs referable to those proceedings, be costs in the cause."

Issues on Appeal 93Mercedes challenges the strike-out orders made in the first judgment and the finding in the second judgment that the hostess imputation was not capable of being defamatory. Rosleigh challenges the strike-out orders made in the first judgment save as to imputation (h). Michael Jnr challenges the strike-out orders made in the first and second judgments and the order dismissing his proceedings. All appellants challenge the costs orders and contend they ought not have been ordered to pay any of the respondents' costs.

Appellants: general propositions 94The appellants do not generally complain about the primary judge's recitation of the relevant legal principles. Rather, they contend her Honour erred in their application. They also submit that her Honour erred in failing to envisage the position of people between the extremes of unusual naivety and unusual suspicion and then determine "the most damaging meaning they would put on the words in question": Lewis v Daily Telegraph [1964] AC 234 (at 259) per Lord Reid. 95The appellants' essential submission is that in determining whether the imputations were capable of being conveyed it is necessary to have regard to the broad impression conveyed by the Book. They submit that the Book is presented as an exposé based on convicted drug dealer Malcolm McCauley's revelations that Mick and his drug syndicate had been engaged in drug dealing over a number of years prior to the incident involving Schapelle in Bali. They point out that Mr McCauley's preparedness to speak to the author was triggered, it appears, by his disappointment that the "Corbys" did not contact him while he was in gaol. They stress the author's qualifications as set out on the back cover of the book as an "investigative journalist" who has identified the "missing pieces of the jigsaw". They also emphasise the statement in the Prologue (p xiii) that McCauley's "startling allegations, and the story that emerges of Schapelle Corby's high-risk drug run to Bali" have been "scrutinised during an extensive investigation that includes new revelations and insights...". 96Secondly, the appellants rely on the fact that the Book tells "[t]he untold story" of how Schapelle Corby "took the rap for her father's drug syndicate". It states that Mick and others have been engaged in drug dealing, which included exporting high quality South Australian marijuana to Bali. It also unequivocally states that Mick and Schapelle had been involved in drug dealing for a number of years and that Schapelle "would have been around drugs her whole life" (393). 97Thirdly, the appellants rely on the emphasis in the Book on the fact that the Corby family is very close, despite Rosleigh and Mick's separation when Schapelle was only two. Mick was conducting his drug dealing business from the Tugun house at which both Mercedes and Michael Jnr lived from time to time. Accordingly they contend the Book suggests they must either have been involved in, or had knowledge of, Mick's drug dealing: see first judgment (at [23]). 98Fourthly, the appellants argue that deceit and lies are a central focus of the Book, in relation to both Mercedes' and Rosleigh's conduct in particular, such that their protestations of innocence cannot be accepted. 99Fifthly, the appellants emphasise the respondents' liability for publishing third party's statements, comments or allegations. They submit that, for example, in the case of Michael Jnr, even though the Book referred (at 334, see Schedule [24]) to third party allegations, that did not alter the fact that it was open to a jury to conclude that the ordinary reasonable reader could read the Book as attributing the act or condition the subject of the allegations to him: Lewis v Daily Telegraph (at 283- 284); Wake v John Fairfax & Sons Ltd [1973] 1 NSWLR 43 (at 49 - 50); John Fairfax Publications Pty Ltd v Obeid [2005] NSWCA 60; (2005) 64 NSWLR 485 ("Obeid") (at [119])

Respondents: general propositions 100The respondents' general submission is that the primary judge properly concluded, in accordance with orthodox principles, that the challenged imputations were not within the range of reasonable understandings of the matter complained of. They contend that the appellants' submissions exaggerate the effect of the Book and invite an artificial, strained and unreasonable reading of it. 101The respondents submit that the "Sins of the Father" are Mick's role as a drug dealer, his participation in that industry exposing Schapelle, as his drug mule, to the fate that she ultimately suffered in Bali. The "untold story" referred to on the cover of the Book and in the Prologue relates to why Schapelle was guilty and the fact that her father, Mick, lay behind it. 102The respondents accept that lies are one of the, if not the, principal themes of the Book. However, they contend that the overall impression of the Book is that it is not about the appellants' lies. Rather, a sharp contrast is drawn between Mick's lies about his drug dealing past, Schapelle's lies about her involvement in the "ill fated run to Bali" and Mr McCauley's and Mr McHugh's lies up until each came clean in the Book and any lies attributed to the appellants. They submit it is significant that in clearing their consciences and in giving up the truth and redeeming themselves neither Mr McCauley nor Mr McHugh pointed a finger at any of the appellants. Rather, the author drew a sharp contrast between the facts about Mick and Schapelle and those concerning the rest of the family. 103Insofar as the primary judge permitted imputations relating to Mercedes and Rosleigh lying to go to the jury (Mercedes' imputations (f), (g) and (hi); Rosleigh imputation (a) and (g)), the respondents argued that those were specific instances which did not relate to the theme of the Book. 104Next, the respondents submitted the author discounted reported hearsay, while reports of rumours were described as unsubstantiated.

The drug syndicate imputations: appellants' submissions 105The appellants rely on their submissions concerning the themes of the Book. They also submit that the primary judge erred in rejecting the drug syndicate imputations particularly insofar as her Honour concluded (first judgment at [30]) that what appeared in chapter 33 of the Book swamped any potential defamatory meaning. Rather, the appellants submitted that chapter 33 would be understood by the ordinary reasonable reader as suggesting that the truth had not come out about Mercedes' involvement with drugs in the course of the Channel 7 proceedings. Insofar as Rosleigh is concerned, the appellants submitted the position was even stronger as chapter 33 stated that the allegations against her were "never tested in court". 106The appellants also argue that her Honour erred in applying the bane and antidote test. They contend that if her Honour was of the view that the imputations were capable of being conveyed, it was a matter for a jury to determine whether any material the respondent relied upon as an antidote was sufficient to swamp the imputations application of the bane and antidote test inferred were capable of being conveyed. 107Furthermore, insofar as Michael Jnr was concerned, even though his amended imputation (a) substantially arose from chapter 33 (at 334), the appellants argued that whether it was capable of being conveyed had to be considered in the context of the Book as a whole. Even if considered only in the context of chapter 33, however, the appellants submitted that context did not warrant the primary judge's conclusion. Her Honour's (challenged) reasoning that chapter 33 exonerated Mercedes and Rosleigh could not apply to Michael Jnr as he was not the subject of the court proceedings with which that part of the Book was concerned. 108The appellants submitted that either of Michael's imputations (b) or (c) (the "fish shop imputations") was capable of being conveyed by the statement, "[s]omehow without ever holding down a full-time job for any substantial length of time, he had managed to buy his own business" (104). The business was referred to as his shop and as having been "bought" and "owned" by him (103, 104). He had managed to buy it "without ever holding down a full-time job for any substantial length of time" (104). Imputations (b) and (c) were reinforced by the "allegations" of him being "involved in the marijuana trade" referred to in chapter 33 (334).

