[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
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ex tempore Judgment
MEAGHER JA: I will ask Leeming JA to deliver the first judgment in relation to this application.
LEEMING JA: Mr Victor Lahoud seeks leave to appeal from the interlocutory decision of the primary judge (Adamson J) dismissing his summons seeking an order for preliminary discovery: Lahoud v Hooper (No 2) [2015] NSWSC 1405. It is possible to summarise the factual background concisely.
Companies associated with Mr Lahoud had a pending application under s 96 of the Environmental Planning and Assessment Act 1979 (NSW) (the Act) to modify an existing consent so as to permit the operation of a 24-hour a day gym on premises in a multi-storied, mixed use building on Sailors Bay Road, Northbridge. The application was advertised, and three occupants in the building (amongst others) supplied submissions objecting to it. Two council employees, who together constituted the Ward Inspection Committee, nevertheless recommended that the application be approved, subject to conditions.
On 24 October 2014, a meeting was held on the premises at which two members of the Ward Committee, including the respondent (a councillor), were present. The Committee announced at the conclusion of the meeting that it did not propose to approve the modification. The question then arose whether the application would be considered by a full Council meeting, a decision which would turn on the view of the Environmental Services Director. Later that afternoon, Mr Lahoud was told that the application would be referred to a full Council meeting the following Monday night. The primary judge found that, at this time, Mr Lahoud was of the view that the outcome of the s 96 application was "quite uncertain".
On the following day, 25 October 2014, the respondent sent an email to the Council's acting general manager copied to all elected councillors. It was in the following terms:
"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."
Mr Lahoud has sought preliminary discovery to identify the person who provided that information to Mr Hooper as a potential defendant in a proposed defamation claim.
An earlier application for preliminary discovery was dismissed by the primary judge, on the basis that it had not been shown that Mr Lahoud had made reasonable inquiries to ascertain the name of the source: Lahoud v Hooper [2015] NSWSC 1026. Subsequently, further inquiries (which it is not necessary for present purposes to summarise) were undertaken by Mr Lahoud. In addition, Council approved the application, subject to conditions. An appeal was filed in the Land and Environment Court from that decision and this Court has been told that the appeal was successful.
Mr Lahoud invoked the power under r 5.2 of the Uniform Civil Procedure Rules 2005 (NSW), which is relevantly in the following terms:
"(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."
It was common ground by the time of the second hearing before the primary judge that (a) Mr Lahoud had made reasonable inquiries but was unable sufficiently to ascertain the identity of the source for the purpose of commencing proceedings, and (b) Mr Hooper had information tending to assist in ascertaining the identity of the source. Accordingly, the discretion conferred by r 5.2 of the UCPR to make an order requiring the defendant to disclose the information tending to assist in ascertaining the identity of the source was enlivened. Further, it was accepted before the primary judge that the power to make such an order was to be exercised on the basis that Mr Lahoud genuinely proposed to bring defamation proceedings against the person who made the communication and had a bona fide desire to do so.
The primary judge, after summarising the factual and procedural background, addressed the parties' submissions at [45]-[69]. Her Honour's consideration of those submissions occupied [70]-[92]. Favourably to Mr Lahoud, her Honour found at [71] that there may be "good forensic reasons" for bringing proceedings against the source, because a defence of qualified privilege might defeat his claim against the respondent but not prevail in proceedings against the source. Her Honour then said at [71]:
"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."
Against that, her Honour was of the view that the strength of the case was "by no means strong" by reason of the fact that it was far from clear that the source would have identified the plaintiff as responsible for the deliberate and malicious damage to the property. Indeed, her Honour found that "the plaintiff would seem to be one of the least plausible suspects". Her Honour also referred to the public interest and the free flow of information from residents to their council as a "further significant factor" that weighed against the order being made.
Mr Lahoud seeks leave to appeal on two proposed grounds. They are that:
1. "the primary judge's discretion miscarried because her Honour erred in approaching the discretion in UCPR 5.2 by finding a public interest against disclosure, notwithstanding her Honour's assessment that the order was 'in the interests of justice' and was necessary to provide the appellant with an effective remedy"; and
2. "the primary judge's discretion miscarried because her Honour erred in failing to have regard to the factors that characterised the relevant communication as a submission to the Council to be taken into account in the execution of its powers under s 96 of the Environmental Planning and Assessment Act 1979 (NSW)."
