Liu v The Age Company Limited

The stay application judgment

1. Fairfax's motion seeking to vacate or stay the preliminary discovery order was supported by an affidavit sworn by its solicitor, Mr Bartlett, in which he stated (on information and belief) that each of the journalist defendants continued to consider himself obliged not to disclose the identity of the sources. He also deposed that the journalists were concerned that if they revealed their sources it would compromise their ability to obtain information from other potential sources in the future in matters of public interest. [25] As the primary judge recorded, "[t]hat evidence (as far as it went) was not challenged and there is no reason not to accept it." [26]
2. Mr Bartlett was not cross-examined. Counsel for Ms Liu contended that his affidavit did not offer any explanation for "the decision to proffer the undertakings only now, after the application has been fully litigated (and taken along all avenues of appeal) on a different premise." [27] He also contended there was no need to cross-examine Mr Bartlett, as Fairfax conceded that in taking the course it had on the preliminary discovery application, its legal advisers were aware of the course of the Cojuangco proceedings. [28] In those proceedings the Court set aside a preliminary discovery order once John Fairfax abandoned any qualified privilege defence ("Fairfax concession"). [29]
3. Fairfax contended that as a result of the Fairfax undertaking, Ms Liu had an effective remedy against it warranting the grant of a stay of the preliminary discovery order. [30] Ms Liu contested those propositions. She argued that the stay application constituted either an abuse of process or should be rejected on the basis of overwhelming discretionary considerations. She also contested the proposition that the Fairfax undertaking left her with an effective remedy. [31]
4. The primary judge referred to the fact that in Liu (No 1), she had considered Ms Liu's entitlement to have "the opportunity to pursue a remedy that would see the issue of the alleged forgery fully litigated and determined" relevant to the issue of effective remedy. [32] Her Honour remarked that there was implicit in those remarks a degree of speculation as to the nature of that opportunity. Accordingly, although it was a consideration which fortified her conclusion, her Honour was of the opinion that it was not necessary in the original application to assess it "standing alone". She did not think it was truly an independent reason sustaining her conclusion on the issue of an effective remedy. Rather, her Honour said that, had Fairfax abandoned the qualified privilege defences from the outset, she was in little doubt that the outcome would have been different. [33]
5. The primary judge held that in consequence of the Fairfax undertaking, Ms Liu had a remedy in defamation against Fairfax which was "no less effective" than an action against the sources. This was because the consequence of the Fairfax undertaking was that Ms Liu "[would] not be faced with any defence in addition to those that would also be available to the sources if they were sued." Although her Honour recognised that Ms Liu would not "have the opportunity to confront her accusers", in her view, that did not deprive Ms Liu of an effective remedy. Rather, her Honour held "the absence of the sources from the litigation is a factor that is likely to preclude the newspaper from succeeding in any truth defence." [34]
6. Ms Liu's abuse of process submission rested on the proposition that by reason of the Cojuangco proceedings, Fairfax must be taken to have known that the making of the preliminary discovery order could have been obviated by giving undertakings not to pursue the qualified privilege defences. Accordingly, Ms Liu argued that Fairfax's failure to abandon the defences before the hearing of the original preliminary discovery application must be seen as a deliberate forensic decision such that it was an abuse of process to invoke the benefit of that approach at a later stage. [35]
7. The primary judge accepted, having regard to the Fairfax concession, that there was "no dispute as to the defendants' awareness, from the outset, of the potential benefit of abandoning the qualified privilege defences." However, her Honour did not accept Ms Liu's submission that it followed inexorably that Fairfax's approach to the preliminary discovery application was a "cynical abuse of … process", although her Honour did think Fairfax's approach was relevant to costs. [36]
8. In her Honour's view, Ms Liu's submission overlooked the importance of the substantive right Fairfax had had to abandon, those qualified privilege defences playing "an important part" in balancing the interests of the right to reputation and freedom of speech. [37] Her Honour also accepted Fairfax believed it could successfully resist the preliminary discovery application on the basis of issues which went beyond those determined in the Cojuangco proceedings. [38] Accordingly, the primary judge was not persuaded that the stay application constituted an abuse of process. [39]
9. Ms Liu submitted that to permit the re-litigation of the preliminary discovery order would be unjust and contrary to modern principle. She invoked McLelland J's statement in Brimaud v Honeysett Instant Print Pty Ltd, [40] concerning the "great injustice and enormous waste of judicial time and resources" which would arise if there were no limit on the entitlement of a party to relitigate interlocutory orders at will. [41]
10. The primary judge recognised in this context that it was "clear enough" that, knowing of the Cojuangco litigation, Fairfax could have given the Fairfax undertaking at the hearing of the original application. However, her Honour accepted Fairfax's submission that there was a "real question" as to whether the undertaking ought "reasonably" to have been put before the Court at that time, since it involved the abandonment of what appeared to be "a perfectly good defence". Her Honour also took into consideration the fact Fairfax thought it could successfully oppose the preliminary discovery application without "having to give up" the qualified privilege defences and that the issues on which the application was contested went beyond the issues determined in Cojuangco. [42]
11. Accordingly, her Honour did not accept that the principle in Brimaud mandated rejection of the stay application. [43]
12. Ms Liu also submitted that the stay application should be refused on the basis of what the primary judge described as "modern litigation principles" as expressed in Part 6 of the Civil Procedure Act 2005 (NSW) ("CPA") and discussed in Aon Risk Services Australia Limited v Australian National University [44] and Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd. [45]
13. The primary judge noted that Ms Liu's submissions assumed that Part 6, CPA applied to the stay application. Her Honour was prepared to accept that assumption, albeit without deciding the question. In any event, her Honour accepted that modern litigation principles were "plainly relevant". [46]
14. In considering the Part 6 submissions, the primary judge emphasised again that she placed "a high value on the gravity of the [Fairfax] decision to abandon an apparently good defence." In her Honour's view, that was "a unique circumstance" which distinguished the case from other cases applying Aon Risk upon which Ms Liu relied. [47]
15. In addition, her Honour said that she placed a high value on the gravity of compelling a journalist to reveal the identity of a source. Her Honour referred to the fact that in Liu (No 1) she had considered the weight of that consideration was lessened by the circumstances as they then stood. [48] This appears to have been a reference to the fact that the contact through whom Fairfax was communicating with the sources had advised Mr Baker that the sources had mistakenly disclosed some handwritten materials and had asked Fairfax not to publish them. Fairfax had published the materials notwithstanding that request, taking the position that "the public interest in the dishonesty being exposed [was] paramount." [49]
16. The primary judge concluded in Liu (No 1) that Fairfax's decision to publish despite the sources' request "had the tendency … to undermine the very protection sought to be achieved by the practice of not requiring journalists to disclose their sources unless such disclosure is necessary in the interests of justice." [50] This was because Fairfax's unilateral determination "that the interests of the sources must yield to what [Fairfax] claimed was a paramount public interest … exposed the sources to the risk of disclosure of their identity." In the light of that determination, her Honour held Fairfax could "hardly maintain that interests competing with the public interest in protecting confidentiality of journalists' sources must be set to one side in the determination of the present application." [51] In Liu (No 2), her Honour held that Fairfax's abandonment of its qualified privilege defences was "a substantial concession" to the concern she had expressed in Liu (No 1). [52]
17. The primary judge recognised that the overriding purpose of the CPA called attention to a synthesis of factors and that Aon Risk "acknowledges that the achievement of a timely and cost-effective resolution of a dispute is an aspect of justice but it is not to come at the price of justice." [53]
18. The primary judge identified two "principal concerns" arising from her consideration of CPA, ss 56-58. The first, having regard to CPA, s 57(1)(d), was achieving the timely disposal of the proceedings at an affordable cost in circumstances where Fairfax did not concede any obligation to meet the costs of the "lengthy original hearing" and where, if the stay application was successful, Ms Liu's costs of the preliminary discovery hearing "[would] have been wasted". [54] The second was, having regard to CPA, s 58(2)(b)(v), the fact that Fairfax had made no concession as to the qualified privilege defences, even conditionally, at the preliminary discovery hearing. [55]
19. Nevertheless, the primary judge was influenced by the fact that Fairfax's ultimate concession to abandon the qualified privilege defences meant the voluntary abandonment of a substantive right. [56] Accordingly, as I have said, subject to satisfactory resolution as to her concern about Ms Liu's wasted costs, the primary judge stayed the preliminary discovery order. [57]

The costs judgment

1. In the costs judgment, the primary judge determined what order should be made as to the costs of the preliminary discovery application hearing, what order should be made as to the costs of the stay application hearing, whether the stay of the preliminary discovery order should be continued and whether any costs awarded in favour of Ms Liu should be assessed on an indemnity basis. [58]
2. The primary judge rejected Fairfax's submission that UCPR 5.8 was the starting point to determining costs. Her Honour observed that that rule provided no guidance. She accepted Ms Liu's submission that UCPR 5.8 was "primarily directed to identifying the range of parties against whom a costs order can be made on a preliminary discovery application", but said nothing which displaced UCPR 42.1, nor said anything which confirmed "the applicability of that rule in any particular circumstance". [59] Her Honour held that the power to award costs was "one of broad discretion to be exercised with reference to both rules and according to the dictates of justice as they appear in the particular case, subject to the guidance of any relevant authority." [60]
3. Insofar as the preliminary discovery hearing was concerned, the primary judge applied Airways Corporation of New Zealand v The Present Partners of Pricewaterhouse Coopers Legal [61] and Steffen v ANZ Banking Group [62] to hold that where an application for preliminary discovery is contested in an adversarial fashion, costs should follow the event unless good reason is shown as to why they should not. [63]
4. Fairfax did not dispute that the preliminary discovery hearing was conducted in an adversarial manner. [64] The primary judge considered whether that, and the fact that Ms Liu had been wholly successful in that hearing, was sufficient reason to order Fairfax to pay her costs. In this respect her Honour had regard to the exceptional nature of the preliminary discovery jurisdiction and, too, that "the defence of a confidentiality undertaking given to a source is a respectable and proper basis for opposing a preliminary discovery order." [65] Nevertheless her Honour was persuaded that, applying the costs follow the event approach, "on that basis alone", Fairfax should be ordered to pay Ms Liu's costs of the preliminary discovery hearing. [66]
5. The primary judge then addressed a second submission Ms Liu made to the effect that the costs of the first hearing could have been substantially avoided had the Fairfax undertaking been offered at that stage of the proceedings. In this respect Ms Liu relied upon what had occurred in the Cojuangco proceedings. [67] After repeating the account of those proceedings her Honour had set out in Liu (No 2), [68] the primary judge observed: "The critical consideration is that the defendants in the present litigation were aware of the course of the Cojuangco litigation. In my view, there is a powerful case for ordering the defendants to pay the costs that would have been avoided had they proffered the undertakings in a timely way. The premise of my decision in Liu (No 2) was that the defendants' conduct fell short of the impropriety required to establish an abuse of process. It does not follow, however, that their forensic choice made with the knowledge of the Cojuangco experience has no consequence as to costs, still less that the costs orders made in that litigation are those that should be made here." [69]
6. The primary judge rejected Fairfax's submission that her Honour could not order them to pay Ms Liu's costs on the "Cojuangco basis" unless she adduced evidence that the costs of the first hearing would have been different had the Fairfax undertaking been offered at or before that hearing. In her Honour's view, "by their forensic choice, [Fairfax] allowed the hearing of [Ms Liu's] application to proceed on an entirely different premise from that on which it was ultimately determined. As events have transpired, the change of tack was ultimately determinative." [70]
7. The primary judge also noted Ms Liu's submissions on the stay application hearing that, if that application was successful, she "should be compensated for every cent of legal costs incurred at the first hearing". [71] At the costs hearing, while not abandoning that submission, different counsel also argued Ms Liu's costs of the first hearing could have been "substantially avoided" if the Fairfax undertaking had been offered earlier.
8. The primary judge accepted Ms Liu had been put to great expense and delay for a cause she ultimately lost "where, by reason of [Fairfax's] forensic choice, she was never afforded the opportunity to consider her position properly informed as to the likelihood of the outcome that has ultimately been achieved". However, her Honour also made some allowances for the fact that the preliminary discovery application may have been fought and lost by Ms Liu even if the Fairfax undertaking had been offered at the first hearing. [72]
9. Her Honour concluded that Ms Liu's alternative argument was "an equal and separate basis" for an order that Fairfax pay Ms Liu's costs of the first hearing as agreed or assessed on the ordinary basis. [73]
10. Fairfax accepted that it should pay the costs of the stay application, save as to those of and incidental to the hearing of the question of power to vacate the preliminary discovery order. [74] However, it resisted Ms Liu's application for the whole of those costs on an indemnity basis, contending that application overlooked her lack of success on the power point. The primary judge concluded that that issue was not a basis for carving out the costs of those arguments. Accordingly, her Honour ordered Fairfax to pay the costs of the stay application hearing as agreed or assessed on the indemnity basis. [75]
11. Having concluded that Ms Liu should be awarded her costs of both hearings, the primary judge was satisfied that it was appropriate to continue the stay of the preliminary discovery order her Honour had provisionally ordered in the stay application hearing. [76] Although expressed as a continuance of the earlier stay, the removal of the condition concerning the determination of costs effectively means that her Honour permanently stayed the preliminary discovery order made in February 2012.

Issues on appeal

1. Ms Liu's notice of appeal complains that the primary judge erred in failing to find that the stay application amounted to an abuse of process, in permitting Fairfax to adopt a forensic position which differed from that adopted in the preliminary discovery hearing and in failing to refuse Fairfax's stay application on discretionary grounds. She also complains that the primary judge erred in finding that she had an effective remedy against Fairfax, having regard to the Fairfax undertaking. Next, she complains that the primary judge erred in failing to give proper consideration to the "overriding significance" of the relevant provisions of the CPA. Finally, she complains that the primary judge erred in failing to award her the costs of the preliminary discovery hearing on an indemnity basis.
2. Fairfax's notice of cross-appeal complains that the primary judge applied a wrong principle in ordering it to pay Ms Liu's costs of the preliminary discovery application on the ordinary basis. In addition, Fairfax complains that the primary judge's exercise of her discretion was vitiated by an erroneous finding of fact that the costs of the preliminary discovery hearing would have been avoided had Fairfax proffered the undertaking ultimately given in the stay application at or before the preliminary discovery application hearing.

