Lahoud v Hooper

Supreme Court of NSW|2015-09-23|Before: Adamson J, Levine J

Solicitors: McLachlan Thorpe Partners (Plaintiff) Minter Ellison (Defendant) File Number(s): 2015/241163

Introduction

The plaintiff, Victor Lahoud, seeks, by summons filed on 18 August 2015, an order for preliminary discovery to obtain the name of the source of a communication to the defendant, John Hooper, an elected councillor of the Willoughby City Council (the Council).
These are the second set of proceedings brought by the plaintiff against the defendant for such an order. In both the first, and the present, proceedings Mr Hmelnitsky SC appeared on behalf of the plaintiff and Mr Elliott appeared on behalf of the defendant.
In the first proceedings, which were commenced by summons filed on 22 January 2015, I found that: 1. the plaintiff was unable to ascertain the identity of the source; 2. the plaintiff had failed to make reasonable enquiries to ascertain the identity of the source; 3. the plaintiff genuinely proposes to bring defamation proceedings against the person concerned (the source) and has a bona fide desire to do so.
The defendant did not ask me to reconsider findings (1) or (3) in the present proceedings.
I dismissed the first proceedings on the basis that the plaintiff had not shown that he had made reasonable enquiries to ascertain the name of the source: Lahoud v Hooper [2015] NSWSC 1026. Accordingly, I did not proceed to consider whether an order for preliminary discovery ought be made in the exercise of my discretion, since the basis for its making had not been established.

The facts

It was common ground that I should proceed to determine the application on the basis of the factual background, including those matters established at the hearing of the first proceedings, together with additional matters proved by evidence filed in these proceedings. The factual background set out below is, in large measure, replicated from my judgment the first proceedings.

Background

The plaintiff is a developer. He conducts his business through various companies, including Castle Constructions Pty Ltd (Castle Constructions) and Castlenorth Pty Ltd (Castlenorth), of which he is sole director. In these circumstances I shall refer to the plaintiff in his various capacities as developer, unit holder and occupier, although it is his companies which relevantly perform these roles or occupy these positions.
Some years ago he developed a multi-storeyed building on Sailors Bay Road, Northbridge (Castle Garden) that contains both residential and commercial units. The six commercial units are located on the ground floor. There are 32 residential units, which are located on the four floors above. There is a separate lift to the residential units, which can only be accessed with a pass.
Castle Constructions owns seven residential units in Castle Garden. The plaintiff used to live in one of the residential units but moved out in early 2014. Since that time, Castle Constructions has leased out the residential units it owns in the building. The plaintiff's younger brother lives in one of these units.
Castle Constructions also owns four commercial units in the building, including lots 34 and 38. It uses one of the commercial units, 35, as its registered office. The plaintiff, his wife and, presently, an architect work there.
The Council owns one of the commercial units in Castle Garden, having accepted title in lieu of contributions under s 94 of the Environmental Planning and Assessment Act 1979 (NSW) (EPAA). The Council's unit, which may only be used for community purposes, is currently vacant.

The Anytime Gym premises

On 3 October 2012 Castle Constructions lodged a development application for Lots 34 and 38 (the Property) to be used as a 24-hour gym. Before the application was lodged a group of residents at Castle Garden objected to the Property being used as a gym and lobbied other residents to persuade them to oppose it. However, the Council's planning officers recommended that the development application be approved.
On 17 December 2012 the Council held a meeting at which the development application was considered. Councillor Hooper, the defendant, moved a motion, which was carried, that the development application be refused.
The plaintiff challenged the refusal in the Land and Environment Court. On 15 February 2013 that Court approved the development application, subject to a condition which permitted the franchisees to operate their gym 24-hours a day on a trial basis for 12 months. It was a term of the approval that, within one month of the expiry of the 12-month period, the plaintiff would lodge a s 96 (of the EPAA) application (for modification of development consent) in respect of the gym to permit it to operate on a 24-hour basis. Following the approval, Castle Constructions leased the Property to franchisees, Zed Zeynoun and Zaher Hamdan, who conduct a gym under the brand "Anytime Fitness".
As at February 2013 the plaintiff lived in Castle Garden with his family. On the afternoon of 15 February 2013 (the day the decision of the Land and Environment Court was handed down), a poster was put up in the lift of the building, which read: ALL THANKS TO VICTOR LAHOUD THE SELFISH BULLY WHO COULDN'T CARE LESS ABOUT THE CASTLE GARDEN RESIDENTS
The plaintiff removed the poster.
The s 96 application, which was required to be advertised, was lodged on 19 May 2014. During the notification period (23 May 2014 to 6 June 2014) the plaintiff did not become aware, through inspecting the Council's file or otherwise, of any opposition to the application. However, in early July 2014 he became aware of a submission lodged by a Mary Johnstone who opposed the application. It is not necessary to set out the terms of the plaintiff's response to the Council about the objection. It is sufficient to say that he was trenchant in his criticism of Ms Johnstone and accused her, among other things, of making "wild and unfounded allegations".
On about 9 September 2014 the plaintiff received a letter from the Council enclosing a report prepared by two Council employees, Ms Leung and Mr Arnott (who together constituted the Ward Inspection Committee), which notified the plaintiff of his right, and the right of the Ward Councillors, to request a meeting before the decision was made whether to approve the plaintiff's s 96 application. The authors of the report made mention of the three submissions which had been made by persons occupying units in Castle Garden and summarised their objections. The Ward Inspection Committee recommended that the s 96 application be approved.
On 24 October 2014 a meeting was held on the gym premises at which the two members of the Ward Committee, Councillors Hooper and Hill, who were responsible for deciding whether to grant consent to the s 96 application, were present. The gym manager, Daniel Carr, who was employed by the franchisees, was available to answer questions. The plaintiff recognised at least some of the residents from Castle Garden who were among those dozen or more people who attended the meeting.
At the conclusion of the meeting on 24 October 2014, the Ward Committee announced that it did not propose to approve the consent. The assembled gathering was told that it would be up to Greg Woodhams, the Environmental Services Director, to decide whether the application would be considered by a full Council meeting. If he concurred with the decision of the Ward Councillors, the decision would stand; if not, the matter would be referred for a full Council meeting the following Monday.
Later that afternoon, Ms Leung rang the plaintiff to tell him that Mr Woodhams, who was also the Council's Acting General Manager, disagreed with the decision of the Ward Councillors and that, as a consequence, the application would be referred to a full Council meeting on the following Monday night. The plaintiff accepted that, at this time, the outcome of the s 96 application was "quite uncertain".