The drug syndicate imputations: respondents' submissions 109The respondents' primary submission is that the members of Mick's drug syndicate are clearly identified as Mr McCauley and others who were arrested in Adelaide in October 2005 (chapter 28, "Gotcha") whereas none of the appellants was specifically referred to as a member, or as having had any knowledge that he was part, of the drug syndicate. They submit that even if the Book gave the impression some of Mick's children may have seen their father, or his friends, smoking marijuana, that was a different proposition to them knowing he was a drug dealer, let alone that he had some part in a drug syndicate. 110Secondly, insofar as the appellants rely upon a theme of the Book being the closeness of the Corby family and, too, the geographical proximity of Mick's syndicate business with his Tugun home and, at least, Mercedes' and Michael Jnr's residence there, the respondents submitted that neither submission survive scrutiny. They emphasised that the Book depicted closeness between Rosleigh and her children. Thus, even though the Book referred to Mick remaining close to the family (who lived in Loganlea on the outskirts south of Brisbane), that had to be considered in the context of the parents' separation in 1979 when Schapelle was two years old. Thereafter he had been physically remote from the family moving first to Brisbane, then living on the coast at Mackay, then disappearing even further north ending up in a "small coal-mining town about three hours drive inland from Rockhampton" in the early 1980's (20). When he relocated in 1998, it was to a town with a population of about 80 about 30 minutes south of Gladstone on Queensland's central coast (23 - 24). They stress that even though the Book clearly states Schapelle was "up to her ears" in Mick's drug dealing, the same could not be said of the other members of the family. Their position was distinguishable because Schapelle had had a closer association with her father. She had been sent to live with Mick in her teens and was the only member of the family who was living with Mick at about the time the Adelaide syndicate began in 2000. 111Thirdly, the respondents submitted that the Book did not suggest that Mick used the Tugun house to conduct his drug syndicate but used it "as his second base" (43). He undertook his drug exchanges in the car park at Jupiter's Casino, 15kms away (43). Couriers running drugs to that point were not allowed to be seen on the Tugun property (45). 112Fourthly, the respondents submit that the reading of chapter 33 for which the appellants contend invokes the impermissible characteristics of a reader who is avid for scandal and unduly suspicious. Rather, in their submission, chapter 33 defeated any overall impression of allegations of drug dealing against the appellants. They argue that chapter 33 conveyed the impression that Channel 7 could never find any evidence to implicate either Mercedes or Rosleigh in drug dealing, because there was no such evidence. They accept that if the Court is against them on the way chapter 33 can be read, it is difficult to defend the judgments below. 113Descending to detail, the respondents submit that chapter 33 described a disastrous litigation experience insofar as Channel Seven was concerned. It explained that its journalists had not properly researched the broadcast allegations because of a "frenzy for rating success" and because of "shoddy and reckless journalism" (326). That sloppy journalism meant that once sued Channel Seven had to do "the real leg work that ... should have [been] undertaken before broadcasting their unsubstantiated stories about Mercedes and Rosleigh" (327). In the end, all Channel Seven had been able to establish, at best, was that Mick had dealt in drugs but that the evidence did not implicate either Mercedes or Rosleigh, whether directly or otherwise (328, 332). 114The only evidence Channel Seven managed to find about Mercedes was that she had once used marijuana, but the Book said expressly that such usage was not "evidence of any kind of drug dealing" (331). In summary, the respondents contended that none of the features the appellants relied upon in relation to chapter 33 suggested that Channel Seven had failed because it could not find available proof but, rather, the chapter had made it plain that the proof did not exist. 115The respondents contested the appellants' contention that the position is stronger in relation to Rosleigh insofar as chapter 33 is concerned. They argue that that chapter conveyed clearly that as Channel Seven had failed so disastrously in Mercedes' case, it had no better proof in relation to Rosleigh and, accordingly, settled her case comprehensively. They also submit that no other part of the Book, in particular the Jailhouse Visit chapter, suggests that Rosleigh is in any way implicated in Mick's syndicate or as having any knowledge of it. 116Insofar as Michael Jnr is concerned, the respondents submitted that only by a strained reading could his use of the expression "prove it, go on, prove it" (chapter 33 at 334) be converted into an admission that he was involved in the marijuana trade, but that it could not be proved. 117The respondents argued that the suggestion that Michael Jnr was involved in the marijuana trade on the Gold Coast was placed in the same category in the Book as the baseless allegations Channel Seven had made against Mercedes. They submitted the allegations referred to were also attributable to the "bogus" emails Channel Seven received when trying to investigate the background to the Today Tonight allegations for Mercedes' defamation trial (see 326). They also relied upon the fact that the sentence appeared immediately after one recording the reluctance of the Australian media to, in effect, take on the "litigious Corbys" and undertake further investigations into them. That, the respondents suggested, could only reasonably be understood to mean that such investigations would not turn up anything of substance as Channel Seven had already found to its significant detriment. 118The respondents submit that principles concerning the effect of the repetition of third party allegations did not require the conclusion for which the appellants contended. Rather, they contend, the primary judge correctly applied the proposition that whether the Book conveyed the assertion made in the defamatory hearsay had to be determined by looking at the matter complained of as a whole, including whether the defamatory hearsay was approved, reaffirmed and/or endorsed and the purpose of the republication: Obeid (at 119). 119Finally, the respondents submitted that the primary judge did not err in striking out the fish shop imputations. They argued that having regard to the context in which the Book described the shop, including references to it being the "family shop/business" and its sale, it was illogical to suggest Michael Jnr had bought it, let alone that he had done so using money sourced as suggested in imputation (b) and (c).

The lying imputations 120Mercedes' imputation (d) was that "[she] lied to the media in an attempt to discredit Alan Trembath by calling him crazy and drunk". Her imputation (h) was that she "lied to the media about the criminal history of members of her family when she gave an interview to Ross Coulthard". The appellants rely upon the terms of the statement at page 19 and the passage from pages 218 - 223 (see [ REF _Ref391240248 \r \h 61] and [ REF _Ref391453998 \r \h 68] above). 121The appellants submitted first that the primary judge accepted that the Book depicted Mercedes as a liar by finding that imputations (f) and (g) could go to the jury. They rely on the reference in chapter 33 to one of the witnesses, Jodie, yelling "Liar" at Mercedes when the verdict in her favour was announced. They also contend that if a jury were to read chapter 33 substantially in the manner for which they contended, namely as referring to a failure of proof, leaving the true position "unrevealed", that would also support the conclusion that the ordinary reasonable reader would consider that Mercedes was a liar and would derive the specific meaning captured by imputation (d) in that context. 122As to the Coulthard lying imputation, the appellants say that the central issue is whether the Book is capable of suggesting the Mercedes lied when interviewed by Mr Coulthard because she was aware of her "father's drug history". The critical passage in the Book is the exchange between Mr Coulthart and Mercedes in the first exchange set out in chapter 22, The Badger (Schedule at [16]). The appellants contend that this imputation stands or falls with Mercedes' drug syndicate imputations (b) and (c). 123As I have said, if successful on this imputation, Mercedes would abandon imputation (hi). 124Rosleigh's imputation (b) also alleged, in effect, lying on her part, namely that she "dishonestly denied knowing David McHugh prior to his visits to Bali". Rosleigh is said to have denied to a Sydney Morning Herald journalist in 2009 knowing Mr McHugh before meeting him at a bar in Bali: Schedule [46]. The appellants rely generally on chapter 33, in particular on that part (at 329) which describes Mr McHugh as the person who "held the key". They also rely on the meeting between Rosleigh, Mr McCauley, Mr McHugh and Schapelle at Kerobokan Prison, including Mr McCauley's reassurance to Schapelle ("United we stand": Schedule [18]). They submit that if Rosleigh succeeds in establishing the drug syndicate imputations were capable of being conveyed, that would also lead logically to the conclusion that this imputation was also capable of being conveyed. They argued that an ordinary reasonable reader would read the Book as conveying that Rosleigh was involved in (or at least aware of) Mr McHugh and Mr McCauley's role in the syndicate well before the meeting between them at Kerobokan Prison: see Schedule [17] - [18]. 125Insofar as the Trembath lying imputation is concerned, the respondents observe that the Book does not refer to Mercedes' statements about Mr Trembath having been made to the media. Secondly, there was no suggestion in the Book that Mercedes did not believe that Mr Trembath was making unfounded and serious claims against her father warranting retaliation. 126The respondents submit that the Coulthard lying imputation cannot be viewed in the context of the wider allegations in the Book implicating Mercedes either as being a part of Mick's drug syndicate or, at least, as knowing of his involvement in it and, generally, his drug dealings. Rather they argue that the words "criminal history" in the imputation would be understood as a reference to Mick's $400 fine when he was 27 for possessing about 2 grams of marijuana (219). 127The respondents contest the proposition that Rosleigh's imputation (b) can be supported if she obtains a favourable ruling on her drug syndicate imputations. They rely upon the fact that the latter make no reference to Mr McHugh or to Rosleigh knowing anything about his involvement with drugs, while Mr McCauley's reassurance to Schapelle was described as "private". They also rely upon the chronology of Mr McCauley and Mr McHugh's visits to Bali (first judgment [44] - [45]) and the fact that Mr McHugh did not meet Schapelle until the third visit as described in chapter 23 (Jailhouse Visit).

The hostess imputation: defamatory meaning 128The appellants essentially argue that whether the amended hostess imputation ("Mercedes Corby worked as a hostess in the Japanese sex industry") was defamatory was a matter for a jury. They argue that the imputation conveyed the notion of tawdriness such as would lower Mercedes in the estimation of ordinary reasonable people. 129The respondents submit that the primary judge correctly distinguished between the application of community standards and the making of a moral judgment in concluding the hostess imputation was not capable of being defamatory.

The costs judgment 130Although the appellants challenge the costs judgment in their draft notices of appeal, they did not advance any substantive submissions to challenge the orders made. The challenge was presumably made to achieve a reversal of the orders in the costs judgement to the extent, if at all, that the appellants' appeals succeed.

Approach on appeal 131The question posed on an appeal from a capacity determination is whether this Court independently comes to the same conclusion as the primary judge: Amalgamated Television Services Pty Ltd v Marsden [1998] NSWCA 13; (1998) 43 NSWLR 158 ("Marsden") (at 164).