Ms Liu's submissions: exercise of discretion

1. Underpinning Ms Liu's appeal are the following propositions with which she submits the primary judge failed to deal satisfactorily, so that her Honour's exercise of her discretion to grant the stay application miscarried in a manner attracting appellate review.
2. First, Ms Liu submitted that it is an abuse of process to take later a forensic step that was open to a party to take at an earlier stage. Accordingly, the stay application was an abuse of process because it was based solely on matter that was known and available to Fairfax at the preliminary discovery hearing (abandonment of the qualified privilege defence) and which it knowingly refrained from raising. [77] She submitted that Fairfax's failure to give the Fairfax undertaking at the preliminary discovery hearing was not a case of an inadvertent slip or omission, but one of a deliberate failure to raise a matter with the Court. The effect of the failure to give the undertaking at the earliest opportunity had led to significant waste of judicial time and resources, loss to Ms Liu of irrecoverable costs and to her being subjected to "five years of agonising and distressing litigation". Secondly, she contended that the stay application was an impermissible attempt to relitigate an interlocutory matter which had already been determined. She argued such relitigation is only permitted where there has been a material change of circumstances or the discovery of new material which could not reasonably have been placed before the Court on the first occasion. Thirdly, Ms Liu submitted the course that Fairfax took was contrary to the case management principles expressed in CPA, ss 56 - 60.
3. Ms Liu's abuse of process and relitigation argument proceeded as follows. Fairfax made a deliberate choice at the preliminary discovery hearing to maintain the qualified privilege defences, despite knowing of what occurred in Cojuangco. Fairfax knew that taking the course ultimately taken in that case would, or could, make a difference to the outcome. Accordingly, it had made a forensic decision not to take that step at that stage. It was an abuse of process to seek to take it at the later stage.
4. As further developed, the argument proceeded as follows. In Liu (No 1) the primary judge noted that Fairfax did not "relinquish" either the statutory or common law defences of qualified privilege and "staunchly [defended its] publications." [78] In Liu (No 2) the primary judge noted that there was "no dispute as to [Fairfax's] awareness, from the outset, of the potential benefit of abandoning the qualified privilege defences." [79] Senior counsel for Fairfax made the Fairfax concession during the hearing of the stay application. To do so was a breach of the obligation on the part of every litigant to bring forward their entire case at the first opportunity.
5. Ms Liu submitted that Fairfax was subject to that obligation as a respondent to the preliminary discovery application and had an obligation to disclaim the qualified privilege defences either absolutely or conditionally at the first hearing. To do so would have obviated the necessity for a further hearing based on the Fairfax undertaking in which essentially the same issues as were litigated at the first hearing had to be litigated in light of that new position.
6. Accordingly, Ms Liu submitted, it was either an abuse of process, or objectionable in the Brimaud sense, for Fairfax effectively to relitigate, via the vehicle of the stay application, the issue whether Ms Liu should obtain preliminary discovery where there had been no change in circumstances nor had any new material been uncovered which was not reasonably available at the time of the first hearing. She submitted that, having regard to Fairfax's knowledge that it could have given its undertaking at the first hearing, giving it in order to secure a stay of the preliminary discovery order did not constitute a change in circumstances nor the discovery of any "new material" in the sense in which those expressions were used when courts consider whether to entertain a second interlocutory hearing.
7. By entertaining the stay application, the primary judge obliged Ms Liu to relitigate issues which had been determined in her favour at the preliminary discovery hearing and not challenged in the Court of Appeal. The primary judge ought to have held the stay application was an abuse of process, or otherwise impermissible on the Brimaud line of authority, or should have been dismissed as vexatious, because Fairfax had failed in its obligation to put every argument at the preliminary discovery hearing. She submitted that the quality of the right Fairfax abandoned was irrelevant to the question whether the stay application was an abuse of process. Rather, resolution of that issue turned on Fairfax's decision and state of mind at the time of the preliminary discovery hearing.
8. Secondly, Ms Liu submitted that the purpose of the case management principles was to compel change in the way litigants and their legal representatives conducted litigation by bringing to their attention aspects of the proper conduct of litigation, requiring them to conduct their cases in that manner and enabling the Court to take account of any failure to do so in exercising its various discretions. As a general proposition, Ms Liu argued it was contrary to the case management principles for a litigant to alter their position after judgment to mitigate the result of a fully contested hearing. She submitted the law should not permit a litigant to revisit their position after judgment has been delivered when the litigant was conscious of choices which could have been made before judgment.
9. On this basis, Ms Liu argued that Fairfax breached CPA, s 56(3) in failing to raise at least the possibility of disclaiming any qualified privilege defence at the preliminary discovery application hearing and thus hindered the just, quick and cheap resolution of the real issues in the proceedings. She contended that Fairfax's lawyers were responsible for that failure. [80] She also argued that the chronology clearly demonstrated how CPA, s 57(1)(d) (timely disposal of proceedings at a cost affordable by the parties) had been flouted.
10. Thirdly, Ms Liu submitted Fairfax breached CPA, s 58(2)(a),(b)(ii),(iv) and (v) in that it had both the duty and opportunity to raise the abandonment of the qualified privilege defences at the preliminary discovery hearing and failed to do so. In consequence, Ms Liu contended, she had suffered a serious injustice. [81] Finally, Ms Liu submitted, referring to CPA, s 60, that had Fairfax raised the issue of abandoning the qualified privilege defences at the preliminary discovery hearing, that hearing might have concluded in a day, not the 10 days it took.
11. Ms Liu also submitted in this context that the primary judge's reasons did not provide any support for her Honour refusing to apply the principles stated by McLelland J (as his Honour then was) in Brimaud to the effect that, save in exceptional circumstances, parties should not be permitted to relitigate the very same question. Ms Liu contended the primary judge ought to have held the stay application was "vexatious" for the same reasons McLelland J dismissed an application to set aside an order appointing a provisional liquidator made by the losing parties to the appointment proceedings, who sought to rely upon matters they might have raised on the hearing of the original application.
12. Fourthly, Ms Liu submitted the primary judge's reasons did not provide any satisfactory basis for staying the preliminary discovery orders. She contended that her Honour's conclusion appeared to be based on the fact that Fairfax was abandoning "an apparently good defence", making "a substantial concession" and abandoning "a substantial right". [82] Ms Liu argued that the value of the right forgone could not provide a justification for delaying its abandonment, particularly when Fairfax knew that course was open, but delayed taking it because it thought it would defeat the preliminary discovery application on other grounds. Rather, the inquiry had to be directed to the way Fairfax had resisted the preliminary discovery application, then fundamentally sought to change its position when it lost and had exhausted all avenues of appeal.
13. In any event, Ms Liu submitted that, properly examined, it could not be said Fairfax had a good qualified privilege defence because it could not be said to have acted reasonably. [83] The source documents described Mr Fitzgibbon wrongly, an error Fairfax sought to disguise in the matters complained of, Fairfax never saw the original documents and never communicated with the sources personally.
14. Insofar as her second proposition was concerned, Ms Liu urged the Court to apply Hayne JA's reasoning in DA Christie Pty Ltd v Baker, [84] and Mason P's adoption of that reasoning in Nominal Defendant v Manning, [85] to hold that a litigant is not permitted to relitigate a matter unless there has been some change in circumstances or some new material not available at the first hearing. She argued that, if Manning was thought to stand in the way of her submission concerning second consideration of an interlocutory issue, the Court should reconsider it and adopt the position taken in Christie by Hayne JA. Alternatively she submitted that, in any event, the course Fairfax took constituted an abuse of process within the principles identified in both Christie and Manning.
15. Ms Liu also submitted that what happened in Cojuangco CA (No 2) following the High Court decision did not have any bearing on the outcome of her case when Mr Cojuangco had not objected to the course John Fairfax took for any of the reasons she advanced, and neither Brimaud nor case management principles were referred to. Alternatively, she contended that if anything in Cojuangco CA (No 2) was thought to sanction Fairfax's approach and the primary judge's disposition of its application, that decision was wrong to that extent and should no longer be followed.
16. Finally, Ms Liu submitted that the primary judge's reasons did not provide a satisfactory basis for the stay order. She contended that the value of a right forgone could not justify delaying its abandonment, with full knowledge abandonment was an available option.

Ms Liu's submissions: effective remedy

1. Next, Ms Liu submitted that in staying the preliminary discovery order, the primary judge erred in concluding she had an effective remedy against Fairfax. [86]
2. At the heart of this submission was Ms Liu's contention that without the documents the sources supplied, there could have been no article. Reproductions of the documents illustrate the article. They are extensively quoted and, she submitted, provided the sole basis for the allegation that she bribed Mr Fitzgibbon.
3. Ms Liu argued that the sources deliberately forged the letters Fairfax relied upon, which purported to be on her company's letterhead and to have been signed by her in which she admitted bribing Mr Fitzgibbon. She contended the sources then attempted to sell those letters to The Age for $200,000. The forged documents were sent to Fairfax as PDF attachments to emails and, as a result, it never saw, nor had possession of, the original documents before publishing the matters complained of. [87] She contends that all the matters complained of were based on the allegedly forged documents, extensive quotes from and pictures of which were at their core. The primary judge had found the allegation of forgery had substance. [88]
4. Ms Liu argued that the effect of the stay was that if she was unable to pursue defamation (and other) proceedings against the sources she would be unable to vindicate her reputation fully, that is to say, to "nail the lie". [89] She emphasised that in Liu (No 1), the primary judge accepted that a significant consideration was that if Ms Liu was unable to identify the sources, she would "in effect be left without the opportunity to pursue a remedy that would see the issue of the alleged forgery fully litigated and determined." [90]
5. Ms Liu submitted, without contradiction by Fairfax, that handwriting experts could not determine the authenticity of the copy documents Fairfax had received from its sources. Rather, such experts had to have access to the originals. She argued that the effect of the stay order was that she would not be able to seek discovery of the original documents from the sources.
6. Alternatively, Ms Liu submitted that even if the sources did not have the original documents, knowledge of their identities would go a long way to resolving the question whether the documents were false. For example, if the sources were revealed to be people who had an animus against her, that would enhance her prospects of proving that the documents were not genuine.
7. Ms Liu also submitted that in the event Fairfax pleaded truth to an imputation that she had bribed Mr Fitzgibbon, without access to the original documents to test their authenticity, she would be disadvantaged if Fairfax was permitted to tender the allegedly forged documents as business records under s 69 of the Evidence Act 1995 (NSW). [91] She argued it was not a sufficient answer to this submission to say she could give evidence that the documents were forgeries as a jury may not accept that bare assertion.
8. Ms Liu also submitted that she needed to be able to demonstrate the forgery of the documents in order to make good her claim for aggravated damages based upon her knowledge of the falsity of the imputations. [92] The stay order deprived her of a valid forensic tool capable of being used to advance her case on that basis.
9. Next, Ms Liu submitted that the primary judge erred in apprehending that the only claim available to her against the sources was one in defamation. Rather, she argued she also had a claim against the sources pursuant to s 18 of the Australian Consumer Law. This was because numerous representations she contended were conveyed by the forged documents (which included the imputations relied upon in the defamation causes of action) were made in trade or commerce by the sale of the documents to Fairfax. [93] Further, Ms Liu submitted that while she had a claim against the sources for misleading and deceptive conduct in selling the documents, she had no such claim against Fairfax because of the information providers' exemption. [94]
10. Further, Ms Liu submitted that if her case that the documents Fairfax referred to in the matters complained of were forgeries was correct, she had been the victim of a criminal conspiracy to obtain money by deception. She contended that there was a public interest in determination of that issue, which could only be achieved if the identities of the sources were revealed.
11. Finally, Ms Liu submitted that the primary judge erred in not recognising that the question whether it was in the interests of justice that she be able to identify the sources did not turn only on the question of effective remedy. Rather, Ms Liu contended that the weight of authority in this Court was to the effect that she was entitled to use defamation litigation as a means of vindicating her reputation and as a means of mitigating the sting of the wrong done to her by judgments against her chosen defendant. She submitted that this should properly be taken into account. [95]

Ms Liu's submissions: costs of the preliminary discovery hearing

1. Finally, Ms Liu submitted that the primary judge should have awarded her indemnity costs for the entirety of the proceedings, not merely the stay application.
2. She argued that Fairfax's conduct was inimical to the interests of justice and that the prejudice she suffered could not be cured by a costs order, [96] still less a costs order on the ordinary party-party basis. Such an order did not fairly or sufficiently recognise her rights. By reason of the failure to give the Fairfax undertaking in a timely manner, she had been put to considerable unnecessary expense which could only be adequately compensated by an award of indemnity costs. She also submitted that such an order was warranted having regard to Fairfax's conduct and the unnecessarily prolonged nature of the litigation.

Fairfax's submissions: exercise of discretion

1. Fairfax submitted Ms Liu had failed to demonstrate any error on the part of the primary judge which would warrant appellate intervention. It argued that Ms Liu's submissions failed to take account of the important public policy considerations weighing against the making of the preliminary discovery order which, together with the Fairfax undertaking, shifted the balance in favour of granting the stay application.
2. In this respect, Fairfax relied upon the public interest in the free flow of information in the community about government and political matters, arguing it was an indispensable incident of Australia's constitutional system and of vital importance to electors. Fairfax also relied upon the concomitant public interest in maintaining the confidentiality of sources who provide such information to the press, and the "chilling effect" on the flow of information caused by disclosure of their identities. [97]
3. Fairfax submitted that the need to protect the identity of persons who expose information which might, without such protection, never see the light of day, was a corollary of the "indispensable incident" of the system of representative and responsible government recognised in Lange. [98] It contended that the Fairfax undertaking decisively altered the fine balance that existed at the time of the first hearing, which, taken with considerations the primary judge identified in Liu (No 1), [99] provided an overwhelming reason to grant the stay.
4. Secondly, Fairfax submitted Ms Liu's contention that the stay application was an abuse of process was founded upon assertions which were unsupported by evidence as to its state of mind and objectives in the conduct of the preliminary discovery proceedings. It submitted that an unsuccessful party to an interlocutory application may relitigate the issues it raised where the interests of justice so required. It argued that Ms Liu had not demonstrated how its knowledge of the course of the Cojuangco proceedings supported the conclusion that it had made a deliberate decision not to give that undertaking at the first hearing in order to conduct a "dress rehearsal."
5. Fairfax also submitted that Ms Liu's abuse of process submission did not take into account various matters, including that the primary judge found its opposition to the preliminary discovery application was "proper", [100] and "respectable and proper", [101] her Honour having accepted that Fairfax opposed the application in the belief that it would win such that the stay application did not entail any impropriety. Fairfax also submitted that Ms Liu's failure to cross-examine its solicitor and put the serious allegation of abuse of process to him was fatal to Ms Liu's abuse of process submission.
6. Fairfax argued that the effect of Ms Liu's abuse of process submission was that it would have been required from the outset to abandon legitimate defences to any defamation proceedings, defences the primary judge found might well succeed, [102] in order to avoid an order for preliminary discovery. It also contended that Ms Liu's submission that such abandonment should have occurred before it had the opportunity to see the claim in defamation brought against it and make a proper assessment of what other defences might be available was absurd. Such submission, Fairfax contended, would permit plaintiffs strategically to seek preliminary discovery from media defendants prior to commencing proceedings for defamation in order, in substance, to compel such defendants to abandon any qualified privilege defence. Rather, Fairfax contended, subject to a position being legitimately available, parties need to be free to exercise forensic judgments as to the manner in which proceedings are defended.
7. Thirdly, Fairfax disputed Ms Liu's submission that the costs of the preliminary discovery application and all subsequent proceedings had been wasted. It contended that that submission assumed that, had the Fairfax undertaking been given earlier, Ms Liu would not have proceeded with the preliminary discovery application, a proposition which was unsupported by evidence.
8. Further, Fairfax contended that Ms Liu's submission that she did not have an effective remedy notwithstanding the giving of the Fairfax undertaking, suggested that she would have persisted in her application regardless of when that undertaking was given. All that would have changed, Fairfax submitted, was the timing of the result. Accordingly, there was no basis for a finding that the costs of the preliminary discovery application were wasted so as to warrant an indemnity costs order.
9. Fourthly, insofar as Ms Liu relied upon CPA, ss 56 - 60, Fairfax submitted that the present case was in effect sui generis because of the public policy considerations to which I have referred. Fairfax also sought to distinguish Manning and Christie on the basis that those cases did not address such public policy considerations and, too, involved repeated applications by an applicant, whereas the present case involved the respondent to an application. In this context, Fairfax argued it was significant that, on Ms Liu's argument, it would have been required to abandon a "legitimate and valuable defence to proceedings remote to the actual application".
10. Next, Fairfax submitted that, assuming the case management principles reflected in CPA, ss 56 - 60 applied to the stay application, they did not mandate its refusal. It argued the primary judge correctly held that such principles were but one factor in the synthesis of factors the CPA required to be considered and that the attainment of justice was of equal relevance. It argued that, in the light of the significance of the Fairfax concession and the significance of the competing issues at stake, the just outcome was that which the primary judge had determined.
11. Finally, Fairfax submitted that nothing in the primary judge's exercise of her discretion conflicted with Cojuangco (No 2). Each case turned on its particular circumstances.

Fairfax submissions: effective remedy

1. Fairfax submitted that the primary judge had correctly applied Cojuangco HC (at 357) in concluding Ms Liu had an effective remedy without recourse to an action against the sources. It contended that "effective" did not mean "perfect" or "the best available" and was not synonymous with the result that the plaintiff wanted, nor was it to be equated with the cause of action or remedy that produced the largest amount of damages a plaintiff might notionally receive, depending upon whom the plaintiff sued.
2. Further, Fairfax argued that Ms Liu's submission that if the sources were not identified she would be unable to proceed against it and relitigate the issue of the forgery of the documents was tendentious. It contended that, even if there was an issue at trial about the authenticity of the documents, Ms Liu could give evidence which, if accepted, would lead the Court to conclude the documents were forged. Such evidence was as available to be given in the proceedings against Fairfax as in any mooted proceedings against the sources. Fairfax submitted that on the face of the statements of claim as filed, there was no pleading which would lead to the issue of forgery being "fully litigated". It contended the submission was founded on speculation that it and/or the sources might plead a defence which raised the issue. Fairfax contended, in substance, that even if it pleaded truth and sought to tender the allegedly forged documents, it would be required to prove their provenance or authenticity such that Ms Liu would be able to seek to demonstrate that they were forged.
3. Fairfax submitted that Ms Liu's submission that its abandoned qualified privilege defences were hopeless was ironic, given her position that she did not have an effective remedy because the qualified privilege defences might succeed. In any event, on the issue of the reasonableness of its conduct, Fairfax pointed to communications between one of the authors of the matters complained of, Mr Baker, and Mr Junn, a solicitor Fairfax described as "the go-between between Mr Baker and [Ms Liu]" for the purposes of obtaining her response to the allegations which were to be published and the allegedly forged documents.

Fairfax submissions: costs of preliminary discovery hearing

1. Finally, Fairfax submitted that Ms Liu had demonstrated no basis upon which she should have been awarded indemnity costs of the preliminary discovery hearing irrespective of the outcome of the stay application. To the extent that issue turned on the fact that the stay application was granted, Fairfax contended that the primary judge did not err. In this respect it relied upon its submissions on its application for leave to cross-appeal, in which it contends the primary judge ought to have ordered Ms Liu to pay its costs of the first hearing or that there should have been no order as to costs.

Reply submissions

1. In reply, Ms Liu submitted that Fairfax's submissions appeared to suggest that there was a special privilege for media defendants arising from the public interest in protection of sources which enabled such defendants to behave in a manner unavailable to other litigants, that is to say, to conduct a case on one basis for years, then eschew that basis and adopt another. Ms Liu submitted that the same rule applied to media litigants as to other litigants.
2. Secondly, Ms Liu submitted that the question of Fairfax's purpose in taking the course it did was beside the point. The only relevant question was whether Fairfax adopted a course inimical to case management principles. In this respect Ms Liu submitted that Fairfax knew it was open to it to disclaim the qualified privilege defences at the preliminary discovery hearing stage, but that it had chosen not to do so for some forensic reason. Having made that choice, Ms Liu submitted, justice required that it be kept to it.
3. Finally, Ms Liu submitted that unless she had the opportunity to prove the documents were forgeries, she did not have an effective remedy absent, for example, Fairfax admitting that fact and disclaiming any attempt to prove otherwise. She submitted that Fairfax must have a pretty good idea of what it might plead in defence to her proceedings.

Substantive rights

1. Fairfax emphasises two matters of public interest as of critical importance to the primary judge's decision to grant the stay application. First, the public interest in the free flow of information in the community about political and government matters ("freedom of communication"). Secondly, the public interest in maintaining the confidentiality of sources who provide such information to the press and the "chilling effect" on the flow of such information caused by disclosure of their identities ("the newspaper rule"). It is necessary to place each asserted public interest in context.

