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[2008] QSC 134
procedural. The plaintiff was ordered to provide $150,000 security for the defendant’s costs; the defendant’s solicitors could inspect and copy three specified affidavits on payment of registry fees;...
The court partly granted Nine's interlocutory application. Kennedy's move to Singapore made it harder for Nine to enforce a costs order, so Kennedy had to provide $150,000 security for future costs. Because Nine delayed raising the issue, the order did not cover costs incurred before 11 April 2008. The court did not require Kennedy to produce the legal opinions mentioned in his letter, because his pleaded case relied on what the letter said and Nine's alleged failure to broadcast it, not on the opinions themselves. A defamation imputation about Kennedy being at the top of an illegal pyramid scheme could remain because the broadcasts, viewed as a whole, could support it. The economic loss paragraphs were removed after that claim was abandoned.
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2,226 words · generated 02/10/2026
In [2008] QSC 134, Dutney J dealt with interlocutory applications in an ongoing defamation action. The judgment did not decide whether Nine Network Australia Pty Ltd, referred to as Channel 9, had defamed Greg Kennedy. It addressed procedural questions about security for costs, privilege, pleading, and access to affidavits.
No linked legislation citations have been extracted yet.
Kennedy was a director of Pacific Delta Investments Ltd, which operated the internet-based virtual casino World Games Inc (WGI) [3]. Channel 9 broadcast stories about WGI and Kennedy on A Current Affair on 31 March, 1 April, 29 April and 6 September 2004 [4]–[5]. Kennedy began defamation proceedings on 13 April 2004 [6].
During the proceedings, Kennedy moved from Australia to Singapore in January 2005 [15]. Nine later sought security for costs, relying on Kennedy's overseas residence and the difficulty of enforcing a costs order against him in Australia. Nine also sought production of legal advice mentioned in a letter sent before the first broadcast. Other parts of the application challenged a pleaded imputation and sought access to affidavits from separate proceedings.
The orders were mixed. Kennedy had to provide $150,000 security for Nine's costs from 11 April 2008, subject to requirements about the form of that security. Nine was permitted to inspect and copy three identified affidavits on payment of the registry's normal fees. Three paragraphs concerning the abandoned economic loss claim were struck out. The applications were otherwise dismissed, with each party's costs treated as costs in the proceedings. The matter was placed on the Supervised Case List.
For security, the court referred to rr 670–672 of the Uniform Civil Procedure Rules 1999 (Qld). Rule 670 supplied the power, r 671 identified circumstances in which security could be ordered, and r 672 listed matters the court could consider [34]–[35]. Those matters included the parties' means, prospects and genuineness of the proceeding, whether security would be oppressive or stifle the proceeding, enforceability of a costs order, and the costs of the proceeding [35].
Kennedy's residence outside Australia enlivened the jurisdiction to order security [36]. The judge identified two critical matters: the lateness of Nine's application and the difficulty Nine would face enforcing a costs order against Kennedy [37]. Although delay is not among the matters expressly listed in r 672, Dutney J treated it as an important discretionary consideration [38].
The judgment examined when Nine knew or should have known that Kennedy was living abroad. Nine argued the relevant period began in October 2007, when particulars confirmed his Singapore residence. Kennedy argued that Nine's solicitors should have noticed the Singapore address in a document inspected in December 2005. The judge accepted that Nine did not know of the foreign residence until October 2007, partly because Kennedy's pleaded address remained Robina and the disclosed document had been supplied for another purpose [38]. But once Nine knew, it did not act immediately. The judge was not persuaded that Nine's asserted belief in available Queensland property explained the delay: searches showed that some properties were not Kennedy's, and others had been sold [27]–[29].
The timing mattered because substantial costs had accumulated before Nine raised security. Nine first raised the issue in a letter dated 4 March 2008 [26]. Dutney J reasoned that a plaintiff's assessment of whether to continue litigation can be affected by costs already put at risk. At a certain point, the obligation to pay the other side's costs if the action is discontinued may itself become an obstacle to settlement. The judge considered that this could amount to prejudice caused by delay. The passage from Robson v Robson quoted in the judgment similarly states that applications of this kind should be made promptly once the relevant facts are known.
Other factors affected the balance. Nine would have difficulty enforcing a costs order because Kennedy had no identifiable assets in Queensland, although the judgment noted that a company he appeared to control owned Queensland property. That company ownership did not give Nine direct access to the property under a costs order against Kennedy [48]. The proceeding was genuine, while the parties' prospects were described as speculative. The publications appeared prima facie defamatory, but also appeared prima facie to be in the public interest if true [49]. The judge also noted that the substantial part of the action would involve Nine proving its defence, and that the action appeared to be private litigation rather than a matter of public importance [49].