The email of 25 October 2014

On 25 October 2014, the day following the meeting, Councillor Hooper sent an email to Mr Woodhams, which was copied to Mr Arnott and all elected Council members. The email said: "Dear AGM [Acting General Manager], Regarding the unanimous vote by Councillors to refuse the 24 hour gym, it has been reported that the repercussions have started. A fire hose was turned on early this morning and flooded the 2nd and 1st floors. Now the lift has been interfered with to disrupt the residents - many of whom are aged and rely on the lift. Would you please have this investigated by our Rangers as Council is a unit owner and this 24 hour gym S96 is coming before Council this Monday night."
One of the recipients responded to the others by saying: "I hope Councillor Hooper has hard evidence to support his statement before making such accusations against a local business."
In cross-examination the plaintiff accepted that it would be "absurd" to suggest that he had acted in the manner referred to in the email, not only because Castle Constructions owned several units in Castle Garden but also because he would not wish to spark controversy in the building when his application was still pending.
On 26 October 2014 the plaintiff obtained a copy of the email. He instructed his solicitors to write to Councillor Hooper, which they did on 27 October 2014, in terms which included the following: ". . . It is our view that the email contains an imputation that our clients were involved in the incidents which are alleged to have occurred on Saturday. Any such imputation is denied. Your email implies that retributive behaviour has occurred because of the meeting of Ward Councillors on Friday which refused the application of our clients for the 24 hour gym. Please produce to us, as a matter of urgency, the evidence you relied upon to make the allegations contained in your email. You might also want to seek advice about whether this letter raises any non-pecuniary interests under clause 63 of the Willoughby City Council Code of Meeting Practice."
Before the Council meeting on Monday 27 October 2014, Councillor Hooper asked the plaintiff how he obtained a copy of the email. He told him that he obtained it from a few different sources. When Councillor Hooper remarked that the plaintiff was not named in the email, the plaintiff said: "Come on. Any person reading that email will know it is referring to an applicant who is angry about the refusal of the application and that is me."
On the evening of 27 October 2014 the full Council adjourned consideration of the application with respect to the Property to its next meeting on 10 November 2014.
On 3 November 2014 the plaintiff's solicitors wrote to Councillor Hooper and alleged that the email was "grossly defamatory" of the plaintiff and constituted an injurious falsehood with respect to Castle Constructions. The solicitors listed seven imputations which they alleged were contained within the email, including that the plaintiff engaged in "criminal and spiteful behavior" by maliciously damaging the first and second floors of the building because of the Council's decision to refuse his application. They classified their letter as a "concerns notice" pursuant to s 14 of the Defamation Act 2005 (NSW) and invited Councillor Hooper to make amends pursuant to s 15 of the Act. The letter also said: "The allegations in the email were made in circumstances where the clear inference is that they were designed to influence the voting of Councillors on the Application, which, if defeated, would have serious consequences for our client and the tenant."
Councillor Hooper responded by email of the same day. He rejected the suggestion that the email made any imputations against the plaintiff. He raised his concern that the email had been disseminated beyond its original addressees and sought information as to the means by which the plaintiff had obtained access to the email. He also raised the wider issue of the Council's responsibility to residents in the following terms: "Council and Police are very aware that there are issues of concern amongst the residents/occupiers as to ongoing reports of malicious damage. When complaints are made to Council it is Council's duty to have them investigated. In this respect it is common for complainants to contact, not just one Councillor but often all councillors individually and when one Councillor requests an investigation it is necessary to inform the Councillors that the matter is in hand and a request has been made for an investigation. As I did."
By email dated 4 November 2014 Councillor Hooper answered each allegation contained in the plaintiff's solicitor's letter and said, in respect of each, that he neither "made nor makes such an allegation" against the plaintiff.
On 10 November 2014 the Council approved the plaintiff's application in respect of the Property, subject to conditions, against which the plaintiff filed an appeal in the Land and Environment Court, which, as at 10 April 2015, when the plaintiff's affidavit read in the first proceedings was sworn, had not been determined.
On 15 December 2014 the plaintiff's solicitors wrote to Councillor Hooper to ask who made the report to him concerning the matters in his email and request copies of any such communications that were in writing.