Freedom of communication

1. The freedom of communication between the people concerning political or government matters which enables the people to exercise a free and informed choice as electors ("the freedom") protected by the Commonwealth Constitution is not an "absolute freedom", but "is limited to what is necessary for the effective operation of that system of representative and responsible government provided for by the Constitution." [103] Accordingly, it may be subject to legislative restrictions serving a legitimate purpose compatible with the system of representative government for which the Constitution provides where the extent of the burden can be justified as suitable, necessary and adequate, having regard to the purpose of those restrictions. [104]
2. The "extended common law defence of qualified privilege" ("extended qualified privilege defence") which protects communications made to the public on a government or political matter is one example of a compatible legislative restriction. [105] This reflects the fact that the purpose of the law of defamation is to strike a balance between the right to reputation and freedom of speech and that it is not to be supposed that the protection of reputation is a purpose that is incompatible with the requirement of freedom of communication imposed by the Constitution. [106]
3. For the purposes of the extended qualified privilege defence recognised in Lange, the Court identified the common law requirements of reciprocity of duty and interest essential to a claim of common law qualified privilege [107] in the following manner. First, the Court held that each member of the Australian community has an interest in disseminating and receiving information, opinions and arguments concerning government and political matters that affect the people of Australia. [108] Secondly, the duty to disseminate such information is the correlative of the interest in receiving it. [109] Thirdly, the common convenience and welfare of Australian society are advanced by discussion - the giving and receiving of information - about government and political matters. [110] Fourthly, a requirement of reasonableness, such as that required by s 22(1)(c) of the Defamation Act 1974 (NSW) ("1974 Act"), was properly to be seen as reasonably appropriate and adapted to the protection of reputation and thus not inconsistent with the freedom of communication which the Constitution requires. [111] Fifthly, the reasonableness requirement was imported as an element only when the extended category of qualified privilege was invoked to protect a publication that would otherwise be held to have been made to too wide an audience. [112] Finally, the protection of the reputations of those defamed by widespread publications was further enhanced by the requirement that the defence will be defeated if the person defamed proves that the publication was actuated by common law malice to the extent that the elements of malice are not covered under the rubric of reasonableness. [113] Malice in the context of the extended qualified privilege defence in its application to communications with respect to political matters "[was] to be understood as signifying a publication made not for the purpose of communicating government or political information or ideas, but for some improper purpose." [114]

The newspaper rule

1. The "newspaper rule" is a special exception in the discovery process made in favour of publishers, proprietors and editors of newspapers as defendants in actions of libel from the general rule that discovery by affidavit of documents and answer to interrogatories must be made of all relevant matters. The foundation of the rule is the special position of those publishing and conducting newspapers and the desirability of protecting those who contribute to their columns from the consequences of unnecessary disclosure of their identity. [115] The justification for the newspaper rule is the assumption that the responsibility of the newspaper for the republication of what is said to it by an informant is necessarily coextensive with the responsibility of the informant for what has been published in the newspaper ("the coextensivity principle"), so that it is undesirable (because it is unnecessary) for plaintiffs at the interlocutory stage of proceedings to delve around for other targets. [116]
2. The newspaper rule only protects the identity of the source from disclosure, not the information provided, unless disclosure of the latter would reveal the identity of the source. [117]
3. The "precise area of operation of the newspaper rule" is "shrouded in uncertainty, as might be expected of a principle erected on shifting foundations." [118] What is clear, however, is that the media and journalists have no public interest immunity from being required to disclose their sources of information when such disclosure is necessary in the interests of justice. [119] To recognise such immunity would offend the paramount interest in the administration of justice which requires that cases be tried by courts on the relevant and admissible evidence. [120] While the court recognises the importance of the free flow of information to journalists, that free flow does not find recognition in an absolute protection in the confidentiality of journalists' sources. To do so would set such a high value on a free press and on freedom of information as to leave the individual without an effective remedy in respect of defamatory imputations published in the media. [121]
4. Rather, the law gives effect to the recognition of the public interest in the free flow of information by exercising a discretion to refuse to order disclosure of sources of information in interlocutory proceedings in defamation, even though disclosure would be relevant to the issues for trial in the action. [122]
5. However, the newspaper rule is a rule of practice, not of evidence, which guides or informs the exercise of the judicial discretion in interlocutory proceedings in defamation (and related) actions. [123] Thus, discovery of a source's identity can be required prior to trial if special circumstances justify such an order. [124] Disclosure can also be obtained at the trial of the action if it is necessary to do justice between the parties. [125]
6. In Liu (No 1), Fairfax submitted that in the light of the implied freedom of political communication recognised in Lange, it should be held that the effect of the newspaper rule was absolute and prevented the disclosure of a journalist's confidential source of information consisting of or used in discussion of matters of government or politics, and that UCPR 5.2 unduly burdened the implied constitutional freedom. [126] The primary judge rejected that submission. [127]
7. This Court upheld her Honour's decision in Liu CA (No 1). Bathurst CJ held that UCPR 5.2 was reasonably appropriate and adapted to serve a legitimate end in a manner compatible with the maintenance of the constitutionally prescribed system of government, because it secured a legislative end "to facilitate civil causes of action where persons who legitimately wished to bring proceedings were frustrated or prevented from doing so by lack of information as to the identity or whereabouts of the proposed defendants". [128]
8. In the context of the present case, the rule achieved the objective of protecting persons from false and defamatory statements by unidentified persons when they may otherwise have no redress, having regard to the defence of qualified privilege available to the newspaper journalist or media outlet which transmitted the information. In his Honour's view, the maintenance of a constitutionally prescribed system of government did not require that persons who provided information, but declined to reveal their identity, should be put in a better position than persons whose identity could be ascertained without resort to UCPR 5.2 or its equivalent. [129] As I have said, the High Court refused Fairfax's application for special leave to appeal from this decision.

The newspaper rule and preliminary discovery

1. The application of the newspaper rule in the context of a preliminary discovery application was considered in proceedings seeking such relief brought by Mr Eduardo Cojuangco against John Fairfax and Sons Ltd and a journalist, Peter Hastings (together "John Fairfax"), the author of an article published by John Fairfax and Sons Ltd which Mr Cojuangco alleged defamed him. Mr Cojuangco sought to identify Mr Hastings' sources of information in order to commence proceedings for defamation in New South Wales against them.
2. Hunt J acceded to that application. Among Hunt J's reasons for making the preliminary discovery order in Cojuangco (No 1) was the likelihood that John Fairfax had a successful defence of statutory qualified privilege pursuant to s 22 of the 1974 Act, which would lead to a different result in the action against the newspaper from that which would be produced in an action against the journalist's informant. [130] His Honour concluded that, absent identification of the sources against whom Mr Cojuangco could bring proceedings, he lacked an effective remedy. As the coextensivity principle would not apply, Hunt J determined it was in the interests of justice that John Fairfax disclose the identity of the sources against whom Mr Cojuangco was likely to obtain such relief. [131]
3. Hunt J focused upon the s 22 defence because, in his Honour's view, all other defences (comment, truth or any other defence) available to each defendant would produce the same result. [132] As his Honour explained, the issue was not whether the applicant was likely to succeed against the newspaper, but whether he was likely to obtain the relief to which he was entitled if he was restricted to suing the newspaper. Thus, he had an effective right of action against the newspaper, in the sense that he was able to obtain against it all the relief to which he was entitled even if, by reason, for example, of the truth of what was republished by the newspaper, he was likely to fail against both the newspaper and informant. [133]
4. Hunt J ordered Mr Cojuangco to pay the costs of the preliminary discovery application, even though he had been successful in securing the relief he sought. This was because, at the time, the Supreme Court Rules 1970 (NSW) ("SCR") Pt 52 r 21 permitted a successful applicant for preliminary discovery to recover his or her costs of the application as part of the costs awarded in his or her favour should any subsequent action succeed. [134]
5. The Court of Appeal dismissed John Fairfax's appeal from Hunt J's preliminary discovery order as, too, did the High Court. [135] Both courts ordered John Fairfax to pay the costs of the appeal.
6. In Cojuangco HC, the High Court held that the newspaper rule was not capable of applying directly to preliminary discovery applications pursuant to SCR Pt 3 r 1. This was because the respondent was "not, as such, a defendant in a defamation action", nor was a preliminary discovery application "an interlocutory proceeding in such an action." [136]
7. The Court considered one very powerful reason for denying that the rule had a direct application to preliminary discovery was that the object of such an application was to ascertain the identity of an informant so that the applicant might take proceedings against that person. [137]
8. Nevertheless, the Court held that the policy considerations which underline the existence of the newspaper rule were factors to be taken into account in the exercise of the judicial discretion conferred by the rules governing preliminary discovery actions. This did not, the Court held, mean that an applicant for preliminary discovery failed unless he or she made out a case of special circumstances. Rather, such an applicant had to demonstrate that the order sought was necessary in the interests of justice. That is to say, that the making of the preliminary discovery order was necessary to provide the applicant with an effective remedy in respect of the actionable wrong of which he or she complained. [138]
9. The High Court was of the view that Hunt J's reference to "the likelihood of a successful defence" "should be read as a statement that the defence was open to be pleaded and might well succeed". [139] On that basis, the Court held that where, in the course of a preliminary discovery application, it appeared the newspaper and journalist may plead qualified privilege pursuant to s 22 of the 1974 Act, "a judge is entitled to exercise his judicial discretion in favour of making the [preliminary discovery] order sought if the newspaper and the journalist do not relinquish that defence and the judge considers that the defence might well prevail". [140]

Effective remedy

1. Following the High Court's rejection of its appeal, John Fairfax applied before Hunt J to set aside the preliminary discovery order on the basis that it undertook not to call Mr Hastings to give evidence at the trial of any defamation action against it. [141] His Honour acceded to that application.
2. In the course of his reasons, Hunt J returned to the question of "effective remedy". His Honour held that the practical application of the High Court's "might well succeed" formulation of the test was "there is a substantial or real or good chance that [the defence] will succeed, regardless of whether that chance is less or more than fifty per cent." [142] He held that a defence of statutory qualified privilege pursuant to s 22 of the 1974 Act could not succeed if Mr Hastings was not called. [143] On that basis his Honour set aside the preliminary discovery order.
3. In Cojuangco (No 2), Hunt J also held that a plaintiff had an effective remedy if he or she might obtain the same compensation from the newspaper as from the source. [144] It was not sufficient that a plaintiff wished to vindicate his or her reputation against the source or obtain "additional satisfaction" by "having the compensation paid by one rather than the other tortfeasor". Such matters did not lead to the plaintiff potentially suffering monetary loss. [145]
4. When he considered the issue of costs, his Honour rejected John Fairfax's submission that it should not have to pay the costs of the second hearing for the same reasons it had not had to pay the costs of the first. His Honour observed that if John Fairfax had given the undertaking not to call Mr Hastings at the time of the original hearing, the application for preliminary discovery would have been refused at that time. He made it clear that John Fairfax's "application to have the previous order reconsidered upon the basis of additional material which could (and should) have been produced at the original hearing is heard as a matter of indulgence" (emphasis added). In his Honour's view, John Fairfax had to "pay for that indulgence", even though it had been successful in having the order for preliminary discovery set aside. His Honour ordered each party to pay his and its own costs of the original preliminary discovery hearing. [146]
5. Mr Cojuangco appealed against Hunt J's order. Mr Hastings died before the appeal was decided. In the Court of Appeal, John Fairfax undertook not to rely upon a s 22 defence. In those circumstances, the Court of Appeal (Mahoney and Handley JJA, Kirby P dissenting) held that Mr Cojuangco's appeal should be dismissed. [147]
6. Mahoney JA held that once John Fairfax had abandoned its qualified privilege defence, the interests of justice did not require a preliminary discovery order because Mr Cojuangco had an effective remedy against John Fairfax without the necessity of such an order. [148] Handley JA held that effective remedy in this context meant a remedy against the newspaper no less effective than an action against the sources. This meant that "the plaintiff in his action against the newspaper must not be faced with any defence in addition to those that would also be available to the sources if they were sued." [149]
7. Mahoney JA would have ordered Mr Cojuangco to pay John Fairfax's costs of the appeal. However, Handley JA was of the view that John Fairfax should pay not only the costs of the appeal which, in his Honour's view, would have succeeded if the qualified privilege defence had not been abandoned, but also the costs of the original preliminary discovery proceedings. [150] Mahoney JA joined in that costs order as both Kirby P and Handley JA were agreed on the costs issue, albeit for different reasons. [151]
8. In Cojuangco (No 1), Hunt J made it plain that his decision did not formulate a general rule but, rather, that the question whether a preliminary discovery order should be made fell to be determined by the circumstances of each case. [152]
9. It seems clear from Cojuangco HC that those circumstances can go beyond the likely award of damages. In holding that Hunt J did not err in exercising his discretion in favour of making the preliminary discovery orders, the High Court observed: [153] "The striking feature of the case is that the publication complained of consists essentially of defamatory imputations attributed to 'a senior American bank official and prominent local businessmen' and 'one of the leading local US banks'. 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." (Emphasis added)
10. In addition, the Court had regard to the serious nature of the defamation, given that Mr Cojuangco was a prominent personality in the Philippines whose reputation "might well be gravely compromised by imputations attributed to the sources mentioned in the publication." Accordingly, the Court held Mr Cojuangco should be given the opportunity of discovering the precise identity of the sources and deciding upon such action as he then considered appropriate. [154]
11. Subsequent decisions on the meaning of effective remedy have not only looked to the issue of either coextensive relief or the likely recovery of the same monetary compensation. In the Guide Dog Owners' Case, Marks J held that in Cojuangco, the High Court meant the expression "effective remedy" to mean that if a plaintiff was able to succeed in the proceeding against an existing newspaper defendant, there would be no injustice in his or her not obtaining the same judgment against another party. However, if the chance of success was put in real jeopardy by a defence not equally available to another party whose identity was not known to the plaintiff, the interests of justice would require discovery of that other party for the purpose of joinder. The exercise of the discretion to grant preliminary discovery required evaluating "the reality of any danger which a defence represents and of the likelihood that the risk of failure of the claim will be reduced by suit against some other wrongdoer." (Emphasis added) His Honour also considered it to be relevant that in the ordinary case the Court did not interfere with the right of a litigant, subject to practice rules, to join any party who may be liable. [155]
12. In West Australian Newspapers Ltd v Bond, [156] Mr Bond contended that discovery of two audiotapes of telephone conversations between a journalist and an unnamed source was necessary for him to be able to satisfy his burden of proof, on the balance of probabilities, of the essential elements of his causes of action in conversion and for breach of confidence. The journalist objected to discovery, relying on the newspaper rule. It appears to have been assumed that if discovery was ordered, the identity of the unnamed source would be revealed. [157] The Court of Appeal approached the issue on the assumption the newspaper rule applied to those causes of action. [158]
13. Buss JA (Owen and Wheeler JJA agreeing) held that disclosure should not be ordered at an interlocutory stage of pending proceedings unless "really needed or there is a compelling reason for disclosure, at that time, to enable the issues at the trial to be properly and fairly determined as between the parties; for example, to enable the plaintiff to establish the elements of a cause of action alleged in the proceedings, or otherwise to do justice between the parties." [159] Among the factors his Honour considered relevant to determining whether disclosure was necessary in the interests of justice were whether, in the particular case, the information the source revealed on a confidential basis appeared to be a matter of genuine public interest, including whether the information disclosed an iniquity, the elements of the plaintiff's cause(s) of action, whether the plaintiff was likely to experience real and substantial difficulty in proving any element of any cause of action without the disclosure of the identity of the confidential source and whether any difficulty in proof as a result of the non-disclosure of the identity of the source was likely materially to complicate the trial. [160]
14. His Honour considered that if a plaintiff in pending proceedings would be left without "an effective remedy" against the defendant in those proceedings or there was a real (as distinct from a fanciful) prospect that the plaintiff would be left without such a remedy, unless the defendant was ordered to disclose the identity of a confidential source, that circumstance would, ordinarily, be a powerful (if not the decisive) factor favouring the exercise of the court's discretion, at the interlocutory stage, to order disclosure. [161]
15. In addition, the Queensland Court of Appeal in Hodder v Queensland Newspapers Pty Ltd held that the identity of the source must be required for some reason other than "mere relevance", having regard to the criterion for the favourable exercise of the discretion that it be "necessary in the interests of justice". [162]

The procedural matrix

1. The appropriate characterisation of the proceedings below is relevant to two issues. First, as to the circumstances in which it was open to the primary judge to reconsider her decision in Liu (No 1). Secondly, insofar as the stay order is concerned, whether leave to appeal to this Court is required.