The balance favoured security, in part because Kennedy did not identify specific prejudice from providing it. But Nine was not given security for costs incurred before notice. The judge considered the estimate of $411,653 to the first day of trial generous, identified work and costs that appeared excessive or unnecessary, and noted that the economic loss claim had been abandoned. The result was security of $150,000 for costs from 11 April 2008 [after 49, security discussion; see orders and reasons preceding 68]. The judgment also allowed for security by way of specified property-related arrangements if evidence and undertakings were provided, or otherwise cash or a bank guarantee to the registrar's satisfaction.
On privilege, Nine sought the legal advice mentioned in the 19 March 2004 letter. The letter said that legal advice obtained in jurisdictions where WGI operated did not conclude that WGI was a pyramid scheme [69]. Kennedy's pleading relied on Nine's alleged failure to include that and other responses in the broadcasts, and alleged that the omission was unreasonable and deliberate [71]. The judge construed the pleading as relying on the letter's contents as part of Kennedy's response, rather than asserting that the advice itself proved WGI lawful [75]–[76]. Since the advice was not itself in issue, and Kennedy was not relying on it as justification of WGI, the reference did not waive privilege [76 and the privilege reasons following it]. Nine's request for production was refused.
For imputation 9(e), the question was whether a properly directed jury could find that the imputation arose from the broadcasts. The court looked at the programme as a whole, including statements about promoters being at the top of pyramid schemes, footage of Kennedy promoting WGI, and references describing him as the boss of a person identified as head of worldwide operations [84]–[88]. The judge concluded that a jury could find the imputation arose [89]. That was not a finding that the imputation was true or that defamation had been established.
The judgment applied the existing Queensland procedural rules; it did not purport to create a new statutory test. Before this decision, rr 670–672 already supplied the relevant framework for deciding whether to order security for costs. Dutney J emphasised that the r 672 list was non-exhaustive and treated delay as an important consideration even though the rule did not expressly list it [34]–[38].
The practical point made in this case is about how the discretion was exercised on its particular facts. Overseas residence and enforcement difficulty supported security. Delay, the costs accumulated before notice, and the estimated future costs affected the amount and period covered. The court therefore ordered security, but not for costs incurred before 11 April 2008. This was an application of the rules to the chronology before the court, not a general formula for calculating security.
The privilege ruling likewise applied an existing principle cited from Attorney-General for the Northern Territory v Maurice: privilege should not be displaced unless the use made of the privileged document makes continued maintenance of privilege unfair to the other party [footnote 9]. Dutney J distinguished the situation from cases where reliance on the substance of legal advice was central to the pleaded case. Here, the pleaded complaint concerned the omission of the plaintiff's response from the broadcast.
As to defamation pleading, the decision did not decide liability. It held only that the particular imputation could be left in the pleading because a jury could find that it arose from the programme when the broadcast was considered in context [82]–[89].
The judgment states that delay in seeking security, although not listed in r 672, “has always been regarded as an important discretionary consideration” [38]. In plain English, the court may take account of a defendant's delay even where the rule's list of factors does not mention delay expressly.
Dutney J explained that costs can become a “positive obstacle to settlement” when the plaintiff's exposure to the other side's costs has grown [security discussion following 38]. This describes a possible practical effect of late notice: the plaintiff may have to weigh not only the potential benefit of continuing, but also the financial exposure already accumulated if the action is discontinued.
On privilege, the judge said the advice was not being relied on to justify Kennedy's position. Rather, he relied on the alleged selective publication of his responses, including the more considered response sent by his solicitor [privilege discussion following 76]. In plain English, mentioning that advice existed in a letter did not, on this pleaded case, put the advice itself in issue.
On the imputation, the judge held that a properly directed jury “may conclude” it arose from the programme [89]. The significance is limited: the court considered the pleading legally capable of being supported by the broadcast. It did not decide what a jury would ultimately find.
The security reasoning is relevant to an application where a plaintiff resides outside Australia, enforcement of a costs order may be difficult, and the defendant seeks security after the case has been underway. The judgment directs attention to when the defendant knew or should have known the facts supporting the application, what costs were incurred before notice, whether those costs could affect the plaintiff's decision to continue, and the other discretionary matters in r 672 [35]–[49].
The specific chronology matters. Here, the plaintiff had moved overseas, but the defendant did not raise security until March 2008. The judgment also considered the defendant's knowledge of the residence, the available property information, costs incurred, the genuineness of the claim, and the absence of a specific claim that security itself would prejudice Kennedy. It does not establish that overseas residence automatically produces a security order or that a particular amount is appropriate in other cases.
The privilege reasoning may be relevant where pleadings mention legal advice in recounting a communication, but the claim does not rely on the advice's substantive correctness. The judgment's distinction is between relying on the fact that a response was given and relying on the privileged advice itself as support for a legal or factual position [69]–[76].
The pleading ruling may be relevant when the alleged imputation depends on the overall meaning conveyed by a broadcast, rather than a single sentence in isolation. The judge considered the broadcast's sequence and focus, and asked whether a properly directed jury could find the imputation arose [84]–[89].