The capacity determination 132Although the primary judge set out principles dealing with the determination of whether the Book was capable of conveying the pleaded imputations, her Honour did not, with respect, set out the function of the capacity determination or the standard by which the issue of law raised by the separate trial was to be determined. 133The judge's function at the capacity stage is to determine "the outside boundaries of the possible range of meanings and [set] the 'ground rules' for the trial": P Milmo and WVH Rogers, Gatley on Libel and Slander (11th ed 2008, Sweet & Maxwell) ("Gatley"), at [3.13] (see also [32.5]) citing Mapp v News Group Newspapers Ltd [1998] QB 520. 134That standard by which the issue of law raised by the separate trial was to be determined was addressed in Favell v Queensland Newspapers Pty Ltd [2005] HCA 52; (2005) 79 ALJR 1716 ("Favell") where the plurality (Gleeson CJ, McHugh, Gummow and Heydon JJ, Kirby J generally agreeing) approved the following statement by McPherson JA in the Court of Appeal: "Whether or not [the pleading] ought to and will be struck out [as disclosing no cause of action] is ultimately a matter for the discretion of the judge who hears the application. Such a step is not to be undertaken lightly but only, it has been said, with great caution. In the end, however, it depends on the degree of assurance with which the requisite conclusion is or can be arrived at. The fact that reasonable minds may possibly differ about whether or not the material is capable of a defamatory meaning is a strong, perhaps an insuperable, reason for not exercising the discretion to strike out. But once the conclusion is firmly reached, there is no justification for delaying or avoiding that step [at] whatever stage it falls to be taken." (Emphasis added) 135Accordingly, the capacity determination is "an exercise in generosity not parsimony"; while it involves a "matter of impression ... the impression is not of what the words mean but of what a jury could sensibly think they meant": Berezovsky (at [16]) per Sedley LJ delivering the judgment of the court. Implicit in Sedley LJ's observation, is that the question of course is "what a jury could sensibly think [the words] meant" to the ordinary reasonable reader. 136One reason "great caution" is mandated at the capacity stage, is because the conclusion which necessarily underpins a determination that the matter complained of is not capable of conveying the pleaded imputations is that "no reader could reasonably understand the words to bear any meaning outside the range delimited ... by the judge; and that it would be 'perverse' for any jury to do so'": Jameel v Wall Street Journal Europe SPRL [2003] EWCA Civ 1694; [2004] EMLR 89 ("Jameel") (at [9]) per Simon Brown LJ (Mummery and Mance LJJ agreeing). 137Thus, the focus should be on the fact that the decision deprives the plaintiff of the opportunity to present his or her case to the jury, the importance of whose constitutional role in this area as representatives of the community is frequently emphasised: see John Fairfax Publications Pty Ltd v Rivkin [2003] HCA 50; (2003) 77 ALJR 1657 ("Rivkin") (at [2]) per Gleeson CJ (who also agreed with Callinan J); (at [184]) per Callinan J. The significance of the jury's role warrants the application of a "high threshold of exclusion": Jameel (at [14]) per Simon Brown LJ. 138In Favell (at [14] - [15]), the plurality appeared to apply a capacity test which asked whether challenged imputations "could reasonably be found by a jury". This is the test adopted in this Court: see Marsden (at 164) per Hunt CJ at CL (Mason P and Handley JA agreeing); Griffith v John Fairfax Publications Pty Ltd [2004] NSWCA 300 (at 19); Malcolm v Nationwide News Pty Ltd [2007] NSWCA 254; (2007) Aust Torts Reports ¶81-915 (at [14]) per Beazley JA (Basten JA and McClellan CJ at CL agreeing). It is consistent with the test applied when determining generally whether a case should be left to a jury: see Naxakis v Western General Hospital [1999] HCA 22; (1999) 197 CLR 269 (at [16]) per Gaudron J; (at [45]) per McHugh J; (at [66] - [67]) per Kirby J; cf Gleeson CJ (at [1]); Callinan J (at [117] - [123]). Naxakis concerned the test to be applied when directing a jury at the close of evidence to enter a verdict in favour of the defendant. Whether or not the Naxakis approach is strictly that which should be applied at a capacity determination was not argued. In any event the Court is bound to follow Marsden.

Publication of defamatory hearsay 139The principles to be applied when considering a publication such as the Book that repeats defamatory allegations made by third parties are uncontroversial. 140In Rivkin (at [27]), McHugh J said (in dissent, but not doubted as correctly stating this principle): "[27] The rule that the publication must be read as a whole is particularly important where the publication reports a defamatory statement by a third party. The general rule is that a person who publishes the defamatory statement of a third party adopts the statement and has the same liability as if the statement originated from the publisher. Accordingly, it is not the law that a person reporting the defamatory statement of another is only liable if he or she adopts the statement or reaffirms it. But, as Griffith CJ pointed out in Ronald v Harper, although as a general rule a person who repeats a defamation adopts it as his or her own statement, it is not 'a rule of invariable application'. The context of the statement may show that it is refuted or undermined by other parts of the publication ..." (footnotes omitted) 141Thus, mere publication of defamatory hearsay suffices to attract liability, however the context in which the defamatory hearsay was published, including whether it was, in fact, "adopted" by the republisher may be relevant to the nature and quality of the republisher's liability: Obeid (at [98]). The primary publication of the defamatory hearsay amounts, without more, to an "adoption of that statement": Obeid (at [99]).

Bane and antidote 142The primary judge concluded (first judgment (at [30] - [33])) that the drug syndicate imputations were not conveyed in respect of Mercedes and Rosleigh because her Honour found that the "whole tenor of the Book, particularly in the context of the chapter devoted to the defamation proceedings against Channel 7, is such that no fair-minded reader would infer that Mercedes had any connection with drugs beyond her admitted youthful experimentation". Although her Honour did not expressly say she was applying the bane and antidote test, it is tolerably apparent that she did so. 143The general view is that the jury is the proper tribunal for determining whether the antidote has overcome the bane: Sergi v Australian Broadcasting Commission [1983] 2 NSWLR 669 (at 674) per Glass JA; see also Hutley JA (at 670) referring to Morosi v Broadcasting Station 2GB Pty Ltd [1980] 2 NSWLR 418(n) (at 419). There, Samuels JA said: "... cases (i.e. when a publication which seeks to refute a calumny which it expressly states may be held incapable of conveying any defamatory meaning) must be comparatively rare." 144Thus, it is rare to conclude that the antidote of the matter complained of swamps its bane at the capacity stage: Bik v Mirror Newspapers Ltd [1979] 2 NSWLR 679(n) ("Bik"); see also Cruise v Express Newspapers Plc [1999] QB 931 (at 939 - 941); Mark v Associated Newspapers Ltd [2002] EWCA Civ 772; [2002] EMLR 38 (at [25] - [44]) per Simon Brown LJ (Mummery and Dyson LJJ agreeing). 145The facts of Bik illustrate the singularity of the application of the bane and antidote principle in that case. The matter complained of was a newspaper report of a parliamentary sitting in which the Minister of Justice informed the House that the plaintiff had been "completely cleared" of any involvement in the design of a faulty crane that led to a fatality, or of giving instructions in relation to the temporary repair of the crane which proved inadequate. Herron CJ (Manning JA agreeing) held (at 682) that the whole tenor of the article was "...to inform the reader that Mr Bik was wholly cleared, and no fair-minded reader could imply that Mr Bik bore any responsibility for the fatality. He would read that an injustice had been done by having had for eight years wrongful acts attributed to him, and now he has been cleared of it. So far from being defamatory, the article is laudatory of the plaintiff." 146The bane and antidote theory reflects the fundamental proposition the "reader is entitled to give some parts of the article more weight than other parts": Rivkin (at [50] per McHugh J). To apply, however, something "disreputable to the plaintiff" must be "removed by the conclusion": see Chalmers v Payne (1835) 2 Cr M & R 156 (at 159); 150 ER 67 (at 68); Ahmed v John Fairfax Publications Pty Limited [2006] NSWCA 6 (at [16]) per McColl JA (Santow and Basten JJA agreeing).

CONCLUSION 147Both parties as might be expected argued their case at the extreme: the appellants for the widest reading of the Book, the respondents for the narrowest. The respondents had the more difficult task in this respect for two reasons. One lies in the standard of the test to be applied at the strike-out stage. As I have already said, great caution must be exercised. In other words, a high bar must be hurdled. 148It is often said that the reader of a book is assumed to read it with more care than he or she would read a newspaper: Marsden (at 165). However that is a relative proposition. No doubt the ordinary reasonable reader of a scientific treatise would read it with great care. But the reader of a book in the "True Crime" series pitched as an exposé revealing new facts about what by the time of publication might have been thought to have been the well-known story of Schapelle Corby's conviction, might not. This is particularly so with a book written, as the primary judge said, in a racy vernacular style as an exercise of "Gonzo journalism [which] tends to include the reporter as part of the story and the discovery of the 'truth' as part of the plot": first judgment (at [10]). The respondents did not criticise her Honour's characterisation. 149The respondents submit that the Book was a targeted exposé aimed at Mick and Schapelle. In my view that submission cannot be accepted. Rather the Book uses loose language, particularly when referring to the family (the Corbys), which is capable of being read as implicating the appellants in the web of lies about drug dealing the Book depicts. The respondents' contention that the Prologue identifies Mick and Schapelle as the target of the author's three year investigation is belied by the fact that the "Corbys" are implicated in the investigation. 150The "untold story" the author exposes is that Mick's statement that his "family has no links to marijuana..." is a lie - the author exposes the "lie" by unravelling the "hidden narrative of Australia's most intriguing drug case ... from behind the headlines of blatant media spin partly orchestrated by the Corbys" (Prologue, xiii). The key sources, Mr McCauley and Mr McHugh, who are critical to exposing the truth, turn on "the Corbys" after being convicted of drug related offences and apparently cast aside by the family, notwithstanding their previous adherence to the version of the story of their association with the Corbys that the family had publicly proclaimed. Neither of these men was prepared to give evidence at Mercedes' defamation case, clearly a factor, it is suggested, in her success and the settlements Channel Seven then reached with her and Rosleigh. 151Further, if the Book's only targets are Mick and Schapelle, then it is curious that the author devotes a chapter to the defamation of Mercedes and Rosleigh by Channel 7, into which context it places rumours of Michael Jnr being "involved in the marijuana trade on the Gold Coast" as well as painting Michael Jnr's acquisition of the fish shop as at least questionable for someone who had never had "a full-time job for any substantial length of time" (104). 152The Book was, in my view, inviting the reader to read it with a suspicious view of those involved in the Corby saga. Further, as Bathurst CJ observed in the course of argument, even if one purpose of the Book was to demonstrate that Mick and Schapelle were guilty of the charges that were made against them, that could not exclude the argument that the appellants may be "collateral damage". 153In my view it would be open to a jury to conclude that the ordinary reasonable reader was being invited to accept that the Book was making new revelations about the lie of Mick's assertion that his family had never been involved in drugs. It was put forward as "True crime" because the author had access to new sources, critically Mr McCauley and Mr McHugh, who had been Mick's partners in crime. 154Thus I cannot, with respect, accept the primary judge's view concerning the whole tenor of the Book: first judgment (at [30]).