The stay order

1. The debate about the primary judge's power to vacate the preliminary discovery order was resolved when the parties agreed that her Honour had power to stay execution of the order. [163]
2. In written submissions apparently prepared for the argument about the power to vacate the preliminary discovery order, Fairfax submitted the court had inherent power to stay the order which was not abrogated by CPA, s 67. In written submissions filed after the parties' agreed position was communicated to the primary judge, Ms Liu contended that her Honour's stay power could be found in either CPA, s 67 or s 135, or the Court's inherent jurisdiction. [164]
3. The primary judge did not identify the source of the power she was exercising on the basis, it would appear, that Fairfax was content for the Court to determine only the claim for a stay, and Ms Liu accepted her Honour had power to entertain that application. [165]
4. In her written submissions in this Court Ms Liu asked rhetorically what power the primary judge was exercising when her Honour stayed the preliminary discovery order on either an interim or, effectively, a final basis. She contended that precise identification of the nature of the relief sought was necessary to determine what constraints governed it. She submitted that her Honour was "presumably" exercising the power conferred by s 135(2), CPA. Fairfax did not contest that proposition. Neither party advanced any submission as to how any constraints on the primary judge's exercise of the stay discretion might differ depending upon which identified source of power her Honour actually exercised.
5. CPA, s 135 empowers the court to give directions with respect to the enforcement of its judgments and orders, including, by virtue of s 135(2)(c), making an order prohibiting any other person from taking any further action, either permanently or until a specified day, to enforce a judgment or order of the court. [166]
6. Section 67 of the CPA confers a more general power on the court "to stay any proceedings before it, either permanently or until a specified day". It is found in Part 6 of the CPA, which deals with "Case management and interlocutory matters". The provision "does not identify any particular criteria as relevant to the exercise of the power but, at least in the Supreme Court … may be understood to cover a variety of circumstances in which the Court's inherent jurisdiction to prevent abuse of its process may be invoked." [167]
7. The statutory power s 135(2)(c) confers "is concurrent with the Court's inherent jurisdiction [to grant a stay] and may be exercised on the basis of facts and circumstances occurring after the date that the order was made". [168] The Court's inherent jurisdiction is substantially reflected in s 23 of the Supreme Court Act 1970 (NSW). While the inherent jurisdiction cannot be restricted to closed and defined categories of cases, the power is not at large. [169] It is to be exercised only as necessary for the administration of justice in this State.
8. It is appropriate to proceed on the basis that the primary judge was exercising the s 135(2)(c) power, but, to the extent the terms of that provision might be seen as imposing any limit on the ambit of that power, her Honour had power to stay the preliminary discovery order in the exercise of the inherent jurisdiction if such a course was necessary for the administration of justice.
9. It was uncontroversial in this Court that even though the effect of the stay order was to bring to an end Ms Liu's application for preliminary discovery, the stay order was interlocutory so that leave to appeal was required in accordance with SCA, s 101(2)(e). In Cojuangco CA (No 2), Kirby P (Handley JA agreeing) was of the view that as Hunt J's order setting aside the preliminary discovery order was "preliminary to an action in defamation it [was] clearly interlocutory in character." [170] An order staying a preliminary discovery order would, a fortiori, fall into the same category. It is quintessentially a decision on a matter of practice and procedure which can be and may be removed if proper grounds are shown. [171]
10. Even though her Honour's decision that the stay application did not constitute an abuse of process was an "an evaluative decision of a subjective nature, regarding an issue upon which minds may differ", House v R [172] principles apply to its appellate review. [173]

The preliminary discovery order

1. An order is interlocutory unless it "finally determine[s] the rights of the parties in a principal cause pending between them." [174] It appeared to be relatively uncontroversial that the preliminary discovery order made in Liu (No 1) was interlocutory in nature. This approach accords with the weight of authority in intermediate appellate courts. [175]
2. An order for preliminary discovery is treated as interlocutory because it is not a principal cause, but, rather, a step preliminary to the instigation of substantive proceedings. It does not, nor is it intended to, determine finally the rights inter se of the parties to any substantive proceeding. Its function is to assist in that determination when, or if, a substantive proceeding is commenced "consequent upon what is revealed in the preliminary discovery [process]." [176]
3. Ms Liu's submissions wavered at times towards the proposition that, while the application may have been technically interlocutory, there was a "very close analogy to final proceedings". Hunt J expressed that view in Cojuangco (No 1), commenting that although the preliminary discovery orders his Honour had made were probably interlocutory in nature, their practical effect was undoubtedly final. [177] However, the question whether a judgment or order appealed from finally determines the rights of the parties so as to be treated as a final, as opposed to interlocutory, order turns on the legal, as opposed to the practical, effect of the judgment. [178]
4. In Dallas Buyers Club LLC, when considering the question of costs after a preliminary discovery application, Perram J observed that such applications are not "ordinary proceedings" as "[n]o rights are determined and no facts relating to any actual suit are found." [179] However, the application in the present case determined Ms Liu's right to invoke the Court's discretionary power under UCPR 5.2 to compel disclosure of the identity of the sources of the documents, and Fairfax's right to oppose the exercise of that discretion. [180]

Rehearing an interlocutory application

1. Because the preliminary discovery order was interlocutory, it created no res judicata, [181] issue estoppel or any extension of either doctrine in the Henderson v Henderson sense. [182] Accordingly, the primary judge (and the Court generally) had jurisdiction to set it aside, vary or discharge it. However, that does not mean there was no constraint upon the Court's power to do so. Rather, the general rationale of the principles relating to res judicata and issue estoppel, being the private injustice and public undesirability of permitting the relitigation of matters already litigated once, also applies to reconsideration of interlocutory orders. [183] It would be conducive to great injustice and enormous waste of judicial time and resources if that was not so. [184]
2. The constrained approach courts take to permitting interlocutory orders to be revisited reflects the proposition that a court must remain in control of its interlocutory orders but, too, that, a further order will be appropriate whenever, inter alia, new facts come into existence or are discovered which render its enforcement unjust. [185]
3. Nevertheless, the characteristics of finality of the proceedings in which the preliminary discovery order was made, as Ms Liu submits, bear upon the issue as to whether the primary judge ought to have entertained, and/or acceded to, the stay application.
4. In Brimaud, upon which Ms Liu place great weight, three directors of the defendant company unsuccessfully resisted the appointment of a provisional liquidator, they having been made parties to the winding up application. The directors did not adduce any substantive evidence during, or seek an adjournment of, the winding up application. Subsequently, they sought to set aside the order appointing the provisional liquidator, or alternatively an order that the provisional liquidator be removed.
5. McLelland J refused the application. His Honour said that not all kinds of interlocutory orders attracted the same considerations. However, his Honour held that where an interlocutory order of a substantive nature had been made after a contested hearing in contemplation that it would operate until the final disposition of the proceedings, the ordinary rule of practice is that an application to set aside, vary or discharge the order must be founded on a material change of circumstances since the original application was heard, or the discovery of new material which could not reasonably have been put before the court on the hearing of the original application. [186]
6. Ms Liu also urges the Court to adopt the preclusive rule identified by Hayne JA (as his Honour then was) in Christie, a case which concerned a second application under s 23A of the Limitation of Actions Act 1958 (Vic) for an extension of time within which to bring an action. The second application sought to remedy a deficiency identified in the dismissal of the first application. The additional material which the applicant sought to advance had been available to him at the time of the first application, yet no explanation was proffered as to why it was not advanced at that time. Hayne JA assumed it was omitted through oversight or neglect. [187] His Honour concluded that the second application required the respondent to meet the same kind of application that it had successfully resisted on the first occasion and was properly classed as an abuse of process. [188]
7. Hayne JA held that considerations of the private interest of litigants in having certainty as to whether an action may be brought against the litigant notwithstanding the expiration of the relevant limitation period, together with consideration of the important public interest in ensuring that judicial determinations are binding, final and conclusive, meant that the circumstances in which second applications under s 23A might be made after dismissal of an earlier application were limited. In his Honour's view, at least most cases of a second interlocutory application might be resolved by concluding that that application was an abuse of process unless there was proof of fraud or it was sought to adduce fresh evidence. [189]
8. Brooking JA agreed with Hayne JA's reasons on abuse of process, although his Honour would have held that the applicant was caught by the principle of issue estoppel. [190]
9. Charles JA was also of the view that principles of abuse of process should determine whether the second application should have succeeded. However, his Honour held it was not open to the Court to adopt what he described as a "preclusive rule" preventing the making of a second application for an extension of time. In his Honour's view, adoption of such a rule was inconsistent with High Court authority because it would have the effect of treating the order on the first application as if it were a final decision on the merits, and removing the element the High Court had said established the interlocutory nature of the order. [191] Accordingly, his Honour concluded that before an abuse of process was established, some factor other than reliance on additional relevant facts which did not amount to fresh evidence must be present. [192]
10. In Manning, the Court considered whether it should adopt Hayne JA's preclusive rule in determining whether, and in what circumstances, an interlocutory order could be revisited in the context of a second application for leave to commence proceedings pursuant to s 52(4) of the Motor Accidents Act 1988 (NSW). Like Christie, Manning concerned a second application relying on evidence to cure a deficiency identified in the first unsuccessful application where the evidence relied upon was available at the time of the first unsuccessful application.
11. The Nominal Defendant submitted that, having regard to the very important public interest in the courts ensuring that parties conduct litigation efficiently and expeditiously in interlocutory proceedings of all kinds, including proceedings to obtain extensions of time, only one application should be permitted unless there had been a change of circumstances, or unless the second application rested on evidence which could not, with reasonable diligence, have been obtained for use in the first application. [193] The Court by majority (Heydon JA and Foster AJA, Mason P dissenting) rejected that submission. The majority also refused to adopt the preclusive rule adopted in Christie. [194]
12. Foster AJA recognised the force of the Nominal Defendant's submission and its recognition of the undoubted public interest in forensic efficiency and the early finalisation of litigation. [195] However, his Honour found Charles JA's dissenting reasons in Christie more persuasive. [196] His Honour concluded that no additional factor was demonstrated which could cause the second application to be an abuse of process. It was not simply a repetition of the previously failed application or of judge "shopping", but a genuine endeavour to repair the deficiencies in the first application. [197]
13. Heydon JA agreed with Foster AJA, but also extensively addressed the Nominal Defendant's preclusive rule submission. His Honour pointed out that there are considerable differences between the particular goals of interlocutory orders, and the categories of circumstances in which such orders are made. Those differences made it difficult to propound a general rule suitable for all cases, when it was unlikely that a single set of rigid and exhaustive criteria could justly settle all issues. [198] Even though cases such as Brimaud referred to the "ordinary rule of practice", such "rules" had to be administered bearing in mind the over-riding principle governing the approach of the Court to interlocutory applications to do whatever the interests of justice required in the particular circumstances of the case. [199]
14. Accordingly, in Heydon JA's view, the Nominal Defendant's submission was "very wide" and "too extreme". [200] If accepted, it "would bind the court to reject the second interlocutory application in limine unless the circumstances had changed or there was fresh evidence." His Honour was concerned that justice could be thwarted if the gateways to a second interlocutory application were so circumscribed. Rather, all factors had to be evaluated, especially in the context that failure on the extension of time application meant the applicant would never be able to have the case considered on the merits, which may in turn have catastrophic consequences for the applicant and the applicant's family. [201]
15. His Honour observed, however, that rejection of the Nominal Defendant's submission was not intended to encourage litigants to avoid putting their best cases forward in any interlocutory application. His Honour viewed as extremely risky even the non-deliberate failure to tender evidence at a first interlocutory application, while the deliberate non-tender of evidence for use in a second interlocutory application should the first fail, or for use in an interlocutory appeal from the interlocutory application, might of itself be fatal to success. [202] Further, a litigant bringing a second application on evidence available earlier where circumstances had not changed was facing serious and self-created risks of an adverse exercise of judicial discretion. [203] Other relevant factors might include the unnecessary vexing of respondents, the diminution of certainty in the conduct by respondents of their affairs, damaging public confidence in the integrity of judicial decisions, expending time and money on litigation unnecessarily and the blameworthiness of the applicant. [204]
16. In dissent, Mason P classified McLelland J's statement in Brimaud concerning the limited circumstances in which a court would allow "a second contested run at the target" as "the rule of practice" of courts. [205] His Honour identified the category of reference for cases in which the "rule of practice" had been applied as abuse of process. [206] He agreed with Hayne JA's reasoning in Christie. He held that, subject to possible exceptions, the rule of practice meant that an attempt to evade that principle in a second substantive interlocutory application was an abuse of process. Once the Court concluded that a second interlocutory application fell within the letter and spirit of the rule of practice, in his Honour's view, it should be dismissed. [207]
17. Decisions of this Court since Manning have queried whether it should be revisited in the light, in particular, of the case management principles in CPA, s 56 - s 60. In Fletcher v Besser Sackville AJA observed, without casting doubt on the correctness of Manning at the time it was decided, that the CPA may need to be taken into account in determining whether a second application for an extension of the limitation period should be permitted where the application was based on evidence that was available at the time of the unsuccessful first application. [208]
18. Sackville AJA's remarks were endorsed by Barrett JA in Levy v Bablis. [209] His Honour saw them as recognition of the fact that the enactment of CPA, ss 56 - 60 raised a real question as to whether a second application should ever be granted where it was based on evidence that was available at the time of the earlier unsuccessful application. Applying Manning, his Honour dismissed an application to vary or discharge any part of orders made at an earlier hearing, having regard to the fact that there had been no material change of circumstances. In his Honour's view, the matters the appellant sought to advance had been known to him at the time the orders were made. Barrett JA inferred that the appellant had made a conscious and informed decision not to seek to deploy those matters at that time. In his view, no basis had been shown on which it would be just to allow the appellant to rely on those matters to vary orders. Further, the considerations to which CPA, ss 56 - 60 gave prominence would not be served by that course. [210]
19. In Lachlan v HP Mercantile Pty Ltd, [211] the Court held that CPA, ss 56 - 58 made plain and more prescriptive what was always the case, namely that the processes of the court are to be utilised for proper purposes and in a way that is efficient, cost effective and in accordance with the dictates of justice. The Court observed that the concepts found in those provisions reflected High Court statements to the effect that where a discretion is conferred on the court in general terms, the court is required to exercise that discretion so as to 'prevent injustice' or in accordance with the judge's view of the justness of the case.
20. In Bajramovic, the Court was asked to accept the suggestions made in Fletcher v Besser and Levy v Bablis to reconsider Manning in light of CPA, ss 56 - 60. Emmett JA (with whom Adamson J agreed) did not expressly deal with that submission. However, his Honour did observe that while it may be an abuse of process for a party who has been unsuccessful in obtaining interlocutory relief or in resisting interlocutory relief to re-litigate the very same question, it would not ordinarily be an abuse of process to endeavour to do so where there has been a change of circumstances or where evidence has become available that was not available at the time of the original hearing. The overriding principle is that the Court must do whatever the interests of justice require in the particular circumstances of the case. His Honour referred to Brimaud as establishing an ordinary rule of practice, but that the interests of justice must prevail in the particular circumstances of any case. [212]
21. Leeming JA observed that, if it had been appropriate to reconsider Manning in light of CPA, ss 56 - 60, it would be apt to have regard to the confirmatory effect of ss 56 - 58 on the exercise of discretions expressed in Lachlan v HP Mercantile Pty Ltd. [213]
22. Accepting the confirmatory effect of CPA, ss 56 - 60, mention should also be made of the views the High Court has expressed concerning case management in Aon Risk and Expense Reduction. In the latter case, the High Court exhorted the courts of New South Wales to "actively engage in case management in order to achieve the purposes of the CPA". Such case management is an accepted aspect of the system of civil justice administered by the courts in Australia. The CPA provides some broad powers to the court to enable it to fulfil its duties with respect to the management of proceedings. Its terms assume that its purpose, to a large extent, will coincide with the dictates of justice. [214]
23. In Aon Risk, the High Court considered case management principles as reflected in the Court Procedures Rules 2006 (ACT) ("ACT Rules") in connection with a dispute about amendments to pleadings. However, Aon Risk "confirmed as correct an approach to interlocutory proceedings which has regard to the wider objects of the administration of justice." [215]
24. In Aon Risk, the trial judge granted the plaintiff, the Australian National University ("ANU"), leave to amend its statement of claim to add a substantial new claim against the defendant, Aon Risk. The application to amend was made on the third day of a four week trial. The claim ANU sought leave to add concerned matters either known to it prior to the commencement of the proceedings and/or which were disclosed to it in the course of discovery. [216] The primary judge granted ANU leave to amend, in part because, in his Honour's view, the amendment sought to raise real triable issues. [217] The amendments his Honour permitted to be made to ANU's claim were substantial. [218] ANU deliberately gave no explanation for the need to amend. [219] Aon Risk appealed against the primary judge's order. It was unsuccessful in the ACT Court of Appeal. [220]
25. The High Court unanimously allowed Aon Risk's appeal. The plurality (Gummow, Hayne, Crennan, Kiefel and Bell JJ) held that the amendment discretion conferred by the ACT Rules was guided by the objectives in r 21(2), which required the rules in civil proceedings to be applied with the objective of achieving "the just resolution of the real issues in the proceedings" and "the timely disposal of the proceedings, and all other proceedings in the court, at a cost affordable by the respective parties." [221]
26. The plurality said that the "timely disposal" requirement indicated that the rules concerning civil litigation were no longer to be considered as directed only to the resolution of the dispute between the parties to a proceeding, but, too, that achievement of a just but timely cost-effective resolution of a dispute also had an effect upon the court and upon other litigants. [222] Thus, where a party has "had a sufficient opportunity to plead his or her case, it may be necessary for the court to make a decision which may produce a sense of injustice in that party, for the sake of doing justice to the opponent and to other litigants." [223]
27. Further, the necessity to minimise costs the ACT Rules directed, implied that an order for costs may not always provide sufficient compensation and therefore achieve a just resolution. It could not therefore be said that a just resolution required that a party be permitted to raise any arguable case at any point in the proceedings, on payment of costs. [224] The plurality was of the view that it was difficult to see that even an indemnity costs order could be sufficient compensation, given that Aon Risk would be required to again defend litigation which was, effectively, to be commenced afresh. [225] Such an approach to case management recognised that justice cannot always be measured in money and that a judge is entitled to weigh in the balance the strain the litigation imposes upon litigants. [226]
28. Factors which will be relevant to applying objectives such as those found in CPA, s 56 include the nature and importance of the change sought to be made to a party's case, the stage the proceedings have reached, the extent of any delay and the costs associated with it, together with any actual prejudice and that which might reasonably be assumed to follow. [227]
29. The plurality in Aon Risk expressed the view that, invariably, where there is delay in applying for an amendment the exercise of the amendment discretion requires an explanation. That is also generally the case whenever there is delay and a discretion is sought to be exercised in favour of one party, to the disadvantage of another. The explanation needs to show that the application is brought in good faith, and needs to bring the circumstances giving rise to the amendment to the Court's attention, so that they may be weighed against the effects of any delay and the objectives of the Rules. [228]
30. The plurality accepted that parties have choices as to what claims are to be made and how they are to be framed, but added that limits will be placed upon parties' ability to effect changes to their pleadings, particularly if litigation is advanced. It was for that reason, that in seeking the just resolution of the dispute, reference is made to parties having a sufficient opportunity to identify the issues they seek to agitate. [229]
31. The plurality considered it was significant that the effect of ANU's delay in applying for the amendment was that the trial was lost and the litigation substantially recommenced. This would impact upon other litigants seeking a resolution of their cases. A "just resolution" of ANU's claim required serious consideration of these matters, and not merely whether it had an arguable claim to put forward and, too, had to have regard to Aon Risk's position in defending it. Critically, the matters relevant to a just resolution of ANU's claim required it to provide some explanation for its delay in seeking the amendment if the discretion under r 502(1) was to be exercised in its favour and to the disadvantage of Aon Risk. [230] Having regard to those conclusions, the plurality held it was unnecessary to consider contentions Aon Risk advanced based on abuse of process. [231]
32. In summary, accordingly, the overriding principle governing the approach of the court to interlocutory applications is that the court should do whatever the interests of justice require in the particular circumstances of the case. [232] That consideration also applies to a second interlocutory application concerning the same, or what is substantially the same, issue or an attempt by a litigant who has unsuccessfully resisted an interlocutory application to re-agitate the same question. [233] However, in determining what the interests of justice require, the court will have regard, among other matters, to the nature of the first interlocutory application, the nature of the change in position and whether any matter relied upon to change the basis upon which the challenged earlier order was made, was open to be advanced at the earlier hearing.