The provided judgment does not contain decisions issued after 16 June 2008 that apply or interpret Kennedy. It therefore does not establish how later courts treated this decision. The authorities discussed in the judgment are authorities that Dutney J considered when deciding the applications, not evidence of subsequent treatment of Kennedy.
The judgment distinguishes Corby v Channel Seven Sydney Pty Ltd [2008] NSWSC 248 on the question of constructive notice of the plaintiff's overseas address [38]. It also discusses Robson v Robson [2008] QCA 36 for the proposition, quoted in the judgment, that security applications should be made promptly once the defendant knows the relevant facts. For privilege, it refers to Cardinia Pty Ltd v Yu Feng Pty Limited, Lilypond Constructions Pty Ltd v Homann, and Attorney-General for the Northern Territory v Maurice. It contrasts the present pleading with Bayliss v Cassidy (no 2) and Rhyse Holdings Pty Ltd v McLaughlins, where reliance on the content of advice was central, according to Dutney J's footnote [footnotes 7–10].
Those references show the authorities used or distinguished in this decision. They should not be described as later treatment of Kennedy.
The interlocutory judgment left the underlying defamation dispute unresolved. It did not decide whether the broadcasts were defamatory, whether any defence would succeed, whether the imputation was true, or whether Kennedy would receive damages. The judge expressly described the parties' prospects at that stage as speculative [49].
The judgment also left the final form of the security arrangements for further submissions. Kennedy had offered security over two properties held in PDIL's name. The judge stated conditions involving evidence of sufficient equity, an undertaking by PDIL, a restriction on further encumbrances without consent or leave, and a caveat by consent. Otherwise, security was to be cash or a bank guarantee to the registrar's satisfaction. The judgment said further submissions would be heard on the precise form of order.
The reasons do not determine how later courts applied the decision, because later judgments are not included in the material provided. Nor do they determine how the discretionary balance would be struck where the chronology, costs, available assets, or evidence of prejudice differed from this case.
This is general legal information, not legal advice. Zoe can make mistakes. Before acting on this, relying on it, or using any draft, have a qualified Australian lawyer check it.
PROCEDURE - COSTS - SECURITY FOR COSTS - RESIDENCE OUT OF JURISDICTION - where plaintiff started proceedings against defendant for defamation in 2004 - where plaintiff ceased to reside in Australia and took up residence in Singapore in 2005 - where defendant was not aware that plaintiff was no longer resident in Australia until October 2007 - where defendant has no identifiable assets in the jurisdiction - where proceedings for defamation are genuine - whether security for costs should be ordered
PROCEDURE - COSTS - SECURITY FOR COSTS - OTHER REASONS FOR SECURITY - where defendant did not give notice of intention to apply for security for costs until April 2008 - where high proportion of costs incurred by defendant since notice was first given of an intention to apply for security for costs - where the obligation to pay the other party's costs if the action is discontinued becomes a positive obstacle to settlement
PROCEDURE - DISCOVERY AND INTERROGATORIES - DISCOVERY AND INSPECTION OF DOCUMENTS - PRODUCTION AND INSPECTION - GROUNDS FOR RESISTING PRODUCTION - LEGAL PROFESSIONAL PRIVILEGE - WAIVER OF PRIVILEGE - where defendant broadcast stories on "A Current Affair" in relation to the plaintiff and in relation to World Games Inc System, the business run by the plaintiff - where prior to the stories being broadcast the plaintiff sent a letter to defendant concerning the legality of the World Games Inc System - where the letter forms a claim for aggravated and exemplary damages - whether the letter should be disclosed - whether the letter is subject to legal professional privilege - whether legal professional privilege has been waived
PROCEDURE - SUPREME COURT PROCEDURE - QUEENSLAND - PRACTICE UNDER RULES OF COURT - PLEADING - STATEMENT OF CLAIM - where application by defendant to strike out imputation in further amended statement of claim
Uniform Civil Procedure Rules 1999 (Qld) rr 160, 161, 162
Attorney-General for the Northern Territory v Maurice [1986] HCA 80; (1986) 161 CLR 475, cited
Bayliss v Cassidy (no 2) [2000] 1 Qd R 464, distinguished
Cardinia Pty Ltd v Yu Feng Pty Limited [1999] QSC 102, affirmed
Corby v Channel Seven Sydney Pty Ltd [2008] NSWSC 248, distinguished
Emmanuel Management Pty Ltd (in liq) v Foster's Brewing Group Ltd & Ors [2003] QCA 552, cited
Lilypond Constructions Pty Ltd v Homann [2005] QSC 263; [2006] 1 Qd R 411, cited
Programmed Solutions Pty Ltd v Dectar Pty Ltd [2007] QCA 385, affirmed
Robson v Robson [2008] QCA 36, discussed
Rhyse Holdings Pty Ltd & Ors v McLaughlins (A firm) & Anor. [2002] QCA 122, distinguished
Mr P Flanagan S.C. with Ms C Klease for the Applicant
[1] The primary action by the Plaintiff against the Defendant is for damages for defamation.