The development at 147 Sailors Bay Road

In late 2014 the plaintiff, through another of his companies, lodged a development application in respect of property that included 147 Sailors Bay Road, being the land next to Castle Garden. The development application proposed demolition of existing structures and the construction of a new five-storey, 23-unit mixed use residential / commercial building.

The first proceedings

The plaintiff commenced the first proceedings by filing a summons for preliminary discovery on 22 January 2015. Soon after the first proceedings were commenced, the plaintiff instructed his solicitors to write to Councillor Hooper and inform him that, having regard to the commencement of these proceedings, he ought not have any involvement in matters to be considered by the Council that concerned the plaintiff, including the outstanding development application for 147 Sailors Bay Road. At the time the plaintiff instructed his solicitors to send the letter, he knew that Councillor Hooper had been opposed to the development at Castle Garden and wanted him to be excluded from the decision whether to grant the development application in respect of 147 Sailors Bay Road.
As it happened, in the week prior to the hearing of the first proceedings, Councillor Hill informed the plaintiff that the development application for 147 Sailors Bay Road had been approved.

Events subsequent to the publication of reasons in the first proceedings

Since the publication of the reasons for decision in the first proceedings on 29 July 2015, the plaintiff has made further inquiries to identify the source. In the course of cross-examination in the first proceedings the plaintiff identified three persons he suspected. Since that time, his solicitors have written to those three persons and the plaintiff himself has contacted them. Inquiries were also made of the manager of the gym, the Chairperson of the Owners' Corporation and the General Manager of the Council. The plaintiff also placed a notice on the noticeboard in the foyer of Castle Garden. None of these inquiries has been to any avail.
The plaintiff has also applied to the Council and the New South Wales Police pursuant to Government Information (Public Access) Act 2009 (NSW) (the GIPA Act), which provides for access to "government information" which is defined as meaning "information contained in a record held by an agency". The Council responded that it did not hold the information; in other words, the Council has no records of the identity of the source. The Police refused to reveal any information, on the basis of the protection afforded to police informants. It appears to be accepted that it was the Council which informed the Police, rather than the source, whose sole relevant communication appears to have been with Councillor Hooper.

NSW Government's Water Wise Rules

As of June 2009 the NSW Government's Water Wise Rules include the following rule: "Fire hoses may be used for fire fighting activities only."

The Council's Privacy Management Plan

The Council was required by the Privacy and Personal Information Protection Act 1998 (NSW) (PPIPA) to prepare a Privacy Management Plan. On 22 August 2005 the Council adopted such a plan (the Plan). It was amended and ratified, most recently for present purposes, on 25 August 2014. It defined "personal information" by reference to s 4 of PPIPIA, which includes information about a person whose identity is apparent or can be obtained. Clause 1.4 of the Plan confirmed that the Council held personal information about customers, ratepayers and residents, including names and addresses.
Clause 3.11 of the Plan sets out s 18 of PPIPA, including the following prohibition in s 18(1) (which is subject to exceptions which are presently irrelevant): "18 Limits on disclosure of personal information (1) A public sector agency that holds personal information must not disclose the information to a person (other than the individual to whom the information relates) or other body, whether or not such other person or body is a public sector agency, unless: . . ."
It was not suggested that the Plan permitted Councillor Hooper to disclose the identity of the source to the plaintiff.

Relevant rules

Rule 5.2 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), relevantly provides: 5.2 Discovery to ascertain prospective defendant's identity or whereabouts (1) This rule applies if it appears to the court that: (a) the applicant, having made reasonable inquiries, is unable to sufficiently ascertain the identity or whereabouts of a person (the person concerned) for the purpose of commencing proceedings against the person, and (b) some person other than the applicant (the other person) may have information, or may have or have had possession of a document or thing, that tends to assist in ascertaining the identity or whereabouts of the person concerned. (2) The court may make either or both of the following orders against the other person: (a) an order that the other person attend the court to be examined as to the identity or whereabouts of the person concerned, (b) an order that the other person must give discovery to the applicant of all documents that are or have been in the other person's possession and that relate to the identity or whereabouts of the person concerned.