Conclusion

1. The stay application was an attempt by Fairfax, the unsuccessful respondent in the first preliminary discovery application, in substance to relitigate that application. The order sought to be stayed was "the culmination of contested proceedings". [234]
2. The stay application was not based on an attempt to repair a deficiency identified in the first hearing. [235] The Fairfax undertaking which underpinned it was not based on the discovery of any new fact. Unsurprisingly, Fairfax conceded it was aware of the course of the Cojuangco proceedings at the time of the preliminary discovery hearing. The primary judge accepted that Fairfax knew at the time of that hearing of the potential benefit of giving the Fairfax undertaking at that time, and that it could have given the Fairfax undertaking then. [236] Her Honour also acknowledged that Fairfax could have proffered the Fairfax undertaking at the preliminary discovery hearing as a conditional position. [237]
3. Fairfax proffered no evidence as to why it had not taken either course, but, rather, had waited until the eleventh hour to proffer its undertaking. [238] To the extent there was any evidence, it was essentially that adduced at the preliminary discovery hearing concerning the undertaking of confidentiality to the sources and the statement that Fairfax and the journalist defendants continued to consider it and themselves obliged not to disclose the sources' identity. In other words, there was no change of circumstances, material or otherwise, based on any new information received since the first hearing. All that had happened was that Fairfax had exhausted all avenues of appeal. It then sought to move the goal posts, and refight the battle it had lost, one already fought at great length and, no doubt, at great cost.
4. The initial question which had to be determined on the stay application was whether, in those circumstances, it was in the interests of justice to enable Fairfax to relitigate the preliminary discovery question. [239] This included having regard to the nature of the proceedings Fairfax sought to relitigate, the characteristics of finality of those proceedings, the stage of the proceedings at which the application was made, any delay and the explanation or lack thereof for it, the consequences for the parties and the case management principles, including the effect of permitting that relitigation on the court and other litigants.
5. The primary judge's decision to grant the stay application was substantially based on her Honour's emphasis on the importance of the substantive right - the qualified privilege defences - Fairfax had to abandon to secure the stay. However her Honour, with respect, failed to take a number of factors into consideration which were relevant to the question whether the stay application was an abuse of process, or should otherwise be disallowed because it offended principles as to permitted relitigation of an interlocutory matter and/or case management principles.
6. First, as I have said, her Honour emphasised the substantive defences Fairfax was abandoning. However, her Honour placed no apparent weight on the fact that those rights are part of the law of defamation, the other aspect of which is Ms Liu's right to reputation. It is possible her Honour took that course because of the conclusion she reached on effective remedy. However, in my view, if that was her Honour's approach, it was incorrect. Ms Liu's right to vindicate her reputation by having access to the source materials was a substantive right to be evaluated in the context of determining whether, having once successfully established it was in the interests of justice that she should have access to materials identifying the sources, she should be stripped of that victory by, at best, an afterthought on Fairfax's part.
7. Secondly, her Honour placed great weight on the gravity of compelling a journalist to reveal a source's identity, one of the factors underpinning the newspaper rule. However her Honour failed, again with respect, to take into consideration that that rule does not confer an absolute immunity on the confidentiality of sources. Rather, it operates in a system enabling individuals to protect their reputations in defamation proceedings which should be determined on relevant and admissible evidence.
8. Thirdly, her Honour failed to take into consideration the nature of the proceedings. In Cojuangco HC the High Court moderated the "special circumstances" test applied in determining in the course of a trial whether disclosure of sources' information otherwise protected by the newspaper rule should be ordered, to a test whether a disclosure order was "in the interests of justice". The High Court took that step because it recognised the anomaly of applying the newspaper rule with full force and effect in proceedings whose object is to ascertain the identity of an informant so that the applicant may sue that person. [240]
9. Fourthly, in any event, the primary judge failed to take into consideration that when a party is seeking an indulgence which has the effect of fundamentally reframing a case, albeit at an interlocutory stage, matters such as the private injustice and public undesirability of permitting the relitigation of matters already litigated once, need to be considered. [241] Her Honour did not take into consideration the strain the preliminary discovery litigation must have imposed on Ms Liu. [242] By the time the stay application was made, the proceedings had been on foot for almost three and a half years, during which time they had progressed from the first instance hearing to the Court of Appeal and to the special leave stage in the High Court. At no stage had Fairfax suggested it might proffer the Fairfax undertaking, conditionally or at all. By the end of the special leave proceedings, Ms Liu was entitled to believe she was finally able to reap the benefit of her victory.
10. Fifthly, her Honour failed to take into account the fact that Fairfax had offered no evidence as to why it had changed its position. Her Honour accepted Fairfax's submission that there was a "real question" as to whether the undertaking ought "reasonably" to have been put before the Court at the time of the preliminary discovery application, since it involved the abandonment of what appeared to be "a perfectly good defence". [243] However, in accepting that submission, her Honour failed to consider that it was not a question of abandoning the defences at the first hearing. Rather, as her Honour had acknowledged, it was open to Fairfax to proffer that undertaking as an alternative submission in the event its other arguments failed. That would have enabled the Court to deal with all arguments at the first hearing.
11. Instead, in my view, the primary judge approached the question whether she should entertain the stay application on the basis that Fairfax was entitled fundamentally to change its position in terms of the basis on which it resisted the preliminary discovery application, subject to payment of costs by way of compensation. This was erroneous. All matters relevant to the exercise of the power to stay enforcement of the preliminary discovery order had to be weighed. [244]
12. Sixthly, and in any event, her Honour failed to consider that the question of what could have happened at the first hearing was, in some senses, irrelevant. The more important question was whether there should be a second hearing about essentially the same issue based on Fairfax's changed position.
13. In my view, with respect, her Honour's failure to take these material considerations into account means her Honour's exercise of her discretion to accede to the stay application miscarried. It was uncontroversial that if this Court reached that decision, it should re-exercise the stay discretion. [245]
14. The preliminary discovery order was of a substantive nature. Its practical effect was undoubtedly final. [246] It opened the door, once complied with, to Ms Liu being able to continue with the process of seeking to vindicate her reputation. She would be able to replace the John Doe names in the statement of claim against the sources with their actual names and effect service of that document. She would also potentially have access to the allegedly forged documents.
15. The stay application was made at a stage when, to all intents and purposes, all that remained was to give directions with respect to its enforcement. The proceedings had passed through a substantive first hearing of 10 days due largely, as Bathurst CJ observed in Liu CA (No 1), [247] to Fairfax seeking to embark on an examination of the merits of Ms Liu's claim. As the Chief Justice said, Fairfax's approach to that hearing was not an appropriate course to adopt in relation to an interlocutory matter of the nature of that in question and was contrary to the objectives in CPA, s 56 and to the obligations on litigants and their advisers to conduct litigation in accordance with the overriding objective in that section. [248] Although his Honour's observation was made on appeal, the length of the hearing to which Ms Liu had already been subjected was clearly a relevant factor in considering whether the stay application should be granted.
16. As I have said, Fairfax gave no evidence to explain why it had not given, or at least proffered its undertaking as a fallback position at the first hearing. Fairfax is a sophisticated and regular litigant. It had the opportunity to give the Fairfax undertaking at that stage either absolutely or as a fallback. It can readily be inferred there was no explanation for the course it took, other than that, knowing that such an undertaking could be given as at least a possible price of protecting the sources' identities, it made a forensic choice not to do so at that stage. By adopting that course, Fairfax flouted the principle that a litigant should put its best case forward in any interlocutory application. [249] It also failed to discharge its duty to assist the court to further the overriding purpose of the CPA and the rules to facilitate the just, quick and cheap resolution of the real issues in the proceedings.
17. As in Aon Risk, a costs order, even an indemnity costs order, could not, in my view, adequately compensate Ms Liu, given that she had to fight the preliminary discovery application again, on a forensic battleground Fairfax had kept up its sleeve.
18. In Aon Risk, the fact that ANU's proposed amendment raised "real triable issues" was insufficient to warrant the exercise of the amendment discretion in its favour, having regard to the lost time of abandoning the trial, and the necessity to resume it. In this case the position is arguably worse, as the preliminary discovery application had effectively concluded. As far as Ms Liu was concerned, the next step was to ascertain the sources' identities in order to replace the John Doe names in the statement of claim against the sources with their actual names and effect service of that document. Instead, the stay application meant the preliminary discovery application was effectively resumed.
19. I would accept that the matters Fairfax emphasised, such as the importance of freedom of communication, were important considerations in the exercise of the preliminary discovery jurisdiction. [250] However, it is not, in my view, a "weapon" that can be deployed at will in repeated circumstances, at the cost of enormous waste of judicial time and resources. A party is not entitled fundamentally to reframe proceedings, subject to payment of costs by way of compensation. [251]
20. To entertain Fairfax's stay application and undertake, in effect, the relitigation of the preliminary discovery application, albeit with the goal posts moved to suit Fairfax, countenanced an approach to litigation by Fairfax which was not in the interests of justice, [252] and fell foul of the principles of case management. [253] That conclusion is sufficient to dispose of the appeal. It is not necessary in those circumstances to revisit Manning, nor to adopt the Christie preclusive rule. It is also unnecessary to make a finding that Fairfax's approach amounted to an abuse of process.
21. I am also of the view that the primary judge erred in finding that Ms Liu had an effective remedy once the Fairfax undertaking was given. As is apparent from the earlier discussion, the question whether, absent disclosure of documents sought to be shielded by the newspaper rule, a putative plaintiff has an effective remedy turns not only on the likely recovery of damages, but, too, upon any difficulty in proof occasioned by the non-disclosure.
22. Ms Liu has a claim for aggravated damages based upon her knowledge of the falsity of the imputations. Determination of that issue must, at least in part, turn on whether or not she made the admissions attributed to her in the sources' documents. It is simplistic, in my view, to say, as Fairfax contends, that Ms Liu's assertion that the documents are forged would satisfy a tribunal of fact.
23. The decision as to what is true and what is proven to be true is not arrived at in a vacuum, but is affected by a consideration of all the surrounding circumstances including the probabilities derived from proven facts, the demeanour of witnesses, their credibility, background, reaction to cross-examination, motives and the like. Truth or otherwise is more likely to be revealed if the person responsible for providing the information to the publishers of the information is, along with the publishers, a defendant in a defamation suit. [254]
24. The nature of the documents Fairfax based the matters complained of on was relevant to whether Ms Liu should have access to the documents. In Cojuango HC, [255] the High Court clearly regarded the nature of the sources and the sources' documents as relevant to whether a preliminary discovery order should be made. In this respect, the Court had regard to the solid basis of support for the allegations made against Mr Cojuangco by John Fairfax in the matter complained of by attributing the imputations to persons prominent in banking and business circles and of a leading bank having its headquarters in the United States. In this case, by attributing the matters complained of to documents allegedly either written by Ms Liu or sourced to her companies' records, Fairfax accorded to the imputations an aura of verisimilitude which Ms Liu should be given the opportunity to test, both by confronting her accusers and having the best opportunity to demonstrate the documents they provided are forgeries.
25. Finally, there is the matter of the allegations pursuant to the Australian Consumer Law which Ms Liu can only pursue against the sources. Those matters were not raised before the primary judge as they only found their way into an amended statement of claim filed after her Honour ruled on the stay application. They are, as Ms Liu submitted, matters she can only pursue against the sources by reason of the information providers' exemption in the Australian Consumer Law. Fairfax said little about this aspect of the appeal, possibly because it did not appear the amended statement of claim had come to its counsel's attention until the hearing of the appeal. On that short notice, counsel did not effectively grapple with the proposition that, absent identification of the sources, Ms Liu does not have an effective remedy in respect of this cause of action because Fairfax has a defence which is not available to the sources. [256] However I would not rest my decision on this factor, as it was not a matter which was before the primary judge whose exercise of discretion the Court is reviewing.
26. In my view there is a risk of Ms Liu's case failing if she is unable to test fully the issue of the forgery of the documents which formed the basis of the matters complained of.
27. In my view, the grant of the stay application wrought a substantial injustice upon Ms Liu. It was necessary in the interests of justice that Ms Liu have preliminary discovery against Fairfax. Fairfax should be held to the forensic choice it made at the preliminary discovery hearing. That will give both parties the opportunity fully to litigate the issues. Ms Liu can bring such proceedings against the sources as she may be advised and Fairfax can defend them with all available defamation defences.
28. I have dealt with Ms Liu's appeal on the costs issue later in these reasons, as it only arises in the event the cross-appeal is unsuccessful.

Cross-appeal: Fairfax's submissions

1. Fairfax framed its costs submissions on the cross-appeal in the context of the issues said to be at stake where preliminary discovery is sought against a journalist and/or media defendant involving public interests of great importance. It contended that by vigorously defending the preliminary discovery proceedings, it was acting as the "guardian" of these important public interests. Accordingly, it argued this distinguished the approach to be taken to the costs of the preliminary discovery application from that to be taken in cases involving private interests.
2. Accordingly, Fairfax submitted the primary judge's exercise of her costs discretion in Liu (No 3) miscarried because her Honour erred in applying authorities supporting the costs follow the event principle in preliminary discovery matters which did not involve media defendants and turned on whether the defendant had vigorously contested the application. Rather, Fairfax contended her Honour ought to have followed authorities prescribing the "usual costs outcome" in preliminary discovery applications concerning the media, that the plaintiff pay the defendant's costs. It also submitted that it had opposed disclosure because it had given an undertaking not to reveal the identity of the sources and that fact distinguished its position from the parties to the cases the primary judge applied.
3. Fairfax also argued that the primary judge ought to have followed Hunt J's approach to the costs issue in Cojuangco (No 1) in circumstances where it was "reasonably entitled to experience doubts as to the propriety of making the disclosures sought by the applicant and to require the matter to be submitted to the court." [257] It contended that this approach was apposite in circumstances where it was something more than a mere witness or bystander to the wrongdoing alleged, vigorously contested the application and appealed the decision.
4. Fairfax submitted that an order that Ms Liu pay its costs of the preliminary discovery hearing was appropriate and adapted to the policy objectives and considerations at issue for two reasons. First, if Ms Liu subsequently commenced proceedings and succeeded against an alleged wrongdoer, such a result ensured that the defendant to those proceedings paid the entirety of her costs, including those of the preliminary discovery application. It submitted that that was an appropriate outcome. Secondly, in the event Ms Liu did not commence proceedings or failed in such proceedings, she bore the costs of invoking the "extraordinary" preliminary discovery jurisdiction and unnecessarily compromising confidences which were essential to the integrity and maintenance of the news media and its contribution to constitutionally protected speech.
5. Fairfax also submitted that appellate intervention was warranted because the primary judge's exercise of the costs discretion was based on an erroneous finding of fact, namely that had the Fairfax undertaking been given in the course of the first hearing, the costs of that hearing could have been substantially avoided.
6. Fairfax submitted that there was no evidentiary support for that finding, nor was it a matter for which Ms Liu had contended. It argued that the history of the matter established that had the Fairfax undertaking been given earlier, there was no reason to suppose it would have deterred Ms Liu from pressing her application. Accordingly, the first hearing would have proceeded in any event with no saving of costs. Fairfax contended that that proposition was made good by the fact that in the stay application Ms Liu continued to maintain her submission that she did not have an effective remedy notwithstanding the Fairfax undertaking.
7. Accordingly, Fairfax argued that even if the Fairfax undertaking had been given at or before the first hearing, the only thing that would have changed was the result. It contended that fact did not, of itself, inform the correct outcome in relation to costs as the hearing would have still been required because of Ms Liu's persistence in prosecuting her application.
8. Fairfax submitted that, if this Court accepted that the primary judge's exercise of her costs discretion miscarried, it should re-exercise the discretion and order Ms Liu to pay Fairfax's costs of the preliminary discovery hearing. It contended that the circumstances of the case did not fall within those classes of case in which a defendant was ordered to pay the costs of a preliminary discovery application. Rather, it argued it had resisted the application in circumstances where it had a reasonable doubt as to its obligation to disclose the identity of the sources, in the context where the disclosure Ms Liu sought related to sources for constitutionally protected speech, and where Fairfax might suffer damage by voluntarily giving disclosure or the disclosure would, or might, infringe the legitimate interest of another. [258]
9. Fairfax submitted that voluntary disclosure in response to a preliminary discovery application by a media respondent of sources was contrary to journalists' obligation of confidence to their sources. It also contended that voluntary disclosure in this case would cause it reputational damage "on a significant scale" and affect its ability to obtain information from sources in the future. Thirdly, it contended that voluntary disclosure would have infringed the "public interest protected by the Constitution", recognised in the newspaper rule as well as in s 126B and s 126K of the Evidence Act.