The drug syndicate imputations 155In my view, the Book is replete with references capable of supporting the view that the appellants were, in one way or another "part of" Mick's drug syndicate. A major premise of the Book is that Mick's statement that his "family has no links to marijuana in any way, shape or form..." is a lie, revealed by the author after three years research as exposed in what follows (Prologue (xi) - (xii)). The author never resiles from that premise. References to denials of such involvement or apparent refutation of allegations to that effect are written in a context which invites suspicion as to their veracity. The use of rhetorical questions coupled, at times (see chapter 30) with allusions to naivety or gullibility in the context of explanations of "coincidence" invite the ordinary reasonable reader to adopt a suspicious approach: see Jones v Skelton [1964] NSWR 485; [1963] 1 WLR 1362; [1963] 3 All ER 952 (at 959); see also Favell (at [8]). 156Further, if the Book's only thesis was to expose Mick's involvement in Schapelle's crime, what was the point of setting out the defamation case in great detail and the curious and questionable circumstance in which the apparently penniless Michael Jnr bought a fish and chip shop? 157The proposition that the class of Mr McCauley's contacts with the Corbys exceeds Mick and Schapelle also appears at the outset. Mr McCauley's disappointment about not being contacted while in gaol, which is said to trigger his revelations, is not limited to not hearing from Mick and/or Schapelle. It is directed to not hearing from "the Corby clan - specifically ... Mick", the fact "he had been dropped even though he had stuck to an agreed code of silence (Prologue xi) and, later, that he had not heard from "...any of 'em", even if they had chosen not to sign "[f]rom the Corbys" (353). It needs hardly be said that, apart from the questioned explanation (Prologue (x) - (xi), chapter 30) of the meeting between the Corbys and Mr McCauley in Bali, no thesis of an innocent association between Mr McCauley and Mr McHugh and the Corbys is proffered. 158One of the respondents' submissions that the appellants could not be seen to be part of Mick's drug syndicate rests on the proposition that the Book specifically identifies the members of the syndicate as those arrested in Adelaide. However one difficulty with that submission is that the Book (at 315) identifies those persons as the "Adelaide-based members of the drug syndicate" - clearly implying that the syndicate's class is larger numerically and more broadly geographically based. Indeed, the respondents accept that the Book identifies other members of the syndicate such as Mr McHugh (also South Australian based) and "other growers". In my view it is capable of being read as extending beyond such people. 159Another of the respondents' submissions concerning the geographic separation between the Corbys and Mick's involvement in the drug trade is arguably belied by a number of passages in the Book. First, there is the apparent openness with which Mick undertook that activity, according to Alan Trembath (at 19). Secondly, after moving to a farm in a town west of Rockhampton, he arguably conducts his drug business from there - the Tugin house becomes his "second base" (43). Mick lives next door to Tony Lewis, a man "who had been busted with hydroponic marijuana crop" (21). They are rumoured to grow "'kick-arse'" hydro together (4). Mick and Tony, it is claimed, discuss moving marijuana between various Queensland towns in the presence of a visitor. The appellants stay at the farm with varying degrees of regularity between 1998 and 2003 (61). While staying at Mick's farm (where by inference his crop of "'kick-arse'" hydro is grown), all the appellants visit Tony Lewis' farm where he grows and harvests marijuana clearly in saleable quantities. Rosleigh "was part of Tony's crowd", arguably indicating a benign attitude to commercial drug dealing. Elsewhere, when a "tell-all" book is to be written, Mercedes makes sure certain people are off limits, including Tony Lewis (336) - arguably indicating a consciousness of guilty knowledge of his activities. Thus the appellants are clearly staying at Mick's farm during the period he is conducting a drug run: Schedule at [3]. Having regard to the apparent openness with which Mick and Tony discuss moving marijuana in the presence of apparent strangers, it would be open to a jury to infer that Mick would similarly lack compunction about such discussions in the presence of his family. 160Another matter to be taken into account is the picture the Book paints in chapter 30, "The Tooth Fairy", concerning the circumstances in which the informant, Mr McCauley, and Mr McHugh (the two men critical to supplying the marijuana to Mick's drug syndicate) come to visit Schapelle in Kerobokan Prison. 161The chapter sets the scene by reference to a fantasy figure, the "Tooth Fairy" - a myth in a parallel universe with Santa Claus and the Easter Bunny. To say of an adult that he or she believes in the Tooth Fairy is to describe someone who is extremely guileless. 162The chapter is introduced by a quotation attributed to Rosleigh: "If you hear a clicking sound that means your phone is tapped" (292) - in itself a hint that she has been the subject of covert police operations. It asks rhetorically (at 302) what the chances were of the men bumping into the "Corbys [in Bali] and being fast-tracked into their inner circle" (which encompassed at least the appellants). It quotes Mr McCauley (at 302) saying, "'[i]f you believe in coincidences, then you believe in the tooth fairy" when discussing how "they were given special access to Schapelle in jail just days out from her verdict hearing, when she was feeling at her most vulnerable". 163Insofar as Rosleigh is concerned, it would be open to a jury to conclude that the ordinary reasonable reader could understand that the Bali meeting was tainted by impropriety. Such a reader could, in the atmosphere of suspicion and incredulity created by the text, infer that Rosleigh would not have taken two otherwise apparent strangers, who she'd just happened to meet in Bali, into the gaol, into the trusted family circle, unless she had known them before the Bali encounter. The only way she could have known them is through Mick who, according to the Book, only knew them because they were part of his drug syndicate. If he was prepared to introduce them to her or, at least, tell her of their acquaintance, it was open to a jury to conclude the ordinary reasonable reader could infer that she would, at least, have learned of the circumstances of their acquaintanceship. The Book goes arguably further, however, in my view, in the manner it describes Mr McCauley and Mr McHugh turning on the Corby clan and revealing the truth about the drug syndicate, contrary to the pact of silence maintained in complicity with the clan. This is a suggestion that all members of the clan had an interest in keeping their respective involvements in drug dealing with Mr McCauley and Mr McHugh quiet. 164I cannot, with respect, agree with the primary judge's conclusion concerning the effect of chapter 33. While chapter 33 reports Mercedes' successful defamation proceedings, it describes them as a "show trial", an expression usually used to refer to a trial in which the verdict has been decided in advance - and, although inappropriately used, no doubt intended to suggest Channel 7 should never have defended the proceedings because it did not get access to, let alone call, the critical witnesses: Mr McCauley and Mr McHugh. It is the revelations by the former, in particular, which have enabled the author to expose the truth about the Corby clan. The last two paragraphs (see [ REF _Ref391456091 \r \h 39] above) conveyed to the ordinary reasonable reader the respondent's view that the trial had not exonerated the Corbys from being "involved in drugs" but, rather, "the exact opposite". A jury could form the view, in my view, that the ordinary reasonable reader could read chapter 33 in the manner for which the appellants contend, that is as being a failure of proof, rather than a triumph of truth. 165Whether chapter 33 truly exonerated Mercedes and Rosleigh or was rather (as the respective appellants contended) calculated to reinforce the message that they were each involved in and/or aware of the late Michael Corby's supposed drug dealing, was quintessentially a jury matter. 166The short point about the Book is that it arguably paints the appellants as implicated in Mick's drug syndicate both because it exposes the lie of his denial of their involvement, and it paints a picture of them lying, dissembling and engaging in agreements with two men clearly engaged in the drug syndicate to conceal the truth, all demonstrating the truth of the opening Sir Walter Scott quotation. 167In my view a jury could reasonably find the drug imputations were conveyed.