[2] This application has been brought by the Defendant. The Defendant seeks a number of orders including security for its costs of the action and disclosure of legal opinions referred to in a letter from the Plaintiff's solicitors to the Defendant's solicitors dated 19 March 2004. The other matters in relation to which orders are sought can be identified by the various sub-headings.
[3] The Plaintiff/Respondent ("Mr Kennedy") is a director of Pacific Delta Investments Ltd ("PDIL") which operates an internet based virtual casino under the name, World Games Inc ("WGI").
[4] The Defendant/Applicant is a commercial television network ("Channel 9"). Channel 9 televises a well known nightly programme called "A Current Affair."
[5] On 31 March, 1 April, 29 April and 6 September 2004, the programme included stories relating to WGI and the plaintiff/respondent, Mr Kennedy ("the stories").
[6] On 13 April 2004, Mr Kennedy issued proceedings against Channel 9 alleging that the stories were defamatory of him.
[8] On 18 May 2004 Mr Kennedy foreshadowed a need to amend the statement of claim. In correspondence, Channel 9 objected to the amendments arguing, inter alia, that imputations in paragraphs 9(a) and 9(e) of the proposed amended pleading did not arise from the stories.
[9] Issue was also taken with Mr Kennedy's failure to produce the legal opinions to which reference was made in a letter from Mr Kennedy's solicitors to Channel 9 dated 19 March 2004. The substance of the letter (including the asserted existence of the legal opinions) was set out in paragraph 22 of the statement of claim.
[10] An application for leave to amend was brought before Atkinson J in this court on 20 July 2004. Imputation 9(a) was argued, as was imputation 9(e), although on a slightly different ground to that argued before me and to which I shall shortly come.
[11] Although it had been raised in the correspondence preceding the application for leave to amend, the issue of disclosure of the legal opinions was not argued before Atkinson J.
[12] Mr Kennedy's amended statement of claim was filed on 22 July 2004 and an amended defence was filed on 23 August 2004.
[13] A further amended statement of claim was filed on 15 December 2004. By this time all the relevant stories had been broadcast.
[14] A further amended defence was filed on 24 December 2004. A second further amended defence was filed on 4 January 2005 and an amended reply on 21 January 2005.
[15] Some time during January 2005 Mr Kennedy ceased to reside in Australia and took up residence in Singapore.
[16] Disclosure took place during 2005. On 9 December 2005, in a supplementary list of documents, Mr Kennedy disclosed a register of directors of PDIL which showed his address being in Singapore.
[17] This document was apparently inspected by Channel 9's solicitor on 29 December 2005.
[18] Early in 2006, the solicitors for Channel 9 changed. On 12 April 2006, the new solicitor again inspected the documents including the document noting the change of the Plaintiff's address.
[19] The action then appears to have gone into abeyance until revived by a letter from the Case Flow Manager of this court in about June 2007.
[20] In November 2006, Channel 9 again changed solicitors and the present solicitors began representing that party.
[21] On 18 June 2007, Mr Kennedy's solicitors wrote to Channel 9's solicitors informing them of the letter from the Case Flow Manager and suggested a timetable to bring the matter to trial. Despite suggesting a timetable which would have resulted in the action being ready for trial in September 2007, the next active step appears to have been the delivery of a request for further and better particulars of Mr Kennedy's further amended statement of claim of December 2004 and the amended reply of 21 January 2005. This was sent on 21 September 2007.
[22] The particulars requested were supplied on 26 October 2007.
[23] On 18 December 2007 Channel 9 filed another defence seeking to justify the defamation together with lengthy set of particulars of truth.
[24] In the meantime, there had been exchanges of correspondence between the parties in which disclosure was pursued and the issue of the legal opinions referred to above was re-agitated.
[25] The particulars of the statement of claim provided on 26 October 2007 disclosed that Mr Kennedy had left Australia in January 2005 and had thereafter been a resident of Singapore.
[26] In a letter dated 4 March 2008, Channel 9's solicitors first raised the issue of security for costs. The copy of the letter exhibited to the affidavit of the solicitor for the Defendant, Mr Beattie, does not disclose what amount was sought for security, whether such amount was realistic and whether it bore any relationship to the amount now claimed. It is thus not possible to say whether demand for security was realistic.
[27] Property searches conducted by Channel 9's solicitors in were carried out in May 2006. These searches disclosed four properties in Mr Kennedy's name. Subsequent inquiries revealed that two of those properties were in fact registered in the name of a different person with the same name as Mr Kennedy.