Cross appeal: Ms Liu's submissions

1. Ms Liu contended that Fairfax had not demonstrated any House v R error which would warrant interference with the primary judge's exercise of her discretion to award costs of the preliminary discovery hearing.
2. Secondly, Ms Liu submitted that the settled position was that where proceedings for preliminary discovery were conducted in an adversarial fashion, they were treated for costs purposes like other adversarial litigation and, accordingly, attracted the consequences that costs followed the event. Ms Liu contended that the English authorities upon which Fairfax relied had not been followed in New South Wales or, insofar as Totalise was concerned, in any Australian authority.
3. Thirdly, Ms Liu submitted there was no New South Wales authority which supported the proposition that invocation of the newspaper rule gave rise to an exception to the adversarial costs principle for which she contended. She argued that the primary judge correctly rejected Fairfax's submissions that media defendants resisting a preliminary discovery application were in a "special category." [259]
4. Fourthly, Ms Liu contended that there were many categories of people other than the media who were subject to obligations of confidence of varying natures. Such people could equally be the subject of a preliminary discovery application and, if they contested it in an adversarial manner, there was no reason why they should not be subject to the usual costs consequences. Ms Liu submitted that there was no warrant for placing the media and its representatives in a different position, particularly in circumstances where it was the media which created the obligation of confidence upon which it relied to seek to resist the application of ordinary principles. She contended that the primary judge correctly disposed of this submission. [260]
5. Fifthly, Ms Liu contended that Fairfax's submission that an applicant for preliminary discovery should seek the costs of that application against the wrongdoer in any subsequent substantive proceedings depended upon a Supreme Court rule, applied in Cojuangco (No 1), which did not have a counterpart in the UCPR.
6. Sixthly, Ms Liu contended that Fairfax's proposition that a preliminary discovery applicant should be ordered to pay costs so that, in the ultimate, if no proceedings were commenced or there was found to be no wrongdoing, that applicant should bear the costs of unnecessarily invoking the preliminary discovery jurisdiction, was unsound and ran counter to UCPR 42.1 and the line of reasoning in the authorities supporting its application.
7. Seventhly, Ms Liu criticised Fairfax's invocation of the "policy objectives and considerations" connected with constitutionally protected speech as seeking to involve the Court in advancing journalists' particular position concerning "free speech issues". Ms Liu also criticised this submission as, in effect, hypocritical when, contrary to a request by the sources not to publish certain papers, Fairfax had published them on the front page of The Age. [261]
8. Eighthly, Ms Liu challenged Fairfax's submission that the primary judge made an error of fact. She contended that the primary judge correctly concluded that Fairfax's forensic choice not to give the Fairfax undertaking until after it exhausted all avenues of appeal, had meant Ms Liu's preliminary discovery application proceeded on an entirely different premise to that on which it was ultimately determined. [262] She also relied on her Honour's finding that she lost the opportunity to elect whether or not to proceed with the application because of the failure to give the Fairfax undertaking at an earlier stage. [263]

Cross appeal: Fairfax reply submissions

1. Fairfax submitted that there was a distinction to be drawn between the classes of other recipients of confidence to whom Ms Liu referred and the media's position. In particular, Fairfax contended that disclosure of a journalist's confidential source has a "direct and chilling impact on the flow of information to the public through the press." It also submitted that the importance of the confidentiality of media sources was now recognised in s 126K of the Evidence Act.
2. Secondly, Fairfax contended that the fact Hunt J relied in Cojuangco (No 1) upon a Supreme Court rule which does not appear in terms in the UCPR was of no consequence having regard to UCPR 5.8, which "absorbs and adds to what was provided for" in the SCR Pt 52 r 21. Fairfax also submitted that the Supreme Court rule found reflection in the ambit of the discretion for which CPA, s 98 provides.

Consideration

1. Both parties relied on a number of cases said to support their respective contentions as to the appropriate costs outcome.
2. Hunt J dealt briefly with the issue of costs in Cojuangco (No 1). His Honour followed Norwich Pharmacal Co v Customs & Excise Commissioners. [264]
3. In Norwich Pharmacal, the British customs authorities were the respondents to an application for preliminary discovery at the behest of Norwich Pharmacal, the owner of a patent covering a chemical compound called furazolidone. Norwich Pharmacal sought to discover the identity of importers of consignments of furazolidone into the United Kingdom, none of which it had licensed. It was uncontroversial that the Commissioners possessed documents showing the importers' identities. However, the Commissioners said they were not entitled, or were not willing, to provide this information to Norwich Pharmacal and contested the latter's right to obtain discovery.
4. The Commissioners' conduct was described as "entirely innocent", being "in execution of their statutory duty". [265] However, the infringements could never have been committed without action on their part in having the consignments released. The House of Lords held the Commissioners were required to give discovery of the relevant documents because a person who becomes involved in the tortious acts of others, even if innocently, is under a duty to assist a person who is injured by those acts by giving full information by way of discovery and disclosure of the identity of the tortfeasor. [266]
5. Lord Reid (with whom Viscount Dilhorne, Lord Cross of Chelsea and Lord Kilbrandon agreed), held that, being in doubt about the propriety of making disclosures, the Commissioners were entitled to require the matter to be submitted to the court at the expense of the person seeking the disclosure. Accordingly, his Lordship held the Commissioners were entitled to costs down to the judgment at first instance which they lost. [267] However, the Commissioners were not awarded their costs of either the proceedings in the Court of Appeal (where they were successful) or in the House of Lords, where they again lost. Rather, no costs were awarded in respect of either of those stages of the proceedings. [268]
6. Hunt J considered that the respondents in Cojuangco (No 1) were, like the Commissioners, "something more than mere witnesses or bystanders". [269] SCA, s 76(1)(b) gave the Court full power to determine by whom and to what extent costs were to be paid. [270] However, his Honour was of the view that SCR Pt 52, r 21, which provided, in substance, that "the successful applicant for preliminary discovery may recover his costs of that application as part of the costs awarded in his favour if he succeeds in the action which he subsequently brings", [271] suggested that the s 76(1)(b) costs discretion should not normally be exercised in favour of an applicant for preliminary discovery. Rather, the conduct of a respondent to such an application, particularly where that person was "a mere witness or bystander", "would have to be exceptional in order to justify the making of such an order against him." [272] His Honour held that the respondents acted reasonably in opposing the order sought because of the nature of the issues which arose, and were entitled to have them determined by the Court at the expense of the applicant. [273]
7. It is notable that in Cojuangco (No 2), Hunt J set aside all the orders made in Cojuangco (No 1), including those in respect to costs. His Honour ordered each party to pay its own costs of the preliminary discovery application hearing, and that John Fairfax pay Mr Cojuangco's costs of the stay application hearing. [274] His Honour set aside the costs order he had made in Cojuangco (No 1) on the basis that if John Fairfax had given the undertaking in the preliminary discovery hearing which was subsequently proffered, Mr Cojuangco's application for preliminary discovery would have been refused. Although John Fairfax was fully entitled to test the Court's rulings, Hunt J considered that it could not "have it both ways". Having exhausted all avenues of appeal, John Fairfax's application to have the preliminary discovery order reconsidered "upon the basis of additional material which could (and should) have been produced at the original hearing [was] heard as a matter of indulgence." Hunt J considered that John Fairfax must pay for that indulgence, even though it had succeeded in having the preliminary discovery order set aside. [275]
8. In Totalise, the Court of Appeal held that Norwich Pharmacal applications were "not really inter partes disputes" to which Civil Procedure Rules 1998 (UK) ("CPR") r 44.3, providing that as a general rule the "unsuccessful party" should pay the costs of the "successful" party, applied. Aldous LJ, who delivered the judgment of the Court of Appeal, observed that Interactive, one of the respondents to Totalise's Norwich Pharmacal application, did not resist the Court making the order and therefore could not properly be called an "unsuccessful party". Rather, a closer analogy was with applications for pre-action discovery, to which CPR r 48.1 applied. [276]
9. CPR r 48.1(2) provided that in actions for pre-commencement disclosure and orders for disclosure against a person who was not a party, the general rule was that the court would award the person against whom the order was sought the costs of the application and of complying with any order made on the application. CPR r 48.1(3) empowered the court to make a different order, having regard to all the circumstances, including the extent to which it was reasonable for the person against whom the order was sought to oppose the application. [277]
10. While the Court accepted that a court deciding a Norwich Pharmacal application had a discretion as to the order for costs, their Lordships observed that "such applications are not truly ordinary adversarial proceedings" because the defendant "does not normally resist the order being made" and has "become mixed up in tortious acts and [is] only concerned that duties and rights, such as duties of confidence and legitimate interests of privacy, are considered by the court." [278] Accordingly, "[i]n general, the costs incurred should be recovered from the wrongdoer rather than from an innocent party" and each case will depend on its facts. [279] However, the Court added that its conclusion that in a "normal" successful Norwich Pharmacal application the applicant should be ordered to pay the costs of the party making the disclosure, including the costs of making the disclosure, did not mean that a party who supports or is implicated in a crime or tort or seeks to obstruct justice being done should believe that the Court would do other than require that party to bear its costs and, if appropriate, pay the other party's costs. [280]
11. Simpson J (as her Honour then was) declined to follow the Totalise approach in Airways Corp in relation to an order for preliminary discovery. Her Honour described Totalise as standing for the propositions "that, in general, costs incurred should be recovered from the wrongdoer rather than from an innocent party" and that "a costs order would not ordinarily be made where 'the party required to make the disclosure had a genuine doubt that the person seeking the disclosure was entitled to it'". [281]
12. While her Honour accepted that a defendant to such an application was "ordinarily", in effect, a bystander, that did not reflect the facts of Airways Corp. Rather, the defendants "had persistently refused to cooperate" and had defended the application on two bases which were not sustained. [282] In her Honour's opinion, the litigation as it proceeded was adversarial in nature, or at least akin to adversarial litigation. Accordingly, she concluded that the price of the defendants' unsuccessful resistance should be the same as that for any other unsuccessful litigant. [283]
13. In Steffen, another successful application for preliminary discovery, McDougall J doubted the merit of an approach to the costs of the application which made them depend on the initiation and outcome of litigation following preliminary discovery. [284] Rather, his Honour said, following C7 Pty Ltd v Foxtel Management Pty Ltd, [285] that ordinarily an application for preliminary discovery should be regarded as a discrete application, and the costs incurred in it should not "await some indefinite future event." [286]
14. Secondly, his Honour accepted that UCPR 42.1 had as its sphere of operation proceedings of an adversarial nature, while proceedings for preliminary discovery were not always truly adversarial in nature. However, his Honour followed Simpson J in Airways Corp to hold that where such proceedings are conducted in an adversarial fashion, UCPR 42.1 dictated the general approach to be taken to the question of costs. [287]
15. Neither Simpson J nor McDougall J referred to Cojuangco (No 1). Their Honours also did not refer explicitly to Norwich Pharamacal, although the latter case was, of course, applied in Totalise.
16. Master Macready referred to Cojuangco (No 1) and Airways Corp in NRMA Ltd v John Fairfax Publications Pty Ltd. [288] His Honour distinguished Airways Corp on the basis that in that case, involving an employee who had used the defendants' computer equipment to publish defamatory material, Simpson J had "not unnaturally regarded the [defendants'] resistance to the application as more akin to adversarial litigation." [289] His Honour also noted that Simpson J had not been referred to Cojuangco (No 1). [290] For reasons which do not, with respect, appear from the judgment, he said he regarded the Totalise principles as appropriate to guide him in determining costs. Accordingly, his Honour had regard to all the circumstances of the case. [291]
17. Fairfax also relied on Hornsby Shire Council v Valuer General of NSW, an application for discovery of documents from a prospective defendant pursuant to UCPR 5.3. [292] In dealing with costs, Adams J distinguished Cojuancgo (No 1) on the basis that it concerned disclosure of the sources of a journalist's report, which his Honour considered was "a special circumstance involving consideration of the so-called 'newspaper rule' and a consideration of the special circumstances that apply in light of the policy of the law protective of the public interest in the free flow of information to the media." [293] His Honour applied Simpson J's reasoning in Airways Corp, which he described as "plainly correct" and advantageous in its "simplicity and consistency with the general principles attaching to costs orders." [294]

Cross-appeal: conclusion

1. The starting point in considering the appropriate costs order is to have regard to CPA, s 98(1)(a) by virtue of which, relevantly, subject to rules of court and to the CPA, costs are in the discretion of the court. The power conferred by s 98(1)(a) is subject to UCPR 42.1, which prescribes that costs should follow the event, unless it appears to the court that some other order should be made as to the whole or any part of the costs. While it might be accepted that courts develop practices or guidelines in administering the discretion conferred by provisions such as s 98(1), [295] the width of a statutory discretion cannot be narrowed by a legal rule devised by the court to control its exercise. [296]
2. It may be, as the primary judge held, that UCPR 5.8 is also of some relevance in making it clear that any person against whom a preliminary discovery order is made may be the subject of a costs order, even though not a party. However, UCPR 5.8 also contemplates that in some instances, of which the present is an example, that, in addition to the applicant, there will be persons properly described as a "party" to the application. Otherwise, it does not appear to throw any light on how the costs of such an application are to be determined.
3. The cases upon which Fairfax relies do not demonstrate that the court has developed a practice or guideline which informs the exercise of the s 98 discretion to a prima facie position that in preliminary discovery actions involving the media a successful applicant pays the media respondent's costs.
4. In Cojuangco (No 1) Hunt J followed Norwich Pharmacal, a non-media case, drawing an analogy between the position of John Fairfax and the Commissioners in terms of each entertaining doubts as to whether discovery should be given and John Fairfax acted reasonably in opposing the order sought. His Honour's decision also turned on SCR Pt 52 r 21, which is not replicated in terms in the UCPR. Further, it is notable that neither the High Court nor the Court of Appeal on the two occasions Mr Cojuangco's case came before them, suggested the issue of costs was governed by a special rule relating to media respondents to preliminary discovery applications. In all appeals, costs followed the event.
5. Although there is undoubtedly an important public interest in the protection of the confidentiality of journalists' sources, Fairfax failed to demonstrate why the existence of that public interest justifies the creation of an exception or a special rule so as to enable media respondents to preliminary discovery proceedings to contest such proceedings in an adversarial manner and avoid a costs order by doing so. Rather, in my view, Fairfax's submissions fail to acknowledge that the media has no public interest immunity from being required to disclose their sources of information when such disclosure is necessary in the interests of justice.
6. I do not accordingly, with respect, agree with Adams J's statement in Hornsby Shire Council concerning Cojuangco (No 1) to the extent that it may be interpreted as suggesting there is a special costs rule for preliminary discovery applications involving media defendants. [297]
7. In my view the court should approach the question of costs of a preliminary discovery application, recognising the exceptional nature of the jurisdiction, but nevertheless applying s 98(1)(b) and UCPR 42.1. That leaves it open to the court in each case to consider whether, in all the circumstances of the case, to exercise the court's discretion to make some other order as to the whole or any part of the costs.
8. As Airways Corp and Steffen indicate, it will clearly be relevant to have regard to the manner in which the preliminary discovery application was defended, if at all. As the primary judge recognised, what was particularly relevant in this case was the adversarial approach Fairfax took to the application. In this respect, it might be noted that in Liu CA (No 1), Bathurst CJ was critical of Fairfax's approach to the preliminary discovery application. While accepting that the existence of a prima facie case was relevant to the exercise of the UCPR 5.2 discretion, his Honour pointed out that this did not mean the application should be treated "as a dress rehearsal for the proceedings." [298]
9. It is also relevant, in my view, that Fairfax cannot be considered to be merely something more than a mere witness or bystander. [299] Rather it is, prima facie, a joint tortfeasor with the sources. It and its journalists who wrote the matters complained of are named as defendants in Ms Liu's statement of claim. It is, accordingly, not merely in effect in the role of an interpleader uncertain as to whether or not it can disclose a prospective defendant's identity or whereabouts pursuant to UCPR 5.2, or give discovery to the applicant of documents that relate to the question of whether or not the applicant is entitled to make a claim for relief pursuant to UCPR 5.3.
10. Rather, it is Fairfax which asserts it has given an undertaking of confidentiality to the sources, the publication of whose information it must have realised was highly defamatory. By publishing such material it must also have realised there was a real risk of a person claiming to have been defamed by the matters complained of seeking to ascertain the identity of the sources as well as the information they provided It took the risk of being exposed to just such proceedings as have eventuated.
11. Further, Fairfax's protestation that it should be accorded a special position, as it had resisted the preliminary discovery application because it had given the sources a confidentiality undertaking, rings hollow once it is recognised that it felt free to ignore that undertaking when it suited. [300]
12. In my view, Fairfax has not demonstrated that the primary judge erred in ordering Fairfax, as the unsuccessful party in the preliminary discovery hearing resisted on an adversarial basis, to pay Ms Liu's costs.
13. In light of the above, it is not necessary to determine whether the primary judge erred in finding on an alternative basis that the costs of the preliminary discovery proceedings could have been substantially avoided if the Fairfax undertaking had been offered at an earlier stage.

Appeal: costs issues

1. I have rejected Fairfax's submission that it should not have been ordered to pay Ms Liu's costs of the preliminary discovery hearing. That leaves outstanding Ms Liu's ground of appeal that her Honour should have ordered Fairfax to pay those costs on an indemnity basis.
2. The general rule is that costs payable to a person under an order of the court or the rules are to be assessed on the "ordinary basis". [301] Costs may be ordered on an indemnity basis where there is relevant delinquency on the part of the unsuccessful party, with the result of more fully or adequately compensating the successful party to the disadvantage of what otherwise would have been the position of the unsuccessful party in the absence of such delinquency on its part. [302] A court should only depart from the general rule and award indemnity costs where the conduct of the party against whom the order is sought is "plainly unreasonable". [303]
3. The primary judge considered Ms Liu's indemnity costs application on the premise that the Fairfax undertaking had been given at the time of the first hearing. My conclusion is that Fairfax should have done so either unconditionally or as a fallback position. On either premise, therefore, the question is whether Fairfax's failure in fact to give the undertaking on either basis demonstrated such delinquency as to warrant an indemnity costs order. Having regard to Ms Liu's concession that, absent a finding Fairfax deliberately refrained from giving the Fairfax undertaking at that stage, she could not argue that its conduct in resisting the application for preliminary discovery was an abuse of process, [304] it cannot, in my view, be concluded that Fairfax was guilty of conduct in relation to the preliminary discovery hearing of such delinquency as would warrant an order for indemnity costs.
4. I would also reject Ms Liu's submission that the primary judge ought to have awarded her indemnity costs of the first hearing on the basis Fairfax's conduct unnecessarily prolonged the preliminary discovery hearing. It was open to her Honour to conclude that Ms Liu may have persisted with the application even if the Fairfax undertaking had been proffered at that stage. [305] Ms Liu has not demonstrated her Honour's finding of fact in this respect was erroneous.
5. Accordingly I would uphold Ms Liu's appeal save as to her claim for the costs of the preliminary discovery hearing on an indemnity basis.