The lying imputations 168Although the position is not so clear in relation to the Trembath lying imputation, on balance I am of the view that this imputation should also have been left to the jury. 169I do not, with respect, share the primary judge's view about the elemental nature of the appellants' argument in support of this imputation. Rather, in my view, it is somewhat more nuanced. The statement attributed to Mercedes is made in the context of Mr Trembath speaking out about Mick's drug dealing. Although her statement is not said to be a direct quote from a media organisation, it is clearly capable of being read as a response to the statement he is quoted as having made to the Daily Mercury, bracketed as it is by that statement and Rosleigh's response in the "local paper", then, again Mr Trembath's response again published in the Daily Mercury (19). 170The suggestion that Mr Trembath could be discredited as "crazy and a drunk" is juxtaposed against the image the Book portrays of a man who has known Mick since he was a child and recounts his observations clearly. It would be open to a jury, in my view, reasonably to find that the Trembath lying imputation was conveyed. At a general level, it would be open to a jury to conclude that the ordinary reasonable reader would read the Book as saying Mercedes was prepared to say anything to protect her family from accusations of involvement in drug dealing - no doubt in part, at least, to refute suggestions that Schapelle was so involved. She had a clear motive to lie to discredit anyone, including a close relative, who raised a counter narrative. 171The Coulthard lying imputation is also finely balanced. Mr Coulthard asked Mercedes a general question as to whether "there was anybody in her family ... who has either been convicted or involved in the drug trade", to which she responded, "[n]o. Not that I know of and ... nah. There wouldn't be". The "sensational" story which was what the Book says led to that interview coming back to "haunt" her was a report in The Australian ("Meet the Corbys") which revealed that Mick had been arrested and fined for possessing 2 grams of marijuana when he was about Schapelle's age. Mercedes' denial of any knowledge of that conviction when asked about it by The Australian because she was not born at the time prima facie related to that specific incident. However the questions asked on both occasions were not confined to a conviction. Mr Coulthard's question asked whether there was "anybody in [her] family ...who has ever been convicted or involved in the drug trade?" The Australian question also related to "her father's drug history". Both more broadly based questions arguably invited the reader to consider Mercedes' denial in the context of the theme of the Book implicating the Corby family at the least as having knowledge of Mick's drug dealing activities. As such it could reasonably be found by a jury. 172In my view a reasonable jury could also find Rosleigh's lying imputation was conveyed. Indeed, it is difficult to understand why the respondents did not concede it was capable of being conveyed having regard to their concession in relation to Rosleigh's imputation (a) which was essentially about the same issue, albeit in relation to Mr McCauley. 173However, leaving that aside, the reasoning for my conclusion is apparent from the reasons concerning the drug syndicate imputations. Briefly restated they rest upon the "Tooth Fairy" nature of Rosleigh's meeting with Mr McCauley and Mr McHugh, the "magic carpet ride" she gave them into the prison to see Schapelle, and Mr McHugh's revelations when "cast aside by Ros" that the "random meetings" were "far-fetched and that although "the Corbys can deny", Mick was "deeply entrenched in the marijuana trade" and "Mick was smuggling pot to Bali": Schedule [18], [27]. All of these matters were capable of supporting the proposition that Rosleigh had known Mr McHugh for a long time before the Bali visit.

The fish shop imputations 174I have already observed that the Book depicts Michael Jnr's acquisition of the fish shop as at least questionable for someone who had never had "a full-time job for any substantial length of time". It reports the allegations that he is "involved in the marijuana trade", the same trade his father is clearly involved in. Michaels Jnr's response, presented not as an outright denial but, rather as a challenge to his accusers does not, in my view, distance the respondents from the prima facie adoption of the defamatory hearsay. 175I accept that there the Book wavers between identifying the shop as a "family" business or Michael Jnr's. It also says Rosleigh sold it. However it also clearly says that Michael Jnr bought it. It is a matter for a jury, in my view, to determine where the truth lies between these apparent inconsistencies. 176Accordingly it would be open to a jury reasonably to find that questionable purchase of the shop was sourced from illicit funds, whether they be Michael Jnr's own earnings from his marijuana trade or from his father's illicit earnings. Once again reasoning to Michael Jnr's knowledge that marijuana was Mick's business can be found in my reasons concerning the drug syndicate imputations. Finally I note that chapter 37 refers to the fact that Mick "always had money to buy property and treat the kids ...[t]he magic was marijuana": Schedule [28]. That also lends support to the proposition that if Michael Jnr did not fund the shop purchase from his own ill-gotten gains, his father's equally illicit earnings were the source of that finance.

The hostess imputation: defamatory meaning 177The hostess imputation was said to be conveyed by the following passages in the Book: "In Japan, Jodie and Mercedes were among the thousands of young western women who, as well as backpacking and teaching English, made good money working as hostesses in nightclubs and bars. Back then, hostessing by foreigners used to exist on the relatively 'innocent' fringes of the Japanese sex industry." (79) ... This kind of hostessing is unique to Japan ... The biggest part of a hostessing job is to act as an enabler at a banquet or drinking party, assisting men in having fun. The hostess gets paid to drink and chat with men and ensure that they have a good time at outrageously priced entertainment clubs. A hostess also gets paid to develop highly stylised relationships with customers- extensions of her work at the club. In most cases, she does not sell sex; she sells love or, rather, an embellished variety of it. Yet the hostess is always, in some form, selling the most alluring of sexual fantasies. She reminds her customers of sex and sensuality after they've spent the day in a work environment that treats them more like robots than men." (82) 178The primary judge concluded the hostess imputation was not capable of being defamatory because she said that Radio 2UE Sydney v Chesterton [2009] HCA 16; (2009) 238 CLR 460 ("Radio 2UE Sydney") meant the test of whether it had that effect did not involve an ordinary reasonable reader making a moral judgment: second judgment (at [9], [13]). I infer that had her Honour not read Radio 2UE Sydney in that manner, she would have reached a different conclusion. 179As a general rule it is illegal, under the law of defamation, (and subject to defences) to publish about a person anything which is likely to cause ordinary decent folk in the community, taken in general, to think the less of that person: Gardiner v John Fairfax & Sons Pty Ltd (1942) 42 SR(NSW) 171 per Jordan CJ (at 172). An imputation will also be defamatory if, "although not disparaging, [it] tends to make other persons 'shun or avoid' the plaintiff": Boyd v Mirror Newspapers Ltd [1980] 2 NSWLR 449 (at 453) per Hunt J (as his Honour then was). 180The question whether a person had been defamed is determined from the perspective of "an audience composed of ordinary decent persons, being reasonable people of ordinary intelligence, experience and education who brought to the question their general knowledge and experience of worldly affairs": Radio 2UE Sydney (at [4] - [6], [39] - [40]) per French CJ, Gummow, Kiefel and Bell JJ; see also Harbour Radio Pty Ltd v Trad [2012] HCA 44; (2012) 247 CLR 31 (at [54]) per Gummow, Hayne and Bell JJ. 181In Reader's Digest Services Pty Ltd v Lamb [1982] HCA 4; (1982) 150 CLR 500 ("Reader's Digest Services ") (at 505 - 506) Brennan J (as his Honour then was and with whom Gibbs CJ, Stephen and Wilson JJ agreed and Murphy J generally agreed) explained the test of whether a publication was defamatory as follows: "Where no true innuendo is pleaded and the published words clearly related to the plaintiff, the issue of libel or no libel can be determined by asking whether hypothetical referees - Lord Selborne's reasonable men (Capital and Counties Bank v Henty (1882) LR 7 App Cas 741, at 745) or Lord Atkin's right-thinking members of society generally (Sim v Stretch (1936) 52 TLR 669, at p 671) or Lord Reid's ordinary men not avid for scandal (Lewis v Daily Telegraph Ltd [1964] AC, at 260) - would understand the published words in a defamatory sense. That simple question embraces two elements of the cause of action: the meaning of the words used (the imputation) and the defamatory character of the imputation. Whether the alleged libel is established depends upon the understanding of the hypothetical referees who are taken to have a uniform view of the meaning of the language used, and upon the standards, moral or social, by which they evaluate the imputation they understand to have been made. They are taken to share a moral or social standard by which to judge the defamatory character of that imputation (Byrne v Deane [1937] 1 KB 818, at 833), being a standard common to society generally (Miller v David (1874) LR 9 CP 118; Myroft v Sleight (1921) 90 LJKB 883; Tolley v J S Fry & Sons Ltd [1930] 1 KB 467, at p 479)." (Emphasis added) 182In Radio 2UE Sydney (at [37]) the plurality said that the general test of what is defamatory, namely of "a plaintiff being 'lowered in the estimation' of the hypothetical referee [did] not imply the exercise of a moral judgment, on their part, about the plaintiff because of what is said about that person [nor] ... import particular standards, those of a moral or ethical nature, to the assessment of the imputations" (see also [38]). 183However that was said in the course of their Honours' discussion about the identification of the hypothetical referee. I do not, with respect, read Radio 2UE Sydney as requiring the approach the primary judge appears to have applied. The starting point is the clear statement in Reader's Digest Services that the hypothetical referee "share[s] a moral or social standard by which to judge the defamatory character of that imputation". There is no suggestion in Radio 2UE Sydney that the plurality was departing from Reader's Digest Services. 184When the plurality in Radio 2UE Sydney came to consider (at [41] ff) "general community standards which may be relevant in a particular case", their Honours explained: " 42 ... Any standards which might be applied by the ordinary reasonable reader will vary according to the nature of the imputation. It should not be assumed that such standards are limited to those of a moral or ethical kind, such as may reflect upon a person's character. It should not be assumed that moral standards have no relevance to imputations concerning a person's business or professional reputation. And it should not be assumed that it will be necessary in every case to apply a standard in order to conclude that a plaintiff's reputation has been injured. [43] There are many standards held within the general community which are not of a moral or ethical kind but which may be relevant to an assessment of whether a person's standing in the community has been lowered..." 185The plurality then effectively endorsed Brennan J's reasons in Readers Digest, when they explained that "the general community standards of which his Honour spoke were not expressed to be moral standards but shared moral or social standards": Radio 2UE Sydney (at [44]). The plurality concluded this aspect of their reasoning (at [46] - [47]) by explaining that "the ordinary reasonable person may be expected to draw upon such community standards as may be relevant, in order to answer the question whether there has been injury to ... reputation" and that "moral or ethical standards ... are the standards most often identified as relevant ..." 186It would be curious, in my view, if reference to moral standards applied by ordinary decent people were not permissible when testing whether a publication was capable of being defamatory. How else, particularly in a case such as the present where the nature of the imputation clearly turns on working in the "sex industry" (albeit not selling sex), could the question be judged other than by applying a moral standard as to a person being prepared to be associated with the "Japanese sex industry"? 187The question whether the hostess imputation was capable of being defamatory had to be judged in the context in which it was published: Lewis (at 256). Taken in that context it would be open to a jury, in my view, to conclude that ordinary decent folk would, applying community standards, think less of a person who took employment involving selling "sexual fantasies" or being paid to remind men "of sex and sensuality". Such activity has a connotation of something shameful or grubby, even if according to the respondents it was employment apparently engaged in by "thousands of backpackers" (79). Whether that detracted from its defamatory quality is a question for the jury. 188In my view the primary judge erred in striking out the hostess imputation.