[28] The two properties that were shown as being registered in Mr Kennedy's name in May 2006 have both been disposed of. A property at Bonogin registered in Mr Kennedy's name solely was sold for $385,000 on 17 July 2006. The other property was located on Russell Island. Mr Kennedy was registered as a joint tenant with Leigh Rosemary Kennedy. The Russell Island property was sold in December 2007 for $45,000.
[29] Mr Beattie deposes that he had conducted property searches in relation to Mr Kennedy as early as 3 September 2007. He was thus aware that the Bonogin property had been sold before he received the particulars confirming Mr Kennedy's residence in Singapore.
[30] Channel 9's pleading filed on 24 August 2004 does not admit Mr Kennedy's allegation that he was resident in Queensland, residing at Robina on the basis of electoral roll and White Pages searches. Presumably he was not registered to vote and did not have a listed telephone number.
[31] Costs incurred by Channel 9 from the commencement of the proceedings to 11 April 2008 are estimated at $396,984. Mr Bloom, a legal costs assessor, estimates costs from 11 April 2008 to the first day of trial at $411,653.
[32] On 27 August 2007, the Deputy Commissioner of Taxation commenced proceedings against Mr Kennedy claiming an amount of $4,275,025.52 for tax, penalties and interest in relation to the 2004 financial year. No defence has been filed. It is not disclosed whether those proceedings have been served.
[33] The principles relating to whether or not security for costs will be ordered are not controversial.
[34] Rule 670 of the Uniform Civil Procedure Rules 1999 (Qld) ("UCPR") provides a source of power. Rule 671 of the UCPR sets out the circumstances in which security can be ordered. Rule 672 sets out a non exhaustive list of matters that can be taken into account when such an order is being considered.
[35] Relevantly rule 672 provides;
"In deciding whether to make an order, the court may have regard to any of the following matters -
(a) the means of those standing behind the proceeding;
(b) the prospects of success or merits of the proceeding;
(d) for rule 671(a) - the impecuniosity of a corporation;
(e) whether the plaintiff's impecuniosity is attributable to the defendant's conduct;
(f) whether the plaintiff is effectively in the position of a defendant;
(g) whether an order for security for costs would be oppressive;
(h) whether an order for security for costs would stifle the proceeding;
(i) whether the proceeding involves a matter of public importance;
(j) whether there has been an admission or payment into court;
(k) whether delay by the plaintiff in starting the proceeding has prejudiced the defendant;
(l) whether an order for costs made against the plaintiff would be enforceable within the jurisdiction;
[36] The jurisdiction to order security for costs is enlivened by Mr Kennedy being ordinarily resident outside Australia.
[37] In this case it seems to me that the critical features bearing on the jurisdiction are the lateness of the application and the difficulties likely to be experienced by Channel 9 in enforcing an order for costs against Mr Kennedy.
There is some debate about the delay in this case. The jurisdiction to award security for costs did not arise until Mr Kennedy ceased to reside in Australia. Senior Counsel for Mr Kennedy submitted that the relevant delay was from December 2005 when it should have been apparent to Channel 9's solicitors that Mr Kennedy was resident offshore.
Senior Counsel for Channel 9 submitted that the delay should only be taken as being since October 2007.
Having regard to the fact that until October 2007 Mr Kennedy pleaded that his place of residence was Robina on the Gold Coast, it seems to me to be placing too heavy a burden on Channel 9's solicitors to expect them to have appreciated that a document disclosed two years earlier for another purpose should have been recognised as showing that Mr Kennedy had ceased to reside in Australia. This is a different case from Corby v Channel Seven Sydney Pty Ltd[2] where constructive notice of the plaintiff's address overseas was found. I am therefore satisfied that until October 2007, the fact that Mr Kennedy was resident in a foreign country was not known to Channel 9.
Upon becoming aware of Mr Kennedy's foreign domicile, Channel 9's solicitors took no immediate action.
Mr Beattie explains in his first affidavit that he believed Mr Kennedy owned property in Queensland against which his client could enforce any costs order.
This belief does not, however, withstand scrutiny. When it was decided to make the application it was a simple matter for Mr Beattie to ascertain that two of the four properties to which he pointed did not belong to this Mr Kennedy. The third was sold more than a year before the question of security arose.
The remaining property was on Russell Island and was one in which Mr Kennedy held his interest as tenant in common. Had thought been given to the question of security for costs, it could not have been believed, even for a moment, that this property would be sufficient security even for the costs incurred prior to the present solicitors commencing to act. As appears from the above chronology, between 26 November 2006 when the present solicitors took over and 26 October 2007, the only step in the proceedings was a request for further and better particulars. It seems to me to follow that almost all of the $242,208 in costs and disbursements incurred by Channel 9 in the November 2006 to April 2008 period must have been incurred in the period between 26 October 2007 and 4 March 2008 when notice was first given of an intention to apply for security for costs.
