Mohareb v Fairfax Media Publications Pty Limited; Mohareb v Harbour Radio Pty Limited

Supreme Court of NSW|2019-11-26|Before: Adamson J

Solicitors: Banki Haddock Fiora (First and Second Defendants in each proceeding) Crown Solicitor's Office (Third Defendant in each proceeding) File Number(s): 2017/35614; 2017/25606

Introduction

On 25 January 2017 Nader Mohareb (the plaintiff) commenced proceedings 2017/25606 claiming damages for defamation against Harbour Radio Pty Ltd, Ray Hadley and the Attorney-General for New South Wales, for whom the State of New South Wales was later substituted, (the Harbour Radio proceedings). The matters complained of comprised two radio broadcasts on 29 January 2016 and 20 May 2016 and two internet broadcasts, which were uploaded on those dates.

The facts

The plaintiff studied and worked in Cairo. He qualified as a structural engineer and migrated to Australia in about 1991. It took him three or four years to get a "proper engineering job". He obtained work from time to time but has not worked in recent years. He has had no personal income since at least 2016. He is not in receipt of any government benefit. In the past he owned real property: a property in Pennant Hills, a unit in Dee Why and a property in Victoria, which he bought with his own funds and funds borrowed from his family. The plaintiff said that he sold the Dee Why and the Victorian properties in 2009 because he had lost confidence in the market as a result of the Global Financial Crisis. The other two properties had been sold some years before. When the properties were sold he repaid his family from the proceeds of sale. He lived in rented property on Scotland Island between 2013 and 2016 but moved to Dee Why in 2017 to live with his mother, where he continues to reside.

The proceedings involving the Valentis

On or about 29 January 2015, judgment was entered in favour of Steven and Teresa Valentis, the defendants in proceedings which the plaintiff had brought against them in the Local Court relating to the plaintiff's occupation of a granny flat owned by them on Scotland Island. The plaintiff was ordered to pay the Valentis' costs. Ultimately, in about September 2015, the Valentis engaged the Sheriff of New South Wales to enforce the judgment debt which resulted from the costs order. The Sheriff seized goods and notified the plaintiff that the goods would be removed if the judgment debt was not paid in full. The judgment debt was paid in October 2015.

The proceedings involving Matthew Palmer

The plaintiff brought proceedings against Matthew Palmer in the District Court. On or about 30 July 2015, Gibson DCJ gave judgment in favour of Mr Palmer and made an indemnity costs order against the plaintiff. The plaintiff sought leave to appeal. On 24 November 2015, the Court of Appeal (Meagher JA and Bergin CJ in Eq) dismissed the plaintiff's application with costs.
On 23 December 2015 Mr Palmer wrote to the plaintiff, asking for his costs to be paid. On 4 February 2016 a demand was made by Mr Palmer's lawyers for payment of the costs ordered by the District Court and the Court of Appeal. On 3 March 2016 Mr Palmer asked for the costs to be assessed by a costs assessor.
On 4 March 2016, Gibson DCJ dismissed the plaintiff's application for leave to prosecute Mr Palmer for perjury and ordered the plaintiff to pay Mr Palmer's costs of the proceedings on an indemnity basis. On about 31 March 2016, the plaintiff filed a notice of intention to appeal this decision.

The proceedings involving Mr Kelso

The plaintiff had commenced proceedings against Mr Kelso which were dismissed by Hatzistergos DCJ on 4 December 2015. The plaintiff was ordered to pay the costs of the proceedings. As at July 2017 the costs assessment process had not yet been completed.

The interview between Mr Hadley and the Attorney-General on 29 January 2016

On 29 January 2016 Mr Hadley interviewed, on Radio 2GB, the Honourable Gabrielle Upton, the then Attorney-General for New South Wales. The subject of the interview was an unnamed person who was alleged to be a vexatious litigant. The Attorney-General indicated that she proposed to bring proceedings under the Vexatious Proceedings Act 2008 (NSW) for an order declaring the unnamed person to be a vexatious litigant. It is common ground that, although the plaintiff was not identified at the time, he was the person referred to. It was possible to identify him retrospectively from subsequent publications.

The sale of gold bars and the transfer of $100,000 to Egypt

On 29 March 2016 the plaintiff advised Farah Hanna, his mother, to sell gold bars which were held on account for her by The Perth Mint. A business record produced on subpoena by Perth Mint recorded that gold to the value of $100,000 was sold on 29 March 2016, leaving a balance in the account of $42,864.45. The money was transferred in two tranches of $50,000 each to an account in Mrs Hanna's name at St George Bank (the St George Bank account) on 29 March 2016. The documents produced by Perth Mint indicated that it was a term of the agreement between Perth Mint and Mrs Hanna that the proceeds of sale of the gold would be remitted to a nominated bank account. Although the St George Bank account was in Mrs Hanna's name, the evidence established that the plaintiff was a signatory of the St George Bank account (as it had been produced on subpoena by Westpac Banking Corporation (Westpac) with that qualification in the schedule). The plaintiff's name and address were on the records of Westpac of which St George Bank was a division.
The plaintiff admitted that he used the St George Bank account regularly for his own purposes, both to make purchases and also to withdraw money. He agreed that he had "unlimited access to the funds" in the St George Bank account and that he treated the account as his own.
From about 2017 until the present day, the plaintiff has lived with his mother in her unit at Dee Why. I accept the plaintiff's admission in [412] of his reply that his mother was, at least in November 2017 when the reply was signed, "frail". The plaintiff's mother is now 82. In oral evidence, the plaintiff described his mother's present condition as follows: "My mother is not frail. My mother is in very good condition. She may have been frail at the time which is in 2017 but she's in very good condition now and she's very alert, she drives her car, she goes to play bowls every week."
Documents produced on subpoena by Westpac showed that the funds were transferred, in two tranches of $50,000, from the St George Bank account to JP Morgan and from there to the National Bank of Egypt and ultimately to an account in Egypt in the name of "Nader Nabil Sedrah" which the plaintiff accepted was his name.