Costs 189Having regard to the conclusions I have reached there seems no reason why the primary judge's costs orders should not also be reversed. The respondents did not suggest otherwise.

In appeal 2013/126155: Rosleigh Jill Rose v Allen & Unwin Pty Ltd (1)Grant leave to appeal. (2)Direct the appellant to file her notice of appeal in the form of the draft in the White Book within 7 days. (3)Set aside order in [89(2)] of the first judgment (save as to imputation (h)) and order in [12(2)] of the costs judgment. (4)Order the respondents to pay Rosleigh's costs in the court below. (5)Order the respondents to pay Rosleigh's costs of this appeal including the costs of the application for leave to appeal.

In appeal 2013/126157: Michael Corby Jnr v Allen & Unwin Pty Ltd (1)Grant leave to appeal. (2)Direct the appellant to file his notice of appeal in the form of the draft in the White Book within 7 days. (3)Set aside order in [89(3)] of the first judgment, order in [27(1)(b)] of the second judgment and order in [12(1)] of the costs judgment. (4)Order the respondents to pay Michael Jnr's costs in the court below. (5)Order the respondents to pay Michael Jnr's costs of this appeal including the costs of the application for leave to appeal.

In appeal 2013/140999: Mercedes Pearl Esma Corby v Allen & Unwin Pty Ltd (1)Grant leave to appeal. (2)Direct the appellant to file her notice of appeal in the form of the draft in the White Book within 7 days. (3)Set aside order in [89(1)] of the first judgment, order in [27(1)(a)] of the second judgment and order in [12(3)] of the costs judgment. (4)Order the respondents to pay Mercedes' costs in the court below. (5)Order the respondents to pay Mercedes' costs of this appeal including the costs of the application for leave to appeal. 191Gleeson JA: In each matter I agree with the orders proposed by McColl JA for the reasons given by her Honour.