The issue for determination

It is common ground, and I am satisfied on the basis of the evidence adduced, that: 1. The plaintiff, having made reasonable inquiries, is unable to sufficiently ascertain the identity of the source for the purpose of commencing proceedings against the person concerned; and 2. The defendant has information that tends to assist in ascertaining the identity of the source.
Accordingly, the issue for determination is whether, in the exercise of my discretion, I ought make an order requiring the defendant to disclose the information that tends to assist in ascertaining the identity of the source.

The parties' submissions

Although I did not determine the question of discretion in the first proceedings, I set out the parties' submissions in my reasons for decision. To the extent that such submissions remain relevant they are reproduced below, as amended to reflect any elaboration or any further submissions made at the hearing of the present proceedings.

The plaintiff's submissions

Mr Hmelnitsky submitted that the following matters (as developed in more detail below) were relevant to the interests of justice and accordingly to the exercise of my discretion: 1. the existence of a prima facie case in defamation against the source; 2. the seriousness of the imputations in the email (which could be inferred to reflect the seriousness of the communication by the source) and the potential detriment that could be caused to the plaintiff by such communications; 3. the availability of the defence of qualified privilege to protect communications, which were not actuated by malice, made on an occasion of qualified privilege; 4. any matters of public policy germane to retaining the confidentiality of the source of the communication to Councillor Hooper that was passed on in the email and the extent to which the contents of the email fell within the ambit of the public policy; and 5. the principle that matters of public policy, such as the newspaper rule and the desirability of free flow of information to public bodies such as Councils ought not be used as a cloak for defamation that could cause serious detriment to an individual.
Mr Hmelnitsky submitted that, although the plaintiff did not need to establish a prima facie case in defamation against the person concerned (Stewart v Miller [1979] 2 NSWLR 128 at 139-140 per Sheppard J), the existence of such a case was relevant to the exercise of this Court's discretion whether to grant the relief sought in the summons: Roads and Traffic Authority of New South Wales v Australian National Car Parks [2007] NSWCA 114 at [13] per Mason P.
He contended that the cause of action would be complete upon proof that the person concerned published what became the substance of the email, as long as Councillor Hooper knew (as he must have done) that the plaintiff was the natural person behind the s 96 application in respect of the Property and that the application had been rejected by the Ward Committee. He relied on the principle that it is not necessary for a publication to name the plaintiff as long as it could be said to be of and concerning the plaintiff: Steele v Mirror Newspapers [1974] 2 NSWLR 348 at 371 per Samuels JA. He contended that this question is pre-eminently a jury question.
The plaintiff relied on the following circumstances: that the poster in the lift identified him as the natural person behind the application; he was the sole director of Castle Construction; he was the real proponent of the s 96 application; and, as an owner of residential units in the building, he had access to the first and second floors.
Mr Hmelnitsky also submitted that I could more readily draw inferences against the defendant as he was available to give evidence and had chosen not to do so: Jones v Dunkel (1959) 101 CLR 298.
It was also submitted on behalf of the plaintiff that it could not be inferred that there was no forensic disadvantage to him if he were only able to sue the defendant but not the source, since the defence of qualified privilege might defeat his claim against the defendant, but would not necessarily defeat a claim against the source. Further, Mr Hmelnitsky contended that the plaintiff had a real interest in vindicating his reputation by "nailing the lie" against the actual source of the defamation.
The plaintiff accepted that it was reasonable to infer that what Councillor Hooper was told was broadly along the lines of what was set out in the email and that the email, in part, amounted to a complaint about matters in respect of which the Council has oversight (deliberate water damage from fire hoses in buildings in which it has an interest and which are the subject of s 96 applications).
Mr Hmelnitsky contended that there was no evidence that the person concerned was a constituent in the Council area and, accordingly, there was no basis for supposing that the public interest in freedom of communication between constituents and their representative body was applicable. However, he contended that, even if it could be assumed that the source was a constituent, it was plain from the wording of the email that it was only partly a complaint about the water damage and was, in large measure, a slur on the plaintiff (who was at least arguably alleged to be the person responsible for the water damage). He relied on the circumstance that Councillor Hooper had circulated the email not only to Mr Woodhams, the addressee, but also to all elected Council members and to Mr Arnott. He contended that the breadth of the circulation of the email showed that Councillor Hooper, at least, did not regard the email as being confined to a complaint that required investigation by one of the Council's rangers, but rather as a communication which was germane to the Council's consideration of the plaintiff's s 96 application at its imminent meeting.
