36 In support of the application for security of costs, the solicitor acting for the defendant, Mr Graham Hryce, swore an affidavit and was cross-examined. His evidence went, essentially, to the anticipated costs of preparation and conduct of the proceedings, up to and including the conclusion of a s7A trial. There was no dispute as to his assessment either in cross-examination or in the oral evidence later given by Ms Norman. Indeed, Ms Norman largely accepted the quantification of the various costs components outlined by Mr Hryce. Mr Hryce set out the figures on which he based his assessment, which gave rise to a calculation in counsel's written submission of costs potentially amounting to $61,710. The claim for security in the sum of $40,000 is therefore a claim for about two thirds of what could be expected (possibly on a worst case scenario) to be the costs incurred by the defendant. This is material, because the costs outlined by Mr Hryce were the costs he expected to be incurred, and not necessarily those which would be allowed on an assessment of costs following the conclusion of litigation. Ms Norman considered that such an assessment might reduce the allowable costs by about or up to 25%; I was told (without evidence) that Mr Hryce gave a somewhat lesser estimate of the reduction. In any event, the amount sought does make some allowance, for whatever reason that might be.
37 The fact of the plaintiff's overseas residence is not only a circumstance with triggers jurisdiction to make an award of security for costs, but it is plainly a relevant matter to be taken into account in the exercise of the discretion. On behalf of the defendant it was also submitted that the evidence permits an inference that defendant has no assets in Australia against which execution could be levied in the event of a costs order against him. In her affidavit, Ms Norman deposed that she had been told by the plaintiff that he had business interests in Australia; that his books are imported and distributed in this country; that since about 1995 or 1996 the plaintiff has visited Australia on average about every eighteen months and has delivered lectures; and that he intends to return to Australia in 2005.
38 However, there was no evidence that he has any assets in Australia and I accept that it is reasonable to draw the inference sought, that is, that the plaintiff is without assets in Australia. This is a relevant factor.
39 I accept, as was put on behalf of the plaintiff, that the mere fact of overseas residency, even when coupled with the absence of assets in Australia, is not determinative of the application. It is, nevertheless, a factor of some weight.
40 Both parties relied upon such evidence as there was of the plaintiff's financial position. That included the evidence of his extensive publication, the extent of the sales of his books, and his visits to Australia. It also included evidence contained in his solicitors' letter of 29 July in which it was asserted that he would be ready, willing and able to provide security for costs if so ordered. On behalf of the plaintiff this evidence was relied upon as supporting a conclusion that he would, in the event of a costs order being made against him, be in a position to meet it. On behalf of the defendant, it was relied upon as negativing any hardship that might otherwise be caused by the making of an order.
41 It is convenient now to deal with the series of matters put on behalf of the plaintiff in opposition to orders sought. A predominant basis of opposition concerned the refusal of the defendant, through his solicitors, to provide any evidence of any defence to the plaintiff's claim. As the account of the correspondence and the submissions put to the registrar show, the plaintiff's solicitors were insistent that such evidence be provided before they would agree to the provision of security for costs. The solicitor who appeared for the plaintiff on this application argued that an inference should therefore be drawn that the defendant has no defence to the claim. I do not draw such an inference. It is well known to all who engage in the practice of defamation law that the issues that might be raised by way of defence can be complex and time consuming to explore. They require the consideration of complex matters by experienced legal practitioners, and the provision of careful and detailed advice. They may require a good deal of consideration of factual matters. This, indeed, was noted by the defendant's original solicitors at an early stage of the correspondence. The 1995 amendments to the Defamation Act (see Defamation (Amendment) Act 1994) make it plain that the issues that a jury is to determine pursuant to s7A are to be determined before the parties embark upon the preparation of matters by way of defence. Whether this was the intention of the legislature or not, one consequence of the division of functions brought about by reason of those amendments is that a defendant is not required to go to the very considerable expense of investigating and preparing defences prior to the ascertainment of whether the matter complained of conveys the imputations pleaded, and, to the extent that they are, whether they are defamatory of the plaintiff. To require the defendant to embark upon that process before any steps have been taken towards the resolution of the first question would be inconsistent with what has been done by the legislature.
42 Further, to do so in the context of an application for security for costs would be to undermine the purpose of the power to make such an order, which is designed to protect a defendant against incurring costs which might not be recovered. I reject the plaintiff's first argument.
43 The second matter put on behalf of the plaintiff concerned the refusal of the defendant's solicitors to identify any issue they wished to take with the statement of claim until the security for costs application had been determined. The solicitor for the plaintiff asserted that the solicitors for the defendant are in breach of their obligations pursuant to Pt 67 r12A. That rule, as has been set out above, requires such issues to be identified no later than seven days prior to the listing of a notice of motion for directions.
44 There was no direct evidence of the date on which the notice was required to be filed but, in the letter dated 4 July, the plaintiff's solicitors stated that that was the last day for compliance.