A. Drugs, knowledge and the Corby family 1Ch 2: Enter the leg model: The close-knit Corby kids (15.8). Mick remained close to Ros and the kids (16.5-.7). Her home at Loganlea, on the outskirts south of Brisbane, was purchased by Mick (16.7). Over the years Greg (Ros's new partner), Ros and Mick would regularly drink and socialise together (16.9). Greg didn't mind Mick lurking around (17.1). Rose is extremely close to her kids (17.2). Mick continued to stay close to his children as they grew older (17.3). He always provided for them (17.5). He was always there at Christmas and during the holidays, and that's why the kids adored him (17.5). 2Mick Corby sells marijuana around town for years prior to the early 1980s (18.3; 19.3). In the early 1980s, he lives next door to Tony Lewis, then a marijuana user and they become best mates (20.5-9). In 1998, Mick bought the farm next door to Tony Lewis in 1998 at Iveragh, thirty minutes' drive south of Gladstone on the Queensland central cost (23.8-.9). (See also 21.9-22.1: By 2006, Mick Corby was living next door to Tony Lewis, a man who had been busted with a hydroponic marijuana crop). 3Ch 3. Beyond the Sausage Factory: toward the end of 1999, a regular Queensland drug run fell McCauley's way and the buyer was Mick Corby who was based on the Gold Coast (39.8). 4Ch 4: Mick, Mal and the Gang: In 2000, Mick bought a large two-storey house in the Gold Coast suburb of Tugun, about an hour's drive south of Brisbane (43.3). Over the next two years, the Corby clan would transform it into a house that could accommodate at least six people. In turn, various members of the family, Schapelle, Michael Jnr, Mercedes, her husband and their two children all periodically lived there. (43.5). Mick began treating it as his second base, allowing him to spend more time around his beloved kids and far more convenient for doing business than the remote farm at Iveragh (43.7). Mick used the car park at Jupiter's Casino, less than 20 minutes by car away from the Tugun house, for most of his drug exchanges. (43) 5From late 2000 to April 2003, Mick was buying drugs from McCauley delivered by Ken Ray. At the start, McCauley was with him and McCauley took the drugs in a suitcase to Mick's place (i.e. the house at Tugun) (44.5-.7). Over these years, Ray did a drug run to Mick at the Gold Coast about every 2-5 weeks (44.8-.9). When Ray went alone the exchanges took place at Jupiter's casino because he knew Corby lived on the Gold Coast and "That's one thing they wouldn't allow - me or my car to be seen on their property." (45.5). The drug runs involved deliveries of one or more suitcases of marijuana (44.3-.7). (The reader was later be told that Michael Corby was paying $3,000 a pound (357.3), and then transporting it to Bali where it was sold for much more (357.4-.5).) 6Ch 6: The Poet and the Stripper. Mick Corby's best friend was Tony Lewis (59.5), (also described as his "soul mate": pp.3-4; also p.20, "best mates"). At various times between 1998 and 2003 the Corby kids stayed at Mick's farm, including Mick Jnr, Mercedes, her husband and their two children (61.1). Tony Lewis's circle of friends included Mick Corby's kids (61.3). Ros came occasionally too (61.5). Ros was part of Tony's crowd (61.5). Tony smoked a lot of grass and had his own marijuana crop (63.3). At the rear of Tony's property there was a shed full of marijuana plants, a few hundred plants (63.5). In another shed behind Tony's house there was a drying area for cannabis plants (63.8). Kim Moore said that she visited Tony's farm 6 or 7 times (63.9) and didn't meet Schapelle but did meet other members of the Corby clan there enjoying Lewis's hospitality (64.7). Photos of marijuana plants on Tony Lewis' farm, and bags of cannabis appear in the photo section of the book (3rd page; see also first photo on 4th page). 7Ch 8: Angel of Bali: Mercedes and Wayan regularly stayed at Mick Corby's farm up in Gladstone (85.9). In 2003, Mercedes and Wayan were on the guest list for Tony Lewis's 55th birthday party to be held at his property (85.9-86.1). Schapelle and Mercedes took turns staying at the farm to keep an eye on Mick Corby, then sick (86.7). Mercedes supplemented the family income by ... working in the family shop, Rox's Seafood takeaway, in Southport. 8Ch 10: The Invitation: Michael Corby Jnr's work history is pretty patchy (103.4). It was completely out of character when in 2003 Michael bought himself a fish and chip shop business ... at Southport (103.6). He once had a job as a part-time life guard, and didn't own much (103.9). Somehow without ever holding down a full-time job for any substantial length of time, he had managed to buy his own business (104.1). But in reality it was his mother who did most of the hard work ... (104.2) 9While the Corbys were fine-tuning plans for their respective trips to Bali, back in Adelaide, Malcolm McCauley was working against the clock to meet Mick Corby's strict deadline for shipment (109.2). 10Ch 11: The Boogie Board Came Late: [Mick] had to take a Stanley knife to the lot, fluff it back up to its original stated, then re-do it all... That's not a half-hour job, I can tell you...there was the added issue of 'those going for an innocent holiday, and those who knew there was a bit of business taking place'...because them other girls had no idea.. Them girls that were travelling with Schapelle (117). 11Ch 15: The Brother-in-law (151). One of the rumours is they say that Wayan is one of the drug dealers in Kuta (154) ... the police had nothing on him: 'I didn't think the police had developed Corby's case that far because, if it's true that the case had something to do with Wayan, the police would have put it in Corby's file before they gave it to me. It's not that we didn't want to go after the wider organisation - the problem was Corby didn't want to say anything at all, she didn't admit that the marijuana belongs to her, the chain had broken' (155-156)...Mr Fix-it had smoothed out the potentially damaging problem...Throughout the high-profile trial Wayan managed to stay out of the Australian media spotlight - suddenly his poor English was a plus and no one wanted to interview him (156). 12Ch 16: The Man on the Plane: Schapelle was now stuck in a classic Catch 22 situation. If she gave up the names of people in Australia involved in the syndicate in order to try to cut a deal with the Indonesian police, she would first ... have to give up her father. Then, potentially the whole syndicate would unravel ... But loyalty to family ran thick through Schapelle's veins...When asked who she trusted, Schapelle's answer was a stoic 'I trust only my family', (p. 166). 13Ch 18: The Singing Lawyer: Bakir promptly hired a private investigator to check out Schapelle's history. But the investigator didn't find anything incriminating, just some unsubstantiated rumours about the family. The young entrepreneur decided to follow his gut instinct about Schapelle and ignore the insidious claims. 'You can't turn your back on a person due to rumours, and I don't believe in guilt by association,' was his common mantra to anyone who provided him with scuttlebutt about the family. (183). Meanwhile, Vasu was becoming particularly paranoid about keeping Mick Corby and Michael Corby Jnr hidden away from both the media and the court hearings. 'Her bloody brother looks like a drug dealer' (183). 'Looking back I guess it was strange the parents didn't ask us any questions about the strategy we were going to take' (183). 14Photos: pages 7-10 With the supporters. Ros and her partner Greg Martin pose with Malcolm McCauley and Dave McHugh outside Kerobokan Prison in May 2005; Ros enjoys a drink with Corby supporters David McHugh and Malcolm McCauley at the Secret Garden bar, Kuta, during the lead up to Schapelle's trial. 15Ch 21: Help Me Australia: Many of the journalists commonly mistook [Ros's] plain-speaking directness as a sign that she was a clueless Aussie battler, an 'open book' with absolutely nothing to hide. In truth, Ros managed to make a lot of noise without really saying much (210). 16Ch 22: The Badger: Coulthart: I don't personally believe all the rumours, but I have to ask you about them...Are there any drug dealers, drug traffickers, any crims at all in the... in the family or in the family circle of friends? Mercedes: 'No. Not that I know of and ... nah. There wouldn't be.' (219). The Australian ... story ... 'Meet the Corbys' ... [revealed] a mystery half-brother, Clinton 'Badger' Rose ...[who] had a criminal history as long as his arm and was locked up in jail at the time Schapelle was busted ... Like his half sister Schapelle, the Badger had also run into trouble with drugs ....In February 2003 he was also charged with possessing a dangerous drug and convicted without punishment ...[T]he Meet the Corbys' article reminded readers of Mercedes's repeated denials during her interview on the Sunday program, that anyone in her family had any connection to illicit drugs - it now appears she and Schapelle had both regularly visited Clinton in jail in Queensland. (219 - 221) Although the Australian's explosive article had inferred that Mercedes was a liar and revealed that Mick Corby had once been arrested for possessing marijuana, at the time of Schapelle's verdict, in May 2005, the full extent of Mick Corby's drug past still remained hidden. That dirty secret was yet to unravel. (222-223) 17Ch 23: Jailhouse Visit: My greatest fear was that she [Schapelle] would cave in and spill the beans [Malcolm McCauley] (224)...McCauley and McHugh would have been viewed as insignificant faces through a lens constantly trained at members of the family. Mercedes, however, appears to be treating them as 'supporters' (225.2). McCauley turns to Ros, Greg, Mercedes and Wayan and says, "I'll try and organize some smoke for next week.' None of the family respond; it is unclear if they have heard him or not (225.5). McCauley remembers that, after initially hooking up with Ros at the Secret Garden, he and McHugh were taken to see Schapelle in the holding cells...away from journalists and prying eyes. Ros agreed to take them in the coming days (225.9-226.2). McCauley said there were occasions when the whole group became so spooked, they would drink up and move on from the bar. 'We would walk down to Ros's place, watch, then double-back and check if anyone was coming in after us into the forecourt. You know, we'd wait and then we'd go to their bungalow. But on the day Mal and Dave were finally given access by Ros to visit her daughter at Kerobokan Prison, she, Mal and Dave didn't seem at all concerned about being seen together (226.7). 18But on the day Ros ushered Malcolm McCauley and Dave McHugh on a magic carpet ride through the doors of Kerobokan, she was brandishing her camera (228.5). Of the now infamous summit with Schapelle inside the jail, McCauley says: 'We were all gathered beside a fishpond. I sat on the wall and Ros, her husband Greg and Dave were there too. Schapelle was facing us...a deliberate seating arrangement...looking out to see who might be heading our way.' (228.7). He [McCauley] remembers saying to her, 'What's the story, love? Can you keep it together?' Ros was constantly geeing her up, saying: 'You're strong, we can do this, we'll fight through, we'll get there. You could get sent back and then it's a different story. But you've got to stay strong...McCauley comments...while [Schapelle] was maintaining to everyone she had nothing to do with the hooter, she was well aware there were others, namely Dave and I, who knew otherwise.' Now, for the first time, he [McCauley] was able to privately reassure her there would be no leaks from the Adelaide end. "I said: 'There's absolutely nothing to worry about from our side, I promise. United we stand, love. If anyone or anything divides us, we're gonna go down and, believe me, nobody wants that." (229.1-.8) 19Ch 25: The 60 Minutes Verdict: Noticeably, despite all their hard campaigning, Ron Bakir and Robin Tampoe had been relegated to standing-room only at the back of the crowded courtroom. The Corbys hadn't saved any seats for them. Instead room had been made for their new media mates, who were paying big money for the Corby's time. Both men had done the hard yards for the family and, all of a sudden, they had been dumped. They wouldn't be the last (243). Meanwhile, Dave McHugh was pretty certain he had been saved a seat in the court (243). 20Ch 26: The Blame Game: 'Has the wrong thing been done by me, yeah, absolutely. Have I been spat on unjustly? Without a doubt in the world. Have I been treated like a scumbag? Without a doubt in the world. Has Schapelle conned me? It depends if she's guilty or not.' - Ron Bakir (251) 'they wouldn't just cut Ron loose - they were going to humiliate him in the process. They went from loving him to loathing him in a split second.' (259) 21Robin Tampoe said '...I was holding her hand while she was crying. I find out down the track that Mercedes did a live interview - she is making $30,000 with New Idea while I'm holding her sister's hand and that, from my point of view, sickens me.' (259) 'The only people that I've seen who are profiting from Schapelle Corby being in jail is the Corby family.' (259-260) While they had cleaned up, Bakir had not made one cent (260). After the verdict, Ros was quick to sell Roz's Seafood Takeaway claiming 'we need the money to pay for all the court costs.' (261) All up the Corbys had over a million dollars in real estate, plus from all accounts a profitable seafood takeaway business before they sold it and a couple of hundred thousand from media deals. Given all the money that had been spent on the trial, they weren't doing too badly. (261) 22Ch 30: The Tooth Fairy...what are the chances of two Adelaide men, both involved in marijuana supply, meeting by chance on a plane to Bali just two weeks after Schapelle Corby's arrest? Then, after returning together during her trial, what the chances of them also randomly bumping into the Corbys and being fast-tracked into their inner circle to such a degree that they were given special access to Schapelle in jail just days out from her verdict hearing, when she was feeling at her most vulnerable? 'If you believe in coincidences, then you believe in the tooth fairy,' says McCauley today...Despite what McCauley implies, you don't have to believe in those coincidences to accept that Ros and her family might have thought two Adelaide holidaymakers were just what they claimed to be. (302-303). 23Ch 31: Sins of the brother (304): There was marijuana everywhere... (307). The most telling discovery of all, however, was a brand-new-looking set of electronic scales...In all there was a total of 23 bags weighing a collective 183 gm...and all sitting in the exact same house from where Schapelle had set off with her boogie board bag on the morning she left for Bali (308) [i.e. Ros' house]. Rosleigh Rose, however, quickly exterminated any chance of that happening [cross-examination about the days leading up to Schapelle's arrest]. Her son was ordered to plead guilty to all charges...It was another nail in the coffin for Schapelle's story of innocence, not to mention the family's all round credibility. (309). 24Ch 33: Thirty Pieces of Silver (324) - (334): The Australian media was now concerned about the litigious Corbys and became reluctant to undertake any further investigations into them. As Michael Jnr would often say to people who alleged that he was involved in the marijuana trade on the Gold Coast, 'Prove it, go on, prove it!' (334) 25Ch 34: The Industry of Innocence: (335) [T]he Corbys...realised the serious money was in a 'tell-all' book on Schapelle's trials and tribulations. (335) ... Mercedes kept a steady eye on the subject matter. Certain people and subjects were now off limits, and never to be mentioned in the media again: Clinton...Mick Corby's drug past, Malcolm McCauley, David McHugh and...Tony Lewis. These barely rated a couple of paragraphs each, while information on Mick Jnr and half-brother James was conveniently scant too. (336) 26Ch 35: Truth and redemption - 'Not even as much as a Christmas card' - Malcolm McCauley (345). It was 21 May 2008...When McCauley emerged from the gates...(345-346). McCauley said he would have understood had they chosen not to sign it 'From the Corbys'. They could have signed it "From your old mates up this way"...before I went inside they were ducking and diving for cover. The whole ship was about to sink, and they were all over me like a rash. They needed me then (353). In an afternoon of startling revelations, McCauley went on to name Mick as a Queensland buyer of his marijuana and Bali as its final destination (356). (Accordingly to McCauley) The truth is [Schapelle] always knew her dad was a drug dealer. She knew about the trips to Bali, she knew about the system, the bribes. She knew the lot...not only did Dave McHugh know more than anyone, he was the mutual friend who had organized the initial introduction. Furthermore, he was still in contact with the Corbys through Ros (358). 27Ch 36: Mr Smoothie Comes to the Table: It seemed resentment had been building within McHugh about the manner in which he'd apparently been recently cast aside by Ros. Here was a man who had played the game, toed the line and publicly lied through his teeth to keep Schapelle's tale of innocence intact. The series of random meetings surrounding McHugh's story had always seemed far-fetched but, so long as he continued to remain loyal and play silent, nobody could prove otherwise. Now, not only had McHugh been caught with cannabis, he'd been banished (371). I started to explain ....I had uncovered numerous friends, associates and sources all now naming Mick Corby as a man deeply entrenched in the marijuana trade... 'But the Corbys will keep denying'... 'They can deny it all they like', I said. 'Mick Corby was smuggling pot to Bali' (372.2). I [McHugh] was sending 10 to 15 pounds every week to ten days for several years...If I hadn't been in a certain place at a certain time around 1999 - I'd never have met any of them (375). McHugh said that on arrival, he would then head to the same self-contained apartments situated close to Jupiter's Casino. He claims that once he was booked in, the same person nearly always met him. He has identified the individual who cannot be named for legal reasons (376). 28Ch 37: In the Name of the Father: There was something magic about Mick's life - he always had money to buy property and treat the kids. The magic was marijuana. It was easy dough ... pot wasn't heroin, it wasn't a big deal... (387) (According to Alan Trembath) Schapelle would have been around drugs all her life (393.3).