Further, the plaintiff submitted, on the basis of John Fairfax & Sons Ltd v Cojuangco (1988) 165 CLR 346 (Cojuangco), that the so-called newspaper rule (which is a rule of practice whereby Courts do not generally require journalists to disclose their sources, at least before trial, unless it is in the interests of justice that they do so) had been rejected as a basis to refuse preliminary discovery. However, Mr Hmelnitsky accepted that the public interest in the free flow of information to journalists was a consideration that was relevant to the exercise of the discretion in applications for preliminary discovery brought against journalists for orders requiring them to identify their sources. Accordingly, he accepted that if there was a relevant public interest in the present case, it could be taken into account in the exercise of my discretion.
Mr Hmelnitsky also relied on the principle that the newspaper rule should not be used to protect those whose communications to journalists are false and defamatory: Liu v The Age Company [2010] NSWSC 1176 at [54]. He referred to the following passage from Cojuangco at 355: "The liability of the media and of journalists to disclose their sources of information in the interests of justice is itself a valuable sanction which will encourage the media to exercise with due responsibility its great powers which are capable of being abused to the detriment of the individual. The recognition of an immunity from disclosure of sources of information would enable irresponsible persons to shelter behind anonymous, or even fictitious, sources."
Mr Hmelnitsky described the original communication from the source as a serious defamation since the damage to the building was substantial, deliberate and malicious. The imputation that the plaintiff, a unit holder, occupier and developer, was responsible was grave and had the potential to compromise the plaintiff's relationships with the recipients of the email and the Council as a whole and thus affect his livelihood as a developer. He submitted that what the source did was to introduce a falsehood into the public debate on the s 96 application rather than to make a legitimate complaint about a matter of concern to the Council.
He submitted further that the newspaper rule had less force in an application for preliminary discovery where the description of the source endowed the defamatory statements with particular credibility. He instanced Cojuangco where the High Court, at 358, identified as the "striking feature of the case" that the defamatory statements were attributed to a "senior American bank official and prominent local businessmen" and "one of the leading local US banks". The Court said: "The thrust of the publication is that the imputations have a solid basis of support in the views of persons prominent in banking and business circles and of a leading bank having its headquarters in the United States. By identifying their sources in this general way and giving prominence to them, the appellants have endowed the imputations with an aura of authority and authenticity which would be lacking if the imputations rested merely on the newspaper's and the journalist's assertions. From the respondent's viewpoint the attribution of the imputations to these apparently authoritative sources is far more damaging than a mere assertion of the imputations without any reference to sources would have been. It is incongruous and unjust that the appellants, having derived the advantage that comes from identifying in general terms the sources of the allegations that they make against the respondent, should now seek to deny him an opportunity of identifying precisely those sources, by invoking the newspaper rule."
Mr Hmelnitsky submitted that there was an incongruity between the defendant's using the occasion of an imminent Council meeting to pass on a slur against the individual developer (either because he wanted to stymie the application to which he was opposed, or because he merely wanted the full Council to be aware of a communication to which he was privy) and his refusal to identify the source for the slur.
Mr Hmelnitsky submitted that concerns about the public interest are adequately addressed by the law of defamation and the law of qualified privilege. He contended that a constituent would have a complete defence under the law of defamation to communicate with people (such as councillors) who have the reciprocal interest in receiving this kind of information under the law of qualified privilege and that if the source communicated to Councillor Hooper on an occasion of qualified privilege, and there was no malice, the source would not be liable in defamation.
Mr Hmelnitsky also relied on the proposition that UCPR r 5.2 operated notwithstanding other provisions, such as the Privacy Act 1988 (Cth) and s 11 of the (now repealed) Road Transport (Vehicle Registration) Act 1997 (NSW), which were designed to protect the identity of, relevantly, owners of registered vehicles: Roads and Traffic Authority of New South Wales v Australian National Car Parks at [5] - [7] per Mason P (McColl and Bell JJA agreeing).