While Mr Kennedy does not assert an inability to provide security for Channel 9's costs, the rapid escalation of costs between 26 October 2007 and 4 March 2008 cannot be said to be without prejudicial effect on him. The assessment of whether the possible benefits of the action justify the risk associated with continuing to pursue it is directly affected by the amount already risked at the time the assessment is made. There can be a point in any large litigation where the necessity for a plaintiff to protect an existing exposure to the costs of the other side becomes at least as important as the benefit the plaintiff hopes to achieve by continuing the litigation. In other words, at a certain point, the obligation to pay the other party's costs if the action is discontinued becomes a positive obstacle to settlement. This may well be the type of prejudice McMeekin J had in mind when in Robson v Robson [2008] QCA 36 he said:
"The long standing rule in seeking orders of this type is that they be made promptly once the defendant becomes aware of the facts on which the application is based. If it is not made promptly, it is almost inevitable that there will be some prejudice to the respondent."[3]
[47] The point at which costs drive the action in any individual case depends on many factors; but awards of damages for defamation in Queensland have not usually been particularly generous, particularly when compared with some other jurisdictions.
[48] Against this, there is no doubt Channel 9 will experience difficulty in enforcing any costs order against Mr Kennedy. He has no identifiable assets in Queensland although a company incorporated in the British Virgin Islands and which he appears to control owns property in Queensland. An order for costs against Mr Kennedy would not, however, allow Channel 9 direct access to that property.
[49] Channel 9 does have the capacity to pursue any orders against Mr Kennedy despite difficulties. In Corby v Channel Seven Sydney Pty Limited[4] the strong financial position of the defendant was an important factor in discounting the difficulty of enforcing a costs order in a foreign country. In that case, however, the impecuniosity of the plaintiff and her inability to provide security at a late stage of the proceedings was considered important.
It is possible to dispose of the other discretionary factors quickly.
Mr Kennedy has not disclosed his financial position. At least at one point he appeared to be a man of considerable substance. More recently he has been sued by the Deputy Commissioner of Taxation for a substantial amount. Whether this signifies a change in his fortunes or merely a dispute with the Australian Taxation Office is unclear. On the other hand, Channel 9 appears to be a substantial entity.
The prospects of success of either party at this stage of the proceedings are purely speculative. The publications made against Mr Kennedy appear to be prima facie defamatory. On the other hand, they appear, prima facie, to be in the public interest if true. Whether they were made on an occasion of qualified protection is a matter for evidence.
The substantial part of this action will be carried by Channel 9. A plaintiff in a defamation action rarely is required to do more than prove publication and adduce evidence of reputation. The claim for economic loss has been abandoned. Overwhelmingly, the costs of the action will be related to proof of the defence.
The action does not appear to concern a matter of public importance. It is purely private litigation between private litigants each pursuing private interests.
The other matters listed in Rule 672 have either been dealt with or are irrelevant in the circumstances of this case.
Balancing the competing factors in this case, I am satisfied that an order for security for costs should be made. The absence of any submission of specific prejudice on the part of Mr Kennedy ultimately tips the balance in favour of such an order.
Despite deciding to make such an order, the delay in giving notice of its intention to apply for the order by Channel 9 is relevant to the amount which should be ordered. It seems to me that Channel 9 should not be entitled to security for costs incurred by it prior to notice being given.
Until 4 March 2008, Channel 9 permitted costs to be incurred without Mr Kennedy having the early opportunity to consider whether the risk of such costs was justified on the basis I have discussed.
For the future, Channel 9's costs have been estimated by a legal costs assessor, Mr Bloom. Mr Bloom estimates those costs in the amount $411,653 up to and including the first day of the trial.
In this case the costs are estimated on what seems to me to be a generous approach. The requirement that Senior Counsel spend three full days attending to case management mentions appears excessive. Likewise, in a case where the evidence of all witnesses will be given orally, I can see no justification for having counsel settle the witness statements in addition to normal pre-trial conferences.
A significant part of the estimated costs relates to the Plaintiff's claim for economic loss which has now been abandoned.
Another large component of the costs relates to what appear to be gratuitous amendment to the Defendants pleadings. By gratuitous, I mean amendments made at the discretion of the Defendant and not as a result of any action on the part of the Plaintiff.
It seems to me that security should not be required for a mediation as well as for a subsequent trial. If the parties elect to mediate, it should not be assumed that the mediation will be unsuccessful. In this case, there is no evidence either party has sought or would agree to a mediation. If a mediation were likely, one approach might be to award security up to the conclusion of the mediation with liberty to apply for an increase if the mediation was unsuccessful. That is not appropriate in this case.
Discounting with these factors in mind as well as the factors to which I referred in Emmanuel, I will order security in the sum of $150,000 for costs from 11 April 2008 only.