45 In the written submissions the solicitor for the plaintiff described r12A as "a peremptory rule of court". In Mortimer v Nationwide News Pty Ltd [2001] NSWSC 450; unreported, 28 May 2001, McClellan J described a failure to comply with the rule as:
" … a serious breach of the obligations which parties and their legal advisers owe to the court and places an unnecessary burden on the administration of the court."
46 Although I agree, with respect, with what McClellan J wrote, and although I am not entirely clear as to what is meant by "a peremptory rule of court", I, nevertheless, would not so describe r12A. R12A is, like any other rule, a rule of court requiring certain action on the part of legal representatives. However, I do not read the rule as intended to nullify the right of a defendant to seek, by order of the court, to defer the incurring of substantial costs until after that application has been determined. If r12A were to be given absolute supremacy over Pt 53 r2(1), then the latter rule would be deprived of much of its value. In any event, pursuant to SCR Pt 1 r12, the court is empowered to dispense with compliance with any of the requirements of the rules, either before or after the occasion for compliance arises. In my opinion, the fact that an application for security for costs is to be made is sufficient reason for dispensing with compliance with the time constraints imposed by Pt 67 r12A.
47 I do not regard the refusal of the defendant's solicitors to identify their objections to the statement of claim prior to the resolution of this application as any reason that should operate against the order they seek. In doing so, they had the support of the registrar.
48 As earlier indicated, the plaintiff also relied upon the evidence of his financial position, and the fact that he would be able to meet an order for costs, as relevant to the exercise of discretion. This, in my opinion, misconceives the purpose of an order for security for costs. Such an order is not made, or not only made, because a party may be unable to meet a costs order, but, also, because a costs order may be unenforceable. That is why the rule specifically applies to plaintiffs resident outside the jurisdiction. Counsel for the defendant advised the court that there appears to be no enforcement agreement with the United States which would facilitate recovery against the plaintiff in the event that he was unsuccessful and required to pay costs, and declined to do so. No objection was taken to this information, and no contrary information was put before the court.
49 It is not the plaintiff's expressed willingness to pay any costs ordered against him, but the extent to which that expressed willingness might, in the event that he has a change of heart, be enforced, that is the issue. The defendant should not be put in the position of being dependent upon the continued goodwill of the plaintiff and nor should the defendant be required to rely upon the hearsay assertions of that willingness. I disregard this as a relevant factor.
50 Finally, the solicitor for the plaintiff contended that the offer to pay security for costs, conditional upon the defendant's filing affidavit evidence of his defences, was a "generous offer" that ought to be taken into account on the exercise of discretion. For the reasons I have given, a defendant in a defamation proceeding is not to be required to incur expenses going to the defence prior to the resolution of the s7A matters. I do not, therefore, regard the plaintiff's offer as "generous", and it does not operate to persuade me that the discretion should be exercised in favour of the plaintiff and against the defendant.
51 On behalf of the plaintiff I was referred to a number of authorities which establish that mere overseas residency will not necessarily result in an order for security for costs: CBS Australia Ltd v Telmark Teleproducts (Aust) Pty Ltd (1987) 72 ALR 270 at 285; Swain Investments Ltd v Danumet Pty Ltd & G R Walker (unreported, 5 May 1989, per Cole J); Caruso Australia Pty Ltd v Portec (Australia) Pty Ltd (1984) 1 FCR 311, per Toohey J; Energy Drilling Inc v Petroz NL (1989) ATPR 40-954; Chellaran & Co Ltd v China Ocean Shipping Company (1991) 182 ALR 321, per McHugh J. I accept this principle, as did counsel for the defendant.
52 In Swain, Cole J held that something more than residence outside the state alone is required to justify the making of an order. In Chellaran, Mc Hugh J (sitting as a single judge in the High Court) described residence outside the jurisdiction and having no assets within the jurisdiction as:
"… a circumstance of great weight in determining whether an order for security of costs should be made."
53 The solicitor for the plaintiff also put great weight upon the merits of his case, as a relevant consideration. I was, accordingly, taken to the statement of claim, and the matter complained of. In this respect it is relevant that the order for security for costs is sought only to encompass the preparation for and conduct of a trial under s7A. Whilst the matter complained of is quite lengthy, there is only a very brief reference directly to the plaintiff. Counsel for the defendant did not challenge the proposition that the article was critical of the plaintiff, or even that it could be held to have conveyed some defamatory imputations. That does not mean that it will be held to have conveyed the imputations as pleaded. Not having heard detailed argument from either party upon the form of the imputations or the capacity of the matter complained of to convey the imputations pleaded, it would not be right to reach any conclusion on those issues. However, it is legitimate to consider whether there would be open to the defendant any reasonably arguable challenges on either of those issues. I am satisfied that some, if not all, of the imputations are susceptible of such challenge.
54 On balance I have concluded that the order sought should be made. I have given consideration to whether it should be in the sum sought, or in some other sum, particularly having regard to Ms Norman's evidence about the relativities between actual costs and assessed costs. In his written submissions the solicitor for the plaintiff argued that there was no proper evidence
"(as opposed to unsubstantiated assertion)"