Orders

1. I propose the following orders: 1. Grant the appellant leave to appeal. 2. Direct the appellant to file the notice of appeal in the form of the draft in the White Book within fourteen (14) days. 3. Appeal allowed in part with costs. 4. Set aside the stay order made on 23 March 2015 and continued on 22 May 2015. 5. Grant the cross-appellants leave to appeal. 6. Cross-appellants to file the notice of cross-appeal in the form of the draft in the White Book within fourteen (14) days. 7. Dismiss the cross-appeal with costs.
2. WARD JA: I have had the advantage of reading in draft the reasons of each of Beazley P and McColl JA. I agree with the orders proposed by McColl JA for the following reasons.
3. The background to the present proceedings has been canvassed by McColl JA and need not here be repeated. Both the decision to grant a permanent stay of the preliminary discovery orders (Liu v The Age Company Pty Ltd (No 2) [2015] NSWSC 276) (the second judgment) and the costs orders made in respect of the application for preliminary discovery (Liu v The Age Company Pty Ltd (No 3) (Supreme Court (NSW), McCallum J, 22 May 2015, unrep)) (the third judgment), the subject of the present applications, were discretionary decisions made by the primary judge. For appellate intervention, error in the House v The King sense must be shown (House v The King [1936] HCA 40; (1936) 55 CLR 499). For leave to appeal/cross-appeal to be granted in respect of an interlocutory decision of this kind, something more must be shown than that the decision was arguably wrong (Be Financial Pty Ltd v Das [2012] NSWCA 164 at [32], citing Zelden v Sewell; Henamast Pty Ltd v Sewell [2011] NSWCA 56 at [22]).
4. I agree with the conclusions of Beazley P (at [10]) and McColl JA (at [220]) that the primary judge erred in determining, as an objective matter, that Ms Liu had an effective remedy once the undertaking not to rely on a qualified privilege defence was given by the newspaper (albeit given conditionally on the stay being granted).
5. In considering whether Ms Liu's claim against the newspaper is an effective remedy for the alleged defamation, it is relevant not only to consider the abandonment of the defence of qualified privilege in relation to her ability to claim damages from the newspaper (if her claim succeeds) but also her ability to "nail the lie". As Mahoney JA observed in John Fairfax & Sons Ltd v Cojuangco (1987) 8 NSWLR 145 (at 151) in this Court, the fact that there is another remedy against a person other than the plaintiff's chosen defendant will not be conclusive against a plaintiff seeking to obtain preliminary discovery to bring proceedings against his or her chosen defendant as a means both of vindication of his or her reputation and mitigation of the "sting".
6. As McColl JA has pointed out (at [223]) the truth as to the issue of forgery is more likely to be revealed if the identity of the sources is known. For example, the compulsory processes of the court in relation to the production of documents should then be able to be invoked. (Whether or not they would prove to be useful might be another issue.) At least while the identity of the sources is unknown those processes would be of limited, if any, use in the present case since the newspaper did not receive any original documents from the sources; rather, the documents that Ms Liu claims were forged were forwarded in PDF format to the newspaper.
7. The fact that Ms Liu may have other recourse by way of the referral of the matter to the relevant authorities for investigation as to a potential crime is not a sufficient answer to the question whether she has an effective remedy for the alleged defamation in the absence of identification of the newspaper's sources. Ms Liu has claimed aggravated damages. That claim is based, as I understand it, on the asserted unreasonableness of the newspaper publishing the allegedly defamatory material without sighting the original documents that Ms Liu says were forgeries. The newspaper argues that the reasonableness of its conduct must take into account other matters. Be that as it may, I agree that there is a risk that Ms Liu's ability to prove that the relevant documents were forged, and hence her claim against the newspaper for aggravated damages, will be seriously hampered if the identity of the sources is not disclosed.
8. Hence I agree that the primary judge's discretion miscarried and that the stay of the preliminary discovery orders should be set aside.
9. As to the proposed Australian Consumer Law claim, the primary judge can hardly be criticised for determining the effectiveness of a remedy against the newspaper without reference to such a claim in circumstances where none was foreshadowed at the time. It is, to say the least, rather ironic that the party vehemently complaining of an abuse of process arising out of the newspaper's change of position in relation to the proffering of the undertaking (Ms Liu) has herself apparently failed to bring forward at the earliest possible time the alternative cause of action on which she now relies for the proposition that, without disclosure of the newspaper's sources, she will be left without an effective remedy. I agree with McColl JA that it is preferable that the current proceedings be disposed of without reliance on the proposed amended claim.
10. For completeness, I should add two observations.
11. First, I agree with McColl JA (at [199]) that the overriding principle governing the approach of the court to interlocutory applications is to do what the interests of justice require in the particular circumstances of the case (as was recognised by Emmett JA in Bajramovic v Calubaquib [2015] NSWCA 139 at [40]-[41]). For that reason, had it been necessary to revisit the approach of the majority in Nominal Defendant v Manning [2000] NSWCA 80; (2000) 50 NSWLR 139, I would have concluded that it was correct; and that the question whether there was an abuse of process by the newspaper in the present case in seeking a stay of the preliminary discovery orders was to be determined having regard to all the circumstances of the case, as well as to the case management principles mandated by ss 56-60 of the Civil Procedure Act 2005 (NSW) and the public interest in the finality of litigation.
12. I do not see the present case as one readily falling within the admonition in Manning by Heydon JA, as his Honour then was, (at [72]) to the effect that a party should bring its best case forward at the earliest opportunity. As McColl JA notes, this was not a case where a second interlocutory application was brought in order to repair a deficiency on the first occasion. Nor, as Ms Liu ultimately conceded, could it be said that there was an abuse of process in the conduct of the newspaper in resisting the initial application for preliminary discovery arising from the fact that the undertaking was not offered on the first available occasion. The newspaper was not at any stage obliged to proffer the undertaking that it ultimately conditionally did. Not only was there no evidence to support the assertion maintained by Ms Liu in her written submissions (but abandoned in oral submissions) to the effect that the newspaper had always intended to offer the undertaking at a later stage if it were unsuccessful in its appellate challenges to the making of the preliminary discovery orders, but also I have difficulty with the proposition that its later decision to do so was at best an afterthought. Rather, there seems to me to be no reason not to proceed on the basis that, knowing of the possibility that an undertaking might strengthen its ability to resist the preliminary discovery application, the newspaper made a forensic decision in the first place not to offer one and then, having failed to resist Ms Liu's application and having failed in its subsequent appellate challenges thereto, it made the opposite forensic decision in the context of its application for a stay of those orders. I see no impropriety in the newspaper taking into account its own interests, as well as the public interest in preserving the anonymity of its sources, in so doing.
13. As to whether, having made the initial forensic decision, the newspaper should in effect be held to it, I see a distinction between the situation where a party seeks for the second time the same interlocutory relief in circumstances where nothing has relevantly changed and no new evidence has emerged that was not reasonably available at the time of the initial application (which is in effect the situation considered in Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44) and the position where a party (here, the newspaper), which has unsuccessfully resisted an application for interlocutory relief, later seeks a stay of the interlocutory orders on the basis of an undertaking that it could have (but was not obliged to have) offered at first instance. At least where there has been what Senior Counsel for the newspaper referred to as a change in the legal landscape (that being the fate of its unsuccessful constitutional challenge), there is a real question to my mind as to whether there was any abuse of process involved in the making of the stay application (and the primary judge's view that there was not was, in my respectful opinion, one that was certainly open to her though I accept it was one on which reasonable minds might differ).
14. The position of the newspaper as the respondent to the initial application must also be taken into account. It was, on one view at least, Ms Liu who sought to re-litigate the question as to the existence of an effective remedy; the newspaper's position on the stay application being accepting of the ruling of the primary judge in that regard.
15. It is not, however, necessary to form a concluded view on the abuse of process issue given my conclusion as to the error in finding that there was an effective remedy once the undertaking had been given.
16. Second, I am not persuaded that the primary judge's discretion miscarried as a result of a failure to take into account the matters enumerated by McColl JA (at [205]-[212]), though I accept that the primary judge did not address all of those matters in the terms there set out. In particular, I note that the primary judge took into account that Ms Liu would not have the opportunity, if a stay were to be granted, to confront her accusers (at [50] of the second judgment) and noted (at [55]) the purpose of the law of defamation as being to strike a balance between the right to reputation and the freedom of speech. The primary judge also extracted (at [44] of the second judgment), when recounting submissions made by Senior Counsel for Ms Liu, part of her reasons in the first judgment (Liu v The Age Company Ltd [2012] NSWSC 12 at [159]-[160]) in which her Honour had set out the passage from Cojuangco (at 151D) to which I have earlier referred. In that context, the primary judge appears to have been cognisant of the interest of Ms Liu in vindicating her reputation. The primary judge was also cognisant of the fact that protection of a journalist's sources is not a right or an end in itself but, rather, a consideration to be weighed in balancing the public interests that the law of defamation seeks to achieve (see [57]; [74] of the second judgment).
17. The primary judge noted (at [7] of the second judgment) that the issue that had been determined in the principal judgment was whether the order sought was necessary in the interests of justice; and (at [8]) that, though important, the newspaper rule was not a rule of practice and has been held not capable of applying directly to proceedings for preliminary discovery. Her Honour also noted (at [78] of the second judgment) that there was considerable force to the complaint that no concession, even conditionally, had been made as to the qualified privilege defence at the original hearing.
18. True it is that the primary judge did not expressly refer to the strain the preliminary discovery litigation must have imposed on Ms Liu, although her Honour was clearly conscious of it - the course of that litigation being a factor expressly relied upon in the costs judgment that followed the determination of the stay application (see [50]; [68] of the third judgment). Finally, as to the relevance or otherwise of what could have happened at the first hearing had the undertaking been offered at that stage, the primary judge no doubt took that into consideration because she had been urged so to do by Senior Counsel for Ms Liu. I consider that the primary judge's reasons as a whole reveal that her Honour was clearly cognisant of, and addressed, the complaints by Ms Liu as to abuse of process and non-compliance with case management principles.
19. That said, I agree that the primary judge's discretion miscarried by reference to the error in determining that, once the undertaking had been proffered, Ms Liu had an effective remedy such that it would be appropriate to grant the stay sought by the newspaper.
20. Finally as to the question of costs, I agree with McColl JA that no error in the exercise of the primary judge's discretion as to costs has been established.
21. I therefore agree with the orders that McColl JA has proposed.