Mr Lahoud accepts, very properly, that it is necessary for him to establish an error of legal principle or the failure to take into account a relevant consideration in order to warrant a grant of leave from a discretionary decision on practice and procedure. He submits that the proposed first ground discloses an error of legal principle, and that the proposed second ground discloses a failure to take into account a relevant consideration.
It must be said that the proposed first ground misstates the finding of the primary judge, to the extent that it omits the qualifying words both before and after the passage from [71] which is reproduced in the ground. But the more important deficiency is that it is plain that r 5.2 confers a discretionary power, not expressly qualified, which is only available in circumstances where, as here, it is established that an applicant wishes to sue and is unable to do so. As Bathurst CJ said in The Age Company Ltd v Liu [2013] NSWCA 26; 82 NSWLR 268 at [89]:
"Finally, even if those preconditions are satisfied, r 5.2(2) gives the court a discretion whether or not to make an order. It was common ground between the parties that the discretion would only be exercised in favour of the applicant when it is in the interests of justice to do so. The existence of a prima facie case against the proposed defendant is relevant to the exercise of the discretion: Stewart v Miller (1979) 2 NSWLR 128 at 139-140; Roads and Traffic Authority of NSW v Australian National Car Parks Pty Ltd supra at [13]."
To the extent that Mr Lahoud contends that there is an error of principle disclosed by her Honour's dismissal of his application notwithstanding the favourable finding referred to in proposed ground 1, the contention is not sound. To the contrary, her Honour did exactly what was required by the rule, which was to determine whether it was in the interests of justice for relief to be granted. The weakness of the proposed case was plainly relevant to that evaluation, as Mr Lahoud properly conceded in oral submissions to this Court. It is true that he makes complaint about her Honour's assessment of the strength of the proposed case, but that does not disclose any error of principle. Contrary to Mr Lahoud's submission, the matters identified by her Honour at [71] reproduced above were not regarded by her, and could not properly have been regarded, as sufficient of themselves to warrant the making of orders for preliminary discovery.
Mr Lahoud contends that the "newspaper rule" in John Fairfax & Sons Ltd v Cojuangco (1988) 165 CLR 346 "should, by analogy, have guided the primary judge in the exercise of her discretion". In that case, the High Court concluded that, in a case where the "rule" applied, it was necessary for the applicant to show that the order was "necessary in the interests of justice" (at 357).
It is far from clear that the "newspaper rule" - which is merely a rule of practice (see The Age Company v Liu at [91]) - applies even by analogy. The respondent's submissions observe that the considerations arising in relation to the freedom of journalistic expression are different from the public policy considerations in a case such as the present. But even if the rule does apply, no error of principle is disclosed. The primary judge addressed the question of the interests of justice in terms. Mr Lahoud is dissatisfied with her Honour's conclusion, but that does not amount to an error of principle.
In respect of his second proposed ground, Mr Lahoud submits that once the primary judgment characterised the communication as a submission on the pending s 96 application intended to be acted upon and drawn to the attention of the councillors deciding that application, then it was no longer possible for there to be a public interest in maintaining the confidentiality of that communication. The primary judge expressly grappled with this submission and concluded that it was relatively weak. Her Honour did so in the following terms, at [86]-[88]:
"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."
Again, true it is that Mr Lahoud submits that her Honour in those paragraphs overstated the extent to which the communication ought to be protected from disclosure, but again, even if he be right in those respects, it has not been shown that that gives rise to any appellable error, let alone an error of principle as is necessary in a case such as this for the grant of leave. Her Honour's decision was, squarely, based on an assessment of the interests of justice.
For those reasons, I propose that the application for leave to appeal be dismissed, with costs.
MEAGHER JA: I agree with Leeming JA. Accordingly, the orders of the Court are:
1. Dismiss the applicant's summons seeking leave to appeal.
2. Order that the applicant pay the respondent's costs of that summons.
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Decision last updated: 11 February 2016