The defendant's submissions

Mr Elliott accepted that the matters listed above at the outset of the summary of the plaintiff's submissions were relevant to the interests of justice and accordingly to the exercise of my discretion, as well as the matters set out in more detail below. He emphasised the general public interest in protecting the free flow of information to councils as well as the following specific matters: 1. The plaintiff obtained the email notwithstanding that he was not a recipient of the email and in breach of the Plan; 2. The argument that the plaintiff was identified as responsible for the water damage is relatively weak; 3. There is a public policy in the free flow of information; and 4. The Plan protects the identity of informants to the Council.
Mr Elliott referred to H & H Security Pty Ltd v Toliopoulos (Supreme Court (NSW), Levine J, 17 May 1995, unreported) in which an application under the equivalent provision to UCPR 5.2 was refused on discretionary grounds because of the need to protect informants. He drew an analogy between the public interest immunity that protected the identity of informants and the public interest in free flow of information between constituents and a representative body, such as the Council. He contended that the protection of the confidentiality of the identity of informants was designed both to ensure that the Council is best placed to receive information from the public as well as to ensure that members of the public are not discouraged from coming forward with information that they believe will assist the Council. Mr Elliott referred to the balancing exercise that needed to be undertaken between, on the one hand, the interest in disclosure for the purposes of the proper administration of justice and, on the other hand, the interest in non-disclosure of the identity of informants to preserve the flow of information from such informants.
The defendant submitted that it would be wrong to impose a level of care and attention to the wording of communications between constituents and a body such as the Council when it could reasonably be expected that those communicating would be deterred, if they feared defamation action, from passing on information to a Council that would assist it to enforce laws, including, for example, those concerning environmental damage or contamination. He submitted that it was better to allow some slight overstatement of information, or the overlay of a conspiracy theory, than to deter such communications by exposing the sender to defamation proceedings, particularly where, the recipient (the Council) has a duty to investigate, rather than (as in the case of a newspaper) to report to the public at large.
Mr Elliott distinguished the public interest in protecting journalists' sources from the relevant public interest in the present case. He submitted that the public interest of present concern was the flow of information to persons who are charged, not with the publication of news to the world for profit, but with the investigation and enforcement of public laws in an environment that is largely confidential.
Mr Elliott relied on the fact that the only direct recipient of the email was Mr Woodhams and that the principal purpose of sending the email to him was to ask him to arrange for the matter to be investigated by a ranger as quickly as possible in light of the imminent Council meeting. Mr Elliott accepted that a subsidiary purpose of the email was to inform all elected Council members, as well as Mr Arnott, of the allegation that had been made. However, he contended that the Council was obliged to consider the plaintiff's application for development approval and all matters relating to it.
Mr Elliott also relied on the circumstance that the plaintiff became aware of the email only because it was leaked to him in violation of the Council's Plan referred to above. He submitted that it ought be inferred by the fact that the plaintiff gave no evidence as to how he came by the email that the plaintiff could not give any evidence that would assist him on that topic: Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 at 418 per Handley JA.
Mr Elliott did not challenge my finding in the first proceedings that it was not fanciful that the plaintiff might be regarded as a suspect, assuming the communication from the source corresponded with the substance of the email and that therefore it was reasonably arguable that the source (on this assumption) identified the plaintiff, although he or she did not do so expressly. However, he submitted that the proposition, though arguable, was not strong since there were several other potential suspects at the time, including the residents themselves who were opposed to the development application. Moreover, the plaintiff was not likely to be implicated since the most recent decision, which was that of the Council officer whose role it was to review the decision of the Ward Committee, had been in the plaintiff's favour. Thus, he contended that the plaintiff's claim on the issue of identification was relatively weak.
He also submitted that although the law of qualified privilege might protect the individual litigant, it did not protect the public interest in the free flow of information. He described human tendency not to put oneself in harm's way which, in the present context, would translate into a disinclination on the part of residents and ratepayers to expose themselves to the notorious emotional and financial risks of litigation. He submitted that the Plan (which protected the identity of informants to Council) accorded with this public interest.

The plaintiff's submissions in reply

Mr Hmelnitsky adopted a proposition I put in argument to Mr Elliott that the plaintiff was entitled, as a matter of natural justice, to know what was being said against him to the Council members, Mr Woodhams and Mr Arnott. Accordingly, he submitted that it could not be said that he was not entitled to receive the email.

Whether the order is necessary to provide the plaintiff with an effective remedy

In cases where the defendant to a defamation suit is a newspaper proprietor or a journalist, the answer to an application for preliminary discovery of the source is, commonly, that the plaintiff has a remedy against those defendants and therefore does not need to know the identity of the source in order to obtain an effective remedy. In Cojuangco the primary judge made an order for preliminary discovery, in part on the basis that the appellant (defendant) might be able to defeat the plaintiff's claim on the ground of qualified privilege which would not necessarily be available to the source. The High Court was not persuaded that this approach revealed any error.
In the present case I accept that there may be good forensic reasons for the plaintiff's desire to bring proceedings against the source since it is possible that the defence of qualified privilege could defeat the plaintiff's claim against Councillor Hooper but not prevail in proceedings against the source. To that extent, it is in the interests of justice that the order be granted because it is necessary to provide the plaintiff with an effective remedy. However, this is but one factor, since the strength of the plaintiff's claim against the source is also to be considered, as well as the other factors addressed below.