Endnotes

1. Liu v The Age Company Pty Ltd (No 2) [2015] NSWSC 276 ("Liu (No 2)"); Liu v The Age Company Ltd (No 3) (Supreme Court (NSW), McCallum J, 22 May 2015, unrep) ("Liu (No 3)"). For convenience I will refer to the applicant as Ms Liu and to the respondents collectively as "Fairfax" save where the context otherwise requires.
2. The Age Company Ltd v Liu [2013] NSWCA 26; (2013) 82 NSWLR 268 ("Liu CA (No 1)") on appeal from Liu v The Age Company Ltd [2012] NSWSC 12; (2012) 257 FLR 360 ("Liu (No 1)").
3. Competition and Consumer Act 2010 (Cth), Schedule 2 ("Australian Consumer Law").
4. Liu (No 3) (at [2]).
5. Cf Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") 6.2(4).
6. Liu (No 1) (at [168] ‑ [170]).
7. [1997] HCA 25; (1997) 189 CLR 520 ("Lange"); see Liu (No 1) (at [130], [154]).
8. Liu (No 1) (at [143], [156]).
9. Ibid (at [132]).
10. Ibid (at [158]).
11. Ibid (at [161]).
12. Ibid (at [160]).
13. Ibid (at [188]).
14. See Liu (No 1) (at [145], [147], [169]).
15. Ibid (at [189]).
16. Ibid (at [216]).
17. The Age Company Ltd v Liu [2013] HCATrans 205.
18. Ibid.
19. In fact, at the time the preliminary discovery order was made, some documents falling within the terms of the order were produced to the Court in redacted form in response to a notice to produce. However, Ms Liu did not seek access to those documents at that time, accepting that any such application should abide the determination of the proceedings: Liu (No 2) (at [4]).
20. Ibid (at [17]).
21. Case number 2010/224488 is the file number of the preliminary discovery proceedings. The file number of the proceedings Ms Liu has commenced against Fairfax is "2011/36003". The primary judge corrected this slip in her order: Liu (No 2) (at [82]).
22. Liu (No 2) (at [81]).
23. Ibid (at [82]).
24. Liu (No 3) (at [57]).
25. Liu (No 2) (at [15]).
26. Ibid (at [16]).
27. Ibid (at [52]).
28. Re Application of Cojuangco (1986) 4 NSWLR 513 ("Cojuangco (No 1)"); Application of Eduardo Murphy Cojuangco (No 2) (Supreme Court (NSW), Hunt J, 6 January 1989, unrep); LexisNexis BC8902633 ("Cojuangco (No 2)"); Cojuangco v John Fairfax & Sons Ltd (No 2) (1990) A Def R 51-005; (1991) Aust Torts Reports ¶81-068 ("Cojuangco CA (No 2)"); see [129] - [144] below.
29. Liu (No 2) (at [53]).
30. Ibid (at [19]).
31. Ibid (at [20] - [21]).
32. Ibid (at [49]).
33. Ibid.
34. Ibid (at [50]).
35. Ibid (at [42]).
36. Ibid (at [54]).
37. Ibid (at [55] - [56], [59]).
38. Ibid (at [59]).
39. Ibid (at [61]).
40. (1988) 217 ALR 44 (at 46) ("Brimaud").
41. Liu (No 2) (at [63]).
42. Ibid (at [64]).
43. Ibid (at [64] - [65]).
44. [2009] HCA 27; (2009) 239 CLR 175 ("Aon Risk").
45. [2013] HCA 46; (2013) 250 CLR 303 ("Expense Reduction").
46. Liu (No 2) (at [72]); Fairfax did not challenge the proposition that Part 6 applied to the stay application, an implied concession which is plainly correct in my view.
47. Ibid (at [73]).
48. Ibid (at [74]), referring to Liu (No 1) (at [203] - [204]).
49. Liu (No 1) (at [196] - [201]).
50. Ibid (at [201]).
51. Ibid (at [204]).
52. Liu (No 2) (at [75]).
53. Ibid (at [76]).
54. Ibid (at [77]).
55. Ibid (at [78]); cf CPA, s 58.
56. Ibid (at [79]).
57. Ibid (at [80] - [82]).
58. Liu (No 3) (at [7]).
59. Ibid (at [13]).
60. Ibid (at [14]).
61. [2002] NSWSC 521 (Simpson J) ("Airways Corp").
62. [2009] NSWSC 883 (McDougall J) ("Steffen").
63. Liu (No 3) (at [17] - [19], [29]).
64. Ibid (at [28]).
65. Ibid.
66. Ibid (at [29]).
67. Ibid (at [30]).
68. Ibid (at [31] - [46]), referring to Liu (No 2) (at [24] - [39]); see also [129] - [147] below.
69. Ibid (at [47]).
70. Ibid (at [48]).
71. Ibid (at [49].
72. Ibid (at [50] - [51]).
73. Ibid (at [52]).
74. Ibid (at [15], [53]).
75. Ibid (at [55]).
76. Ibid (at [56]).
77. A submission that Fairfax's conduct in resisting the application for preliminary discovery was an abuse of process because Fairfax deliberately refrained from disclaiming the qualified privilege defences, intending to do so if it failed in its opposition to the application, was abandoned in the course of argument in the Court of Appeal. It had not been made before the primary judge and Ms Liu accepted that, absent a factual finding in her favour to that effect, she could not make good that submission.
78. Liu (No 1) (at [132]).
79. Liu (No 2) (at [54]).
80. Cf CPA, s 56(4).
81. Cf CPA, s 58(2)(b)(vi).
82. See Liu (No 2) (at [73], [75] and [79] respectively).
83. Cf 2005 Act, s 30(1)(c); Lange (at 574).
84. [1996] 2 VR 582 ("Christie").
85. [2000] NSWCA 80; (2000) 50 NSWLR 139 ("Manning").
86. Liu (No 2) (at [50]).
87. See Liu (No 1) (at [144] - [152]).
88. Liu (No 1) (at [188] - [189]).
89. Cf John Fairfax & Sons Ltd v Cojuangco (1987) 8 NSWLR 145 (at 151) per Mahoney JA ("Cojuangco CA (No 1)"); Cojuangco CA (No 2) (at 41,529 - 41,530) per Kirby P.
90. Liu (No 1) (at [160]).
91. ("Evidence Act"); The suggestion that the sources' documents could be tendered as business records was one which Hunt J also made in Cojuangco (No 2) (at 20).
92. Waterhouse v Broadcasting Station 2GB Pty Ltd (1985) 1 NSWLR 58 (at 75) per Hunt J.
93. Amended Statement of Claim, para [21].
94. Australian Consumer Law, s 19.
95. Cojuangco CA (No 1) (at 151) per Mahoney JA; Cojuangco CA (No 2) (at 41,529 - 41,531) per Kirby P.
96. Cf Liu (No 2) (at [80] - [81]).
97. See Stephens v West Australian Newspapers Limited [1994] HCA 45; (1994) 182 CLR 211 (at 264); Aid/Watch Inc v Federal Commissioner of Taxation [2010] HCA 42; (2010) 241 CLR 539 (at [44]); McGuinness v Attorney-General (Vic) [1940] HCA 6; (1940) 63 CLR 73 (at 104) per Dixon J ("McGuinness"); John Fairfax & Sons Pty Ltd v Cojuangco [1988] HCA 54; (1988) 165 CLR 346 (at 354) ("Cojuangco HC"). Fairfax also submitted that these important matters of public interest were recognised by the enactment of s 126K of the Evidence Act ("Journalist privilege relating to identity of informant") but accepted, having regard to the fact that that provision came into force on 21 June 2011, that it did not apply to the preliminary discovery application.
98. See also Aid/Watch Inc v Federal Commissioner of Taxation [2010] HCA 42; (2010) 241 CLR 539 (at [44]).
99. (at [165], [169]).
100. Liu (No 2) (at [59]).
101. Liu (No 3) (at [28]).
102. Liu (No 1) (at [143], [154], [156]).
103. Lange (at 561); see also McCloy v New South Wales [2015] HCA 34; (2015) 89 ALJR 857 ("McCloy")(at [2]A) per French CJ, Kiefel, Bell and Keane JJ; see also (at [119]) per Gageler J; (at [305]) per Gordon J.
104. McCloy (at [2]A) per French CJ, Kiefel, Bell and Keane JJ.
105. Lange (at 571).
106. Ibid (at 568).
107. Adam v Ward [1917] AC 309 (at 334); see also Lange (at 565, 570).
108. Lange (at 571).
109. Ibid.
110. Ibid.
111. Ibid (at 572 - 573).
112. Ibid (at 573).
113. Ibid (at 574).
114. Ibid.
115. McGuinness (at 104) per Dixon J; see also Cojuangco HC (at 351 - 352). The source of the expression the "newspaper rule" itself is obscure. In South Suburban Co-operative Society Limited v Orum [1937] 2 KB 690 (at 695) counsel submitted that "[w]hat may be called the newspaper rule" was explicitly stated for the first time by Vaughan Williams LJ in Plymouth Mutual Co-operative & Industrial Society Ltd v Traders' Publishing Association Ltd [1906] 1 KB 403, although an examination of that case shows his Lordship did not use that expression, but referred (at 415) to a "general rule of practice." Spencer Bower described the newspaper rule as "an utterly illogical practice in favour of newspapers [which has] been allowed to crystallize into a positive rule of the K.B.D." (emphasis in original) and as having been "countenanced, for no assigned, or assignable, reason by the C.A." in Hennessey v Wright (No 2) (1888) 24 QBD 445, Hope v Brash [1897] 2 QB 188 and Plymouth Mutual Cooperative and Industrial Society Ltd v Traders' Publishing Association Ltd, adding that in Lyle-Samuel v Odhams, Ltd [1920] 1 KB 135, "the C.A. has reluctantly professed itself unable to disestablish it after thirty years' existence": Spencer Bower, A Code of the Law of Actionable Defamation, (2nd ed 1923, Butterworth & Co) at 413, Appendix XV, footnote (y).
116. Cojuangco (No 1) (at 519, 524).
117. Wran v Australian Broadcasting Commission [1984] 3 NSWLR 241 (at 252 - 253) per Hunt J.
118. Cojuangco HC (at 351).
119. Ibid (at 354); see also Cojuangco CA (No 1) (at 149) per Glass JA (Kirby P agreeing).
120. Ibid.
121. Ibid. The continued application of the newspaper rule in the area of trials will no doubt be affected by s 126K of the Evidence Act which, as I have said, did not apply to the preliminary discovery application in this case. However, in any event, s 126K(2) confers a judicial discretion to require a journalist to disclose the informant's identity.
122. Cojuangco HC (at 356).
123. McGuinness (at 104 - 105); Cojuangco HC (at 356).
124. Cojuangco HC (at 351 - 352). At the time that case was argued, John Fairfax contended there was no reported decision in which disclosure had been ordered on the basis of "special circumstances": Cojuangco HC (at 356).
125. Cojuangco HC (at 355).
126. Liu (No 1) (at [9], [12]).
127. Ibid (at [61]).
128. Liu CA (No 1) (at [96(a)]).
129. Ibid (at [99]).
130. Cojuangco (No 1) (at 525 - 526, 530).
131. Ibid (at 529 - 530).
132. Ibid (at 525); his Honour identified a very limited area by comparing s 33(2) of the 1974 Act with s 34(2) in which there may be different results depending upon who was sued. The same possibility appears to be open under s 31 of the 2005 Act.
133. Ibid.
134. See Cojuangco (No 1) (at 533 - 534); there is no like provision in the UCPR.
135. Cojuangco CA (No 1); Cojuangco HC.
136. Cojuangco HC (at 356).
137. Ibid.
138. Ibid (at 357).
139. Ibid.
140. Ibid.
141. Cojuangco (No 2).
142. Ibid (at 13); this test was referred to as "undoubtedly correct" in The Herald & Weekly Times Ltd v Guide Dog Owners' & Friends Association [1990] VR 451 ("Guide Dog Owners' Case") (at 459) per O'Bryan J (Murphy J agreeing).
143. Cojuangco (No 2) (at 24).
144. Ibid (at 26).
145. Ibid (at 25 - 26).
146. Ibid (at 33 - 34).
147. Cojuangco CA (No 2).
148. Ibid (at 41,549); Handley JA agreed (at 41,551).
149. Ibid (at 41,551).
150. Ibid.
151. Ibid (at 41,550).
152. Cojuangco (No 1) (at 525).
153. Cojuangco HC (at 358).
154. Ibid.
155. Guide Dog Owners' Case (at 463) per Marks J (Murphy J agreeing).
156. [2009] WASCA 127; (2009) 40 WAR 164 ("Bond").
157. Ibid (at [33] - [34]).
158. Ibid (at [32]); as Buss JA noted (at [63]) observations in Cojuangco HC (at 354 and 356) suggest the rule only applies in defamation and analogous proceedings; cf British Steel Corporation v Granada Television Ltd [1981] AC 1096 (rule confined to defamation actions and does not extend to actions for breach of confidence).
159. Ibid (at [87]); see also [108].
160. Ibid (at [89]).
161. Ibid (at [94]).
162. [1994] 1 Qd R 49 (at 56 - 57) per Davies JA and Byrne J.
163. Liu (No 2) (at [17]).
164. White Book 288, Plaintiff's Further Submissions, 28 March 2014, at [12]. In Cojuangco (No 2), the plaintiff conceded that the Court had power to reconsider the preliminary discovery order even though it had been entered. Hunt J regarded that as a proper concession in light of what his Honour described as the Court's inherent power to set aside or vary a judgment or order in relation to both final and interlocutory judgments or by virtue of s 23 of the Supreme Court Act 1970 (NSW): Cojuangco (No 2) (at 14 - 15).
165. Liu (No 2) (at [18]).
166. There was no counterpart to s 135 in the Supreme Court Act 1970 (NSW). A similar power was found in SCR Pt 42 r 12 and Pt 44 r 5.
167. State of New South Wales v Plaintiff A [2012] NSWCA 248 (at [15]) per Basten JA (Beazley and Hoeben JJA agreeing).
168. Boland v Dillon; Cush v Dillon [2015] NSWCA 183 (at [58]) per Bergin CJ in Eq, referring to Australian Beverage Distributors Pty Ltd v Evans & Tate Premium Wines Pty Ltd [2007] NSWCA 57; (2007) 69 NSWLR 374 (at [140]) per Beazley JA (as her Honour then was), with whom Hodgson and Santow JJA agreed.
169. Jago v District Court of New South Wales [1989] HCA 46; (1989) 168 CLR 23 (at 74) per Gaudron J; Reid v Howard [1995] HCA 40; (1995) 184 CLR 1 (at 16 - 17) per Toohey, Gaudron, McHugh and Gummow JJ; see also Riley McKay Pty Ltd v McKay [1982] 1 NSWLR 264 (at 270).
170. Cojuangco CA (No 2) (at 41,528); Handley JA (at 41,550). Mahoney JA expressed the view, without elaboration, that leave to appeal was not necessary: Cojuangco CA (No 2) (at 41,546). The issue of whether leave to appeal was required did not appear to arise in Cojuangco CA (No 1).
171. Cooper v Williams [1963] 2 QB 567 (at 580) per Lord Denning MR (Danckwerts LJ agreeing at 582); semble Davies LJ also (at 583); Hutchinson v Nominal Defendant [1972] 1 NSWLR 443 (at 447) per Isaacs J; referred to with approval in Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; (1981) 148 CLR 170 (at 178) ("Adam P Brown Male Fashions").
172. [1936] HCA 40; (1936) 55 CLR 499.
173. Rinehart v Welker [2012] NSWCA 95 (at [184]) per Bathurst CJ (McColl and Young JJA agreeing); Ghosh v NineMSN Pty Ltd [2015] NSWCA 334 (at [37]) per Macfarlan JA (Leeming JA and Adamson J agreeing).
174. Hall v Nominal Defendant [1966] HCA 36; (1966) 117 CLR 423 (at 443) per Windeyer J.
175. See Malouf v Malouf [1999] FCA 284; (1999) 86 FCR 134 (Beaumont, Lee and Dowsett JJ) or the Guide Dog Owners' Case (at 455) per O'Bryan J (Murphy J agreeing); (at 461 - 462) per Marks J; see also Airservices Australia v Transfield Pty Ltd [1999] FCA 886; (1999) 92 FCR 200 ("Airservices").
176. Airservices (at 208) per Finn J.
177. Cojuangco (No 1) (at 534).
178. Carr v Finance Corporation of Australia Ltd (No 1) [1981] HCA 20; (1981) 147 CLR 246 (at 248) per Gibbs CJ ("Carr v Finance Corporation").
179. Dallas Buyers Club LLC v iiNet Limited (No 3) [2015] FCA 422; (2015) 327 ALR 695 per Perram J (at [2]) ("Dallas Buyers Club LLC").
180. Liu v The Age Company [2010] NSWSC 1176 (at [35]); see also Batistatos v Roads and Traffic Authority of New South Wales; Batistatos v Newcastle City Council [2006] HCA 27; (2006) 226 CLR 256 (at [63]).
181. No res judicata was created because no cause of action was determined: Re Wakim; Ex parte McNally [1999] HCA 27; (1999) 198 CLR 511 (at [161]) per Gummow and Hayne JJ.
182. (1843) 3 Hare 100; 67 ER 313; no extended doctrine of res judicata or issue estoppel where no earlier final decision: Christie (at 602) per Hayne JA; Charles JA (at 606); see also Tomlinson v Ramsey Food Processing Pty Ltd [2015] HCA 28; (2015) 89 ALJR 750 (at [20] - [23]) per French CJ, Bell, Gageler and Keane JJ; Bajramovic v Calubaquib [2015] NSWCA 139 (at [40]).
183. Brimaud (at 46).
184. Ibid.
185. Adam P Brown Male Fashions (at 178) per Gibbs CJ, Aickin, Wilson and Brennan JJ.
186. Brimaud (at 46); see also Amalgamated Television Services v Marsden [1999] NSWCA 313 (at [38]) per Mason P (Meagher and Handley JJA agreeing) ("Marsden"); Chanel Ltd v F W Woolworth & Co Ltd [1981] 1 All ER 745 (at 751 - 752); [1981] 1 WLR 485 (at 492 - 493) per Buckley LJ.
187. Christie (at 604).
188. Ibid.
189. Ibid (at 605).
190. Ibid (at 597).
191. Ibid (at 606 - 607, 610 - 611).
192. Ibid (at 611).
193. Manning (at [44]).
194. Ibid (at [71]) per Heydon JA; (at [101]) per Foster AJA.
195. Ibid (at [99]).
196. Ibid (at [122]).
197. Ibid (at [124]).
198. Ibid (at [45]).
199. Manning (at [46]); cf Mason P (at [17] - [19]).
200. Ibid (at [44], [72]).
201. Ibid (at [73]).
202. Ibid (at [72]).
203. In like vein, in Carr v Finance Corporation (at 248), Gibbs CJ was of the view that a second application to set aside a default judgment would be doomed to failure because, save where the first application had been dismissed on a technicality, the issues of substance which it raised would have been decided adversely to the defendant in the first application.
204. Ibid (at [72] - [73]).
205. Ibid (at [10] - [11]); his Honour also approved a like statement made by Sperling J in Wentworth v Rogers (Supreme Court (NSW), Sperling J, 28 April 1995, unrep) (at 6).
206. Ibid (at [13], [16]).
207. Ibid (at [19]).
208. [2010] NSWCA 30 (at [17]) (Allsop P and McColl JA agreeing).
209. [2012] NSWCA 128 (at [19] - [20]) (Whealy and Meagher JJA agreeing).
210. Ibid (at [20], [70]).
211. [2015] NSWCA 130; (2015) 89 NSWLR 198 (at [30]) (Bathurst CJ, Beazley P and McColl JA).
212. Ibid (at [40] - [41]) per Emmett JA (Leeming JA and Adamson J agreeing).
213. Ibid (at [57] - [58]).
214. Expense Reduction (at [42], [51], [55], [57]).
215. Ibid (at [51]).
216. Aon Risk (at [54]).
217. Ibid (at [40]).
218. Ibid (at [47]).
219. Ibid (at [53]).
220. Aon Risk Services Australia Ltd v Australian National University [2008] ACTCA 13; (2008) 227 FLR 388 (Higgins CJ and Penfold J; Lander J dissenting).
221. Aon Risk (at [89]); cf CPA, s 57(1)(d).
222. Ibid (at [93]).
223. Ibid (at [94] - [95]).
224. Ibid (at [98]).
225. Ibid (at [99]).
226. Ibid (at [100]).
227. Ibid (at [102]).
228. Ibid (at [103]).
229. Ibid (at [112])
230. Ibid (at [114]).
231. Ibid (at [115]).
232. Brimaud (at 46); see also Manning (at [73]) per Heydon JA; (at [123] - [133]) per Foster AJA.
233. Brimaud (at 46); Bajramovic (at [41]) per Emmett JA (Leeming JA and Adamson J agreeing).
234. Marsden (at [38]).
235. Cf Manning, Christie, Bajramovic.
236. Liu (No 2) (at [54]).
237. Ibid (at [78]).
238. Cf Aon Risk; Adam P Brown Male Fashions (at 178).
239. Brimaud, Manning, Bajramovic.
240. Cojuangco HC (at 356).
241. Brimaud (at 46).
242. Cf Aon Risk (at [100]).
243. Liu No 2 (at [64]).
244. Cf Aon Risk (at [111]).
245. House v R (at 505).
246. Cojuangco (No 1) (at 534).
247. (at [103]).
248. Ibid.
249. Manning (at [72]).
250. See Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd [2001] HCA 63; (2001) 208 CLR 199 (at [209] - [210]) per Kirby J.
251. Aon Risk (at [111]).
252. Manning (at [73]); Bajramovic (at [41]).
253. Aon Risk; Expense Reduction.
254. Guide Dog Owners' Case (at 452).
255. (at 358).
256. Cf Cojuangco CA (No 2) (at 41,551) per Handley JA.
257. Cojuangco (No 1) (at 533).
258. Cf Totalise Plc v The Motley Fool Ltd [2001] EWCA Civ 1897; [2002] 1 WLR 1233 ("Totalise") (at [30]).
259. Liu (No 3) (at [25]).
260. Ibid.
261. See Liu (No 1) (at [196] - [204]).
262. Liu (No 3) (at [48]).
263. Ibid (at [50]).
264. [1974] AC 133 ("Norwich Pharmacal").
265. Ibid (at 174) per Lord Reid.
266. Ibid (at 175); see British Steel Corporation v Granada Television Ltd [1981] AC 1096 (at 1104 - 1105) per Sir Robert Megarry V-C.
267. Norwich Pharmacal (at 199) per Lord Cross.
268. Ibid (at 176) per Lord Reid; see also (at 182) per Lord Morris.
269. Cojuangco (No 1) (at 533).
270. Cf CPA, s 98(1)(b).
271. Cojuangco (No 1) (at 533).
272. Ibid (at 534).
273. Ibid.
274. Cojuangco (No 2) (at 34).
275. Ibid (at 33).
276. Totalise (at [18]).
277. CPR r 48.1(3)(a).
278. Totalise (at [22]; see also [29]); in the latter paragraph the Court referred to CPR r 48.3 as governing the costs of proceedings for pre-action disclosure. This was clearly a mistake; the correct rule was CPR r 48.1, referred to in Totalise (at [18]).
279. Ibid (at [29]).
280. Ibid (at [30] - [31]).
281. Airways Corp (at [8], [10]).
282. Ibid (at [10]).
283. Ibid (at [11]).
284. C7 Pty Ltd v Foxtel Management Pty Ltd [2001] FCA 1864 (at [50]) per Gyles J.
285. Steffen (at [31], [33]).
286. Ibid.
287. Ibid (at [29]).
288. (Supreme Court (NSW), Master Macready, undated, file number 004454/01, unrep).
289. Ibid (at 4).
290. Ibid (at 3).
291. See Totalise (at [28] - [31]).
292. [2008] NSWSC 1281 ("Hornsby Shire Council").
293. Ibid (at [7]).
294. Ibid (at [8]).
295. Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 (at [35]) per Gaudron and Gummow JJ ("Oshlack").
296. Norbis v Norbis [1986] HCA 17; (1986) 161 CLR 513 (at 537) per Brennan J (as his Honour then was), referred to with approval in Oshlack (at [35]); see also Pavlovic v Universal Music Australia Pty Ltd (No 2) [2016] NSWCA 31 (at [16]) per Bathurst CJ, Beazley P and Meagher JA.
297. See also Liu (No 3) (at [24] - [25]).
298. Liu CA (No 1) (at [102]).
299. Cf Cojuangco (No 1) (at 533).
300. See Liu (No 1) (at [203] - [204]).
301. UCPR 42.2.
302. Oshlack (at [44]) per Gaudron and Gummow JJ.
303. Sydney City Council v Geftlick [2006] NSWCA 280 (at [90]) per Tobias JA, Mason P and Hodgson JA agreeing.
304. See [71] above.
305. Liu (No 3) (at [51]).

Amendments 07 April 2017 - 7 April 2017 [55] CPA s 58(2)(v) amended to CPA s 58(2)(b)(v). [61] Amendment to footnote reference 68. [81] Typographical error corrected. [85] Typographical error corrected. [118] Amendment to footnote reference 104. [129] Amendment to defined term. [137] Typographical error corrected. [162] Amendment to footnote reference 170. [224] Amendment to footnote reference 256. [236] Evidence Act s 126D amended to Evidence Act s 126B. [269] Amendment to case reference. 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: 07 April 2017