Mr Kennedy has offered security over two properties held in the name of PDIL on the Gold Coast. I would accept this as adequate providing that the Plaintiff, can produce and/or provide the following;
1. evidence that PDIL's equity in the two properties referred to above is at least equal to the amount of $150,000 and;
2. a document executed by PDIL undertaking to be responsible for the Defendant's costs of the action up to the amount of $150,000 and;
3. an undertaking not to further encumber the two properties without the consent of the Defendant or the leave of the Court and;
4. a caveat by consent to secure the Defendant's contingent interest in the properties.
Otherwise security should be provided in the form of cash or bank guarantee to the satisfaction of the registrar. I will hear further submissions on the precise form of order.
[68] The next contested issue concerns the privilege attaching to the legal advice referred to in the letter of 19 March 2004 sent by the Plaintiff to the Defendant.
[69] The letter of 19 March 2004, was sent prior to the first story of 31 March 2004 and with a view to discouraging its broadcast. Relevantly, it read as follows:
"We also urge you to allow our clients to provide considered answers to any criticisms that you intend to raise and so we ask, again, for a list of questions to be sent to us by email urgently.
In the meantime, in relation to the queries you very briefly raised yesterday, we are instructed that:
1. You asked our client Mr Kennedy why he believes the World Games Inc system is not a pyramid scheme when you assert (incorrectly, we might add) that the Norwegian, Canadian and Australian governments think it is. First, PDIL does not on our instructions conduct any business in Australia at all so the Australian position is irrelevant. However, to our and our client's knowledge, there has been no finding at all anywhere in the world (including in Australia) that the World Games Inc System is a 'pyramid scheme' and the legal advices our client has obtained in the various jurisdictions in which it operates (including Norway and Canada) do not conclude that the World Games Inc System is a pyramid scheme." (Italics added)
[70] Notwithstanding the written submissions of Senior Counsel for Mr Kennedy, I have no doubt that the italicised passage means and was intended to mean that Mr Kennedy had obtained legal advice concerning the legality of the World Games Inc System and that that advice concluded that the system was not an unlawful pyramid scheme.
[71] Paragraphs 22 to 25 of the further amended statement of claim plead, relevantly:
22 By his solicitor's letter dated 19 March 2004 the Plaintiff informed the Defendant:
(d) that legal advice obtained in various jurisdictions in which WGI operated (including Norway and Canada) did not conclude that WGI is a pyramid system ...
23 the Defendant omitted to include in the 31 March broadcast each or any of the matters referred to in the previous paragraph.
24 The Defendant's omission to refer to these matters was unreasonable.
25 The Defendant's omission to refer to these matters was deliberate and suggested that the Plaintiff's only response to the allegations made in the broadcast were those depicted in the broadcast, and that the Plaintiff unreasonably refused to respond to those allegations."
[72] These paragraphs then found a claim for aggravated and exemplary damages.
[73] Channel 9's solicitors sought production of the legal advices referred to pursuant to rule 222 of the UCPR.
[74] Rule 222 entitles a party to request production of a document mentioned in a pleading.
[75] In this case, it seems to me that the document relied on by Mr Kennedy is the letter. The reference to the legal advice is only by way of setting out the contents of the letter. Whether or not such legal advice exists is irrelevant to the allegation and to the paragraphs which follow. Mr Kennedy's case as pleaded is that despite being told certain things in the letter, Channel 9 chose not to include those things in the stories. Even though Channel 9 had no means of knowing whether or not the assertions made had any factual basis, Channel 9's failure to include those assertions in the stories is alleged to justify an award of aggravated or exemplary damages.
[76] Looked at in this way, the existence or content of the advice is not in issue. The reference to it is incidental to setting out the terms of Mr Kennedy's response to the anticipated stories. Put more succinctly, the actual advice is irrelevant to the action. All that is relied on is the failure to publish the assertion of legal advice. Mr Kennedy does not claim by way of pleading that he in fact had such legal advice. While this might provide a flimsy foundation for the claim for aggravated or exemplary damages and a jury might infer from the failure to produce the legal opinions that they do not exist, that is the way the case is constructed. Refusal to order disclosure of the document on this basis is consistent with the remarks of Helman J in Cardinia Pty Ltd v Yu Feng Pty Limited.[7]
Production might also be refused on the grounds that the advice referred to is not sufficiently specific.[8]
Having regard to all the circumstances, I regard the power to order production as being subject to a residual discretion which in this case, should be exercised against production unless the reference to the advice is sufficient to amount to a waiver of legal professional privilege. Where a document is subject to legal professional privilege, such privilege ought not to be set aside unless the use to which the document is put renders the continued maintenance of the privilege unfair to the other party.[9]
The question is thus reduced to whether or not the reference to the undisclosed legal opinions in the letter and the subsequent pleading of the letter constitutes a waiver of privilege.