The substance of the communication between the source and Councillor Hooper

Much was said in submissions about the email and what inferences ought be drawn from it about what the source communicated to Councillor Hooper which led to its being sent and why it was sent. I infer (there being no basis for any other inference) that what the source communicated to the defendant was broadly along the lines of what appeared in the email. Accordingly I infer that the source said the following to Councillor Hooper: 1. A fire hose was turned on in the Castle Garden building, of which the Council was a unit holder, which caused extensive damage by flooding the first and second floors. 2. The lift was interfered with to disrupt the residents, many of whom were aged. 3. These acts were done deliberately and maliciously by someone who had an interest in the plaintiff's s 96 application. 4. There was a connection between this conduct and the unanimous vote by councillors to refuse the 24-hour gym (as implied by the word "repercussions"). 5. The s 96 application was due to be determined by Council the following Monday.
The only present guides to the identity of the source and the purpose of the communication by the source to Councillor Hooper are the contents of the email. I infer that the source was someone who lived or worked in or near Castle Garden or who used the gym in the building. I infer that the source was not an eyewitness to the turning on of the fire hose and was merely speculating about its connection with the s 96 application.
I do not consider that these inferences give rise to considerations such as those addressed in Cojuangco where the statements in the article derived their authority from the description (but not identification) of the sources. Rather, I consider that the source merely informed Council of primary facts which it could, given time, have found out for itself, and communicated a speculative hypothesis which had no apparent basis other than suspicion.
I infer that from the content of the email that the objective purposes of the communication from the source to Councillor Hooper were: to bring the water damage at Castle Garden and its effect on the building and its residents to the attention of Council in its capacity both as unit holder and as the relevant decision-maker for the s 96 application; and to communicate his or her theory that the damage was related in some unspecified way to the s 96 application.
I am not persuaded that there is any relevant incongruity (as contended for by Mr Hmelnitsky) between, on the one hand, the fact that the defendant sent the email to the various addressees ahead of the Council meeting and, on the other, his refusal to disclose the identity of the source. The Council can only act through human agents. The s 96 application was to be determined by the Council at a meeting. The information which Councillor Hooper had received was at least arguably germane to the s 96 application since it concerned the building where the gym was located and there was an unsubstantiated allegation that there was some connection between the damage and the application. The identity of the source was not particularly significant; moreover it was Council policy, as provided for in the Plan, not to disclose the names of such persons.

The strength of the plaintiff's case against the source

The allegations were serious, since they amounted to allegations that someone had deliberately and maliciously damaged property and caused inconvenience and potential danger to vulnerable persons with a view to influencing the Council with respect to the s 96 application. However no person was named. Moreover, it cannot be inferred from the contents of the email that the unnamed malefactor was either in favour, or against, the 24-hour gym, although the person was thought to be interested in some way in the grant or refusal of the s 96 application. As referred to above, I infer from the email that the source did not witness the turning on of the fire hose and that any view the source had about the culprit (that it was someone with a view about the gym) was based on no more than suspicion.
Although, as I found in my reasons following the first proceedings, it is arguable (in the sense that a jury would be capable of finding) that the email referred to the plaintiff, the argument is by no means strong. The list of potential suspects would be long and would include: the plaintiff, the operators and employees of the gym; the gym users; the residents of Castle Garden; and, potentially, the residents of 147 Sailors Bay Road.
Indeed, of all of these people or categories of people, the plaintiff would seem to be one of the least plausible suspects. It is difficult to see how he, as a unit holder in Castle Garden, an occupier of an office on the ground floor and the proponent of the s 96 application, would have an interest, either in damaging his own property, jeopardising his chances of approval, or burning his bridges with the Council by such conduct. Moreover, at the time of the communication he had just secured a victory: Mr Woodhams had decided that the decision of the Ward Committee (to refuse the application) would not stand and that the matter would have to be determined by a full Council meeting. Therefore, although the allegations were serious, the potential harm to the plaintiff could not be regarded as substantial: he was not named, and, though a possible suspect, he was not a plausible, much less an obvious, one. For these reasons I assess the plaintiff's claim against the source, although arguable, to be relatively weak. This is a weighty factor against the granting of the order: see, in the context of UCPR 5.3, Hatfield v TCN Channel Nine Pty Ltd [2010] NSWCA 69; 77 NSWLR 506 at [158] per Young JA and [165] per Sackville AJA.

The manner in which the plaintiff received the email and became aware of the communication from the source to Councillor Hooper

The plaintiff received the email informally (as he was not a named recipient), and apparently in breach of the Plan. However, natural justice may have required that he be informed that a communication had been passed onto the Council members and Mr Arnott, which could be construed as an allegation that he was implicated in the water damage to the building: Kioa v West (1985) 159 CLR 550 at 587 per Mason J. In these circumstances, I do not regard the way in which the plaintiff obtained the email as a factor that should be taken into account against him in the exercise of my discretion.