B. The Syndicate and the Corbys 29P. xi: Every week he waited to receive word from the Corby clan - specifically Schapelle's father, Mick. There was nothing - not even a Christmas card. 30Corby syndicate: p.x (the Corby Family); p.xi (the Corby clan); p.xiii (former Corby confidants); p.xiii (orchestrated by the Corbys); p.xiii (kept her mouth shut and took the fall for the syndicate); p.3 (Meet the Corbys); p. 40 (Mick, Mal and the Gang); p.43 (the Corby clan); p.61 (Tony's circle of friends, including Mick Corby's kids...even the Indomitable Rosleigh Rose...she was now part of Tony's crowd); p.64 (she alleges she met other members of the Corby clan there enjoying Lewis' hospitality); p.78 (of Mick Corby's children, Mercedes is the one most like him); p.118 (the Corby's version of events); p. 136 (Schapelle's legal team and the Corby's would later portray this as a major miscarriage of justice); p. 165 (If she gave up the names of the people back in Australia involved in the drug syndicate in order to try and cut a deal with the Indonesian police, she would first and foremost have to give up her father. Then, potentially the whole syndicate would unravel and more questions would be asked. Who was she delivering to? Who were the suppliers? Who were the clients?; p. 191 (So to me that put a big question mark over one of the Corbys' key arguments); p.317 (he personally sat McCauley down, and during the course of an interview asked him about his involvement with the Corbys); p.323 (I figured that while I was in there, I'd hear from the people who I thought mattered. I figured wrong); p.353 (...I made a pact with the old man [Mick Corby] and a couple of others...); p.353 (...McCauley said he would have understood had they chosen not to sign it From the Corbys'. They could have signed it "From your old mates up this way"...before I went inside they were ducking and diving for cover. The whole ship was about to sink, and they were all over me like a rash. They needed me then.); p.390 (Mick Corby always believed his daughter would never break. Loyalty to the family had been ingrained in her from an early age.)

C. Lies by the Corbys 31The Corby family - especially Rosleigh - maintain that he was a random Aussie holidaymaker in Bali who approached them with offers of sympathy for Schapelle and free drinks at the bar. Whatever the truth may be, for a long time McCauley stuck faithfully to Rosleigh's version of the story...But now he says that was all a desperate disguise born from a pact he made with Mick - to save everyone's skin, not least his own. He adds that for that reason he loyally toed the party line... (pp.x - xi) 32Too many people have been hurt by all the lies (xii) 33Mercedes later tried to discredit Alan (19) 34After her arrest, the Corbys were certainly not keen for any media to find Kimi in Japan, going to the extraordinary lengths of telling one newspaper journalist that the family could not remember his surname (83) 35Later on, during the media's intense scrutiny of her past Mercedes continually stressed that, back in 2004, she and Wayan had only planned to stay in Bali for six months..." (87-88) 36Mercedes worked relentlessly to distance herself and Wayan from the surfing industry...But Mercedes and Wayan's link to the surf scene was close... (154-155) 37Mercedes also said, 'She knows she's innocent; she's not depressed.' (157) (c.f. 145.4) 38Curiously, it would be many months before Mick would make a personal visit to Bali to see his beloved daughter. The family's explanation was that he was too sick to travel, due to his prostate cancer (157) 39Despite all the carping from the Corby camp about Qantas being uncooperative, the company in fact undertook a major internal investigation into claims that its baggage handlers had put the drugs inside Schapelle's bag (200) 40Mercedes... had now been caught out lying on national television (221) 41The Tooth Fairy (292)...a day later, however, she had dropped that theory and suddenly remembered, with precise detail, that the pictures were taken some six months beforehand...after a request from two strangers... (295) Ros was piling on the theatrics (296). The whole day was one big stunt...a smokescreen, a crowd diversion, because she knew, prior to arriving in Adelaide, that they [the police] were not interested in giving her the pictures. They told her that before she left...End of story. McCauley says that throughout that day, both he and Dave McHugh kept in contact with Ros by calling her on a 'brand new number'... (297) It was then that a plan was hatched so Ros could retrieve the photographs from Dave without the documentary team or anyone else asking questions about how it had come about. In what McCauley claims was an elaborate and calculated ruse... (298). 42In March 2008, Mercedes Corby had undergone a massive transformation. Her long blonde hair was now a mousy brown in colour and she looked like a 'frumpy mum' dropping her kids off to school. The 'in with the in crowd' surfer chick image was gone - for now. (329) 43The Corbys had always argued that Mercedes' thirtieth birthday party was to be a small affair with about 15 to 20 family friends attending. However Jodie said it was going to be a big dance party, more like a rave. (331) 44The photos of the penis pipe and the mull bowl had forced her to admit she had smoked pot, but she denied using other drugs. (333) 45Rosleigh Rose had told the Herald-Sun in Melbourne that it was 'absolute rubbish' her ex-husband could ever have been involved in a drug syndicate. And Mick's latest alibi? Michael never had the phone on', she said. 'If he [McCauley] lives in Adelaide and Michael was up here [in Queensland], how did he contact him?' (359) 46On 15 May 2009 ...journalist Benns [phoned] Rosleigh ... for a comment. 'Have you spoken to David McHugh lately?' he asked. Clearly caught off-guard, she answered: 'Er, I spoke to him the other day. He rung me up and said Schapelle had been in the Adelaide Advertiser.' Did he mention that he had been arrested for growing drugs?' There was a brief moment of silence and then she replied: 'Why would he? I am not really his friend or anything. He just said Schapelle was in the Advertiser...(369) 'Is it another coincidence?... Ros responded in an aggressive tone 'I met him [McHugh] at the Secret Garden a few years ago with that bloody liar rotten thing from Adelaide [McCauley], I don't really know them at all, and I have never met that McCauley fellow except at the Secret Garden.' (370 c.f. Jailhouse visit 225 - 228). 47After that, McHugh said it was 'one lie after another'. 'After them photos were leaked, it would all have been over if it hadn't been for me and Mal...McHugh - and McCauley - have made additional allegations which cannot be published due to legal reasons (377-378)...I was used to protect a bullshit story. And then I got spat out. It happened to others. It happened with Mal, and now it's happened to me. 'All the time, they keep telling Schapelle, "You're coming home, you're coming home." And while they're doing that, they keep raking in money.' 48Ch 37: In the Name of the Father: So poor Schapelle has paid a hefty price for her increasingly intricate web of lies and deceit. The Australian public, meanwhile, has grown weary of the continual theatrics of her family. None of the Corbys could have foreseen that her arrest would create media deals worth over two million dollars - but they were quick to sign up to them...but she will never admit to the crime and will go to her grave claiming that someone else stashed the marijuana inside her bag. Why? Because there is far too much at stake. Her furiously proclaimed innocence has painted her, and everyone surrounding her, into a corner...The Corbys have always claimed that if it was ever possible, Ros or Mick would have been willing to trade places with their daughter... 'It makes no difference to us. An innocent person is in there anyway, so it would be like swapping her with another innocent person' she [Mercedes] carefully explained. (391)

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