In my view there is nothing inconsistent between relying on the failure to publish all or part of the contents of a letter in response to the allegations to be made in the first story and the reference to legal advice as contained in the letter of 19 March 2004. Mr Kennedy is not seeking to rely on the advice as justification of his position. Rather he relies on selective publication of his responses to the allegations as a justification for aggravated and exemplary damages. In particular, he complains that his unprepared and no doubt unhelpful responses when confronted unannounced by the journalist were published while the more considered responses of his solicitor were not. I do not see the allegations in the parts of the further amended statement of claim to which I have referred going further than that.[10]
In those circumstances I am not satisfied that the mere reference to the advice is sufficient to constitute a waiver of privilege and disclosure of any legal advice will be refused.
[82] Channel 9 seeks to strike out the imputation pleaded in paragraph 9(e) of the further amended statement of claim. This imputation is in the following terms:
"...the Plaintiff is the top member of an illegal pyramid scheme"
[83] Channel 9 contends that by reason of the inclusion of the word, "the" rather than, for example "a", it is not open to the jury to conclude that the imputation arises.
[84] I disagree. In the course of the stories the following appears
Ray Martin: "...World Games is a scam as Paul Barry reveals. It is the promoters who make millions at other people's expense."
[85] This is immediately followed by footage of Mr Kennedy being approached by the journalist with a view to questioning him concerning the affairs of World Games Inc. After an exchange this follows:
Paul Barry: "It's no wonder Greg Kennedy is embarrassed. He's got rich by selling a dream to thousands of suckers around the world ..."
[86] Later this exchange takes place between the journalist and Richard Lead, a person identified as an expert on pyramid selling:
Paul Barry: "So, who makes money out of these schemes?"
Richard Lead: "People who start it, the promoters because they're at the top of the pyramid. They can make a very large amount of money. This is why the schemes are illegal."
[87] There is then further footage of Mr Kennedy promoting WGI and the wealth to be made from it.
[88] Then there is reference to the top people behind WGI being Australians followed a little later by a reference to the Canadian police trying to apprehend a person described as the "head of World Games worldwide operations." The person referred to is a MR George. In the next sentence Mr Kennedy is described as Mr George's boss.
[89] Even allowing for the transitory nature of television broadcasts and the lack of attention to detail of most viewers, it is clear that the focus of the programme is on Mr Kennedy and that he is generally portrayed as the person ultimately behind the operation. In those circumstances I am satisfied that a properly directed jury may conclude that the impugned imputation arose from the programme.
[90] Mr Kennedy abandoned the economic loss claim and I order that paragraphs 28, 44 and 64 of the further amended statement of claim be struck out.
[91] Channel 9 accepts that imputation 9(a) was the subject of express argument before Atkinson J in earlier interlocutory proceedings and as a result no longer seeks to strike this imputation out.
[92] Disclosure is sought of a number of affidavits filed in proceedings between Worldplay Services Pty Ltd and Quentin George (9981/03). Those affidavits have been sealed by order of this court. To determine relevance I have looked at the affidavits. The two affidavits of Mr Kennedy sworn respectively on 3 November 2003 and 4 November 2003 (documents 2 and 3 on file 9981/03) may be relevant. The affidavit of Mr Coulthart sworn 4 November 2003 (document 5) may also be relevant.
[93] Mr Kennedy claims not to have copies of these affidavits but has no objection to the copies on the court's file being made available for copying and inspection.
[94] Accordingly, I order that Messrs Thynne & Macartney be at liberty to peruse and make a copy of those affidavits subject to paying the normal fees charged by the registry.
[95] The final matter concerns disclosure of some material the subject of Federal Court proceedings in 2004 and itemised in paragraph 15 of the application. A request has been made for copies of the material from the Federal Court. Mr Kennedy's solicitors have agreed to provide the material to Channel 9's solicitors once it is received from the Federal Court. It is unnecessary in those circumstances for any order to be made.
[96] I will hear argument in relation to the final form of the orders and costs.
[1] I do not resile from my remarks in Programmed Solutions Pty Ltd v Dectar Pty Ltd [2007] QCA 385
[4] [2008] NSWSC 245 at [39].
[8] See Lilypond Constructions Pty Ltd v Homann [2005] QSC 263; [2006] 1 Qd R 411 at 414 (para [14]) per Mackenzie J.
[9] Attorney-General for the Northern Territory v Maurice [1986] HCA 80; (1986) 161 CLR 475 at 492-493 (per Deane
[10] Cf Bayliss v Cassidy (no 2) [2000] 1 Qd R 464; Rhyse Holdings Pty Ltd & Ors v McLaughlins (A
firm) & Anor. [2002] QCA 122 where reliance on the content of the advice was central to the case
Kennedy
Nine Network Australia P/L
(1986) 161 CLR 475
The plaintiff was ordered to provide $150,000 security for the defendant’s costs; the defendant’s solicitors could inspect and copy three specified affidavits on payment of registry fees; paragraphs 28, 44 and 64 of the further amended statement of claim were struck out; the applications were otherwise dismissed; each party’s costs were costs in the proceedings; and the matter was placed on the Supervised Case List.