The public interest in the free flow of information from residents to their local Council

There is a public interest in the free flow of information from residents to councils. It is undesirable that it be trammeled by the fear of exposure and litigation which disclosure by councils of the source of complaints or information might engender.
Although this public interest bears some of the features of the public interest thought to be behind the newspaper rule, it is, in my view, more closely allied with the public interest in protecting informants: see H & H Security Pty Ltd v Toliopoulos. The purpose of communications such as the present is to inform the Council of something that falls within its functions and which may lead to its being investigated by the Council.
The Council's statutory duties and functions include: 1. owning, maintaining and protecting property so as to enable it to fulfil its other functions (s 186(1) of the Local Government Act 1993 (NSW)); 2. considering applications for modification of development approvals (s 96 of the EPAA); and 3. carrying out inspections and investigations, including in respect of development approval compliance and fire safety (s 192 of the Local Government Act).
The Council performs important functions in the community and relies on information provided by those living or working in the Council area to perform its functions. It is beneficial for residents to be the "eyes and ears" of the Council since they see and hear things to which the Council could not possibly otherwise be privy. There is a significant public interest in ensuring that those who may wish to inform the Council of matters within these areas of responsibility are not deterred from so doing because of an apprehension that they will be sued. It is important that public authorities, including the Council, are able to receive, quickly and without formality, information from members of the public about matters that may be of concern to it and its constituents so that investigations can proceed promptly.
The Plan sets out a protocol which gives rise to a legitimate expectation that those informing the Council of such matters will not be identified by name. An order for preliminary discovery necessarily overrides such a Plan. Nonetheless an order inevitably affects such expectations and tends to undermine the public policy behind such regimes for the protection of privacy. This is a matter which weighs against the making of the order sought.
Although the source did more than inform Councillor Hooper of the cause, nature, extent and effect of the water damage to the building, it was accepted that, if that was all the source had done, there could be no complaint. Indeed the source might be regarded as acting as a responsible citizen would, by informing the Council of that a building in which it was a unit holder had been seriously damaged by deliberate acts. The source added to this information his or her suspicion that the damage was a consequence of the Council's decision-making with respect to the s 96 application and implied that the water damage was intended to influence the Council's decision at its meeting the following Monday.
I reject Mr Hmelnitsky's submission that the additional matters (over and above the information itself) "intruded a falsehood into public debate". The asserted connection between the damage to the building and the s 96 application was no more than surmise. As such, the hypothesis that there was some connection could not, without more, be excluded, much less regarded as "false". The only basis on which the email could be said to be false was if it were read as asserting that the plaintiff was responsible for the water damage. Although I have found that such a reading is open, I do not regard the submission as particularly strong for the reasons given above.
The primary objective purposes of the communication which led to the email were to inform the Council, through Councillor Hooper, of the water damage and to posit the theory that the damage was connected to the s 96 application. A secondary purpose was to gain priority for the investigation into the damage, in light of the imminent Council meeting. I consider that the email plainly falls within the rubric of the communications, the free flow of which ought be protected because of the public interest in Council's being informed of such matters of concern. This is a further significant factor that weighs against the order being made.

The availability of the defence of qualified privilege

The availability of the defence of qualified privilege is relevant in two respects to the exercise of the discretion. As referred to above, the defence may be available to Councillor Hooper but not to the source, which is a factor in favour of making the order, since the plaintiff may otherwise have no remedy. It is also relevant since Mr Hmelnitsky relied on it as providing potential protection to the source by way of a defence to the plaintiff's claim. He submitted that any debate about the reciprocity between the source and Councillor Hooper and the occasion on which the source made the communication that led to the email could properly be resolved within the ambit of defamation proceedings in the context of the defence, if alleged, of qualified privilege.
I regard this argument as somewhat circular. A defendant's success in defamation proceedings on the ground of qualified privilege, or indeed on any ground, may amount to no more than a Pyrrhic victory. The time, cost and stress of litigation will, by that time, have taken their toll. Costs, even on an indemnity basis, are no salve and may be no more than cold comfort. In GSA Industries Pty Ltd v NT Gas Ltd (1990) 24 NSWLR 710, Samuels JA said at 716 (in a passage approved in Aon Risk Services Australia v Australian National University [2009] HCA 27; 239 CLR 175 at [25]): "… the emollient effect of an order for costs as a panacea may now be consigned to the Aladdin's cave which Lord Reid rejected as one of the fairy tales in which we no longer believe."
There is no basis for inferring that the effect on the free flow of information from constituents (including the source) to councils will be redressed in any discernible way if the source, as defendant, is ultimately successful. The source, and those in the community who are aware of the litigation, may be inclined to conclude, if the order for preliminary discovery is made, that it would be better in future to stay mute, for fear of being sued. This consequence would be undesirable and contrary to the public interest. These matters are not determinative, and do not in every such application for preliminary discovery lead to its refusal. However, in the context of the present case, I regard the availability of the defence of qualified privilege as a factor which does little to ameliorate the potentially detrimental effect of making the order on the free flow of information to councils.

Conclusion

Having regard to these considerations I am not persuaded that it is in the interests of justice to make the orders for preliminary discovery sought in the summons.

Orders

I make the following orders: 1. Dismiss the summons. 2. Unless an application for a different order is made in writing to my Associate within seven days, order the plaintiff to pay the defendant's costs of the proceedings.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 25 September 2015

Road Transport (Vehicle Registration) Act 1997(NSW)

repealed) Road Transport (Vehicle Registration) Act 1997(NSW)

At a glance

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Judgment (26 paragraphs)

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Legislation Cited (9)

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