The application by the Attorney-General to have the plaintiff declared a vexatious litigant

In May 2016 the Attorney-General commenced proceedings to have the plaintiff declared a vexatious litigant. The proceedings were heard by Schmidt J on 14 October 2016 and 16 November 2016. The plaintiff was self-represented. On 16 December 2016 Schmidt J dismissed the summons on the basis that it was not open to her to conclude that Mr Mohareb had "frequently" instituted or conducted vexatious proceedings and therefore that there was no basis for making orders under the Vexatious Proceedings Act: The Attorney General for the State of New South Wales v Mohareb [2016] NSWSC 1823.

The plaintiff's bankruptcy

On 21 January 2018 the plaintiff committed an act of bankruptcy, as a consequence of which a sequestration order was made against him on 5 November 2018 and Adam Shepard was appointed as the plaintiff's trustee in bankruptcy. Mr Shepard elected, pursuant to s 60(2) of the Bankruptcy Act 1966 (Cth), to discontinue the various defamation actions commenced by the plaintiff. The plaintiff has, however, continued the actions in his own name under s 60(4) of the Bankruptcy Act.
In his report to creditors dated 17 January 2019, Mr Shepard purported to summarise the plaintiff's assets and liabilities. He listed the balances in various accounts held in the plaintiff's name, which did not include the St George Bank account, that being an account in Mrs Hanna's name. Mr Shepard requested information from the Australian Transaction Reports and Analysis Centre which indicated that two overseas transfers had been made in March 2016 of about USD$36,000 each (being the transactions referred to above). Mr Shepard recorded: "The bankrupt advised that he does not currently hold any overseas bank accounts and has not held any overseas bank accounts in the last 12 months. The bankrupt further advised that he has no knowledge of the abovementioned transactions."
The trustee's report also recorded that the plaintiff had owned a property in West Pennant Hills which he sold in 2001; a unit on Pittwater Road, Collaroy which he sold in 2007 and a unit in Dee Why which he sold in 2009. He also owned a property in Victoria which he sold in 2009. These are the properties referred to above.
Under the heading "Income Contributions", the trustee recorded: "The bankrupt disclosed in his SOA [Statement of Affairs] that he is self-employed as a structural engineer and that he has not worked for some time. The bankrupt recently disclosed that he currently receives financial assistance from his family. The bankrupt disclosed in his SOA that he has no dependants…."

The application by Mr Palmer to have the plaintiff declared a vexatious litigant

In 2018, Mr Palmer (who is referred to above) commenced proceedings against the plaintiff for an order under the Vexatious Proceedings Act. The proceedings were heard by Fagan J on 22 and 23 July 2019. Both parties were self-represented. On 7 August 2019 Fagan J published reasons (Palmer v Mohareb [2019] NSWSC 975) and made orders which included the following: "(1) The defendant, Nader Nabil Sedra Mohareb, is prohibited from instituting any proceeding against the plaintiff, Matthew Palmer, in New South Wales. (2) The defendant, Nader Nabil Sedra Mohareb, is prohibited from instituting any new proceeding against any person in New South Wales, this order not to affect the filing of any interlocutory process in proceedings that have been commenced at the date of this order or any appeal or application for leave appeal from a decision in any such proceeding."
On 28 August 2019, the plaintiff filed a notice of intention to appeal against the decision of Fagan J. On 14 October 2019 he filed a notice of appeal. The matter was listed for directions in the Court of Appeal on 18 November 2019. The Court of Appeal directed that the application for leave to appeal and the appeal be heard concurrently on 5 March 2020. I am informed by Ms Chrysanthou that Mr Palmer (who appeared for himself in the proceedings before Fagan J) does not propose to appear at the hearing in the Court of Appeal. For this reason, the State of New South Wales has applied for leave to intervene in the Court of Appeal to provide the court with the benefit of a contradictor to the plaintiff.

The defendants' investigation of the transfers to Egypt

On about 28 August 2019 Ms Norman became aware that Mr Shepard was investigating whether the plaintiff had made two payments to a bank account in Egypt. She took the steps set out below to determine whether there were grounds to apply for security for costs on that basis.
On 19 September 2019 a subpoena was issued at the request of Fairfax to Westpac seeking production of documents relating to any transfer from any bank account of which the plaintiff was or has been a signatory to a National Bank of Egypt account in his name during the period January 2016 to May 2016.
On 24 September 2019 the defendants served a notice to produce on the plaintiff requiring production on 27 September 2019 of documents relating to any transfer from any bank account of which he was or has been a signatory to a National Bank of Egypt account in his name during the period January 2016 to May 2016. By email dated 26 September 2019 the plaintiff responded that he had no knowledge of any such documents.
At the directions hearing before Fagan J on 27 September 2019, the notice to produce was called upon and the plaintiff responded that he had nothing to produce.
On 1 October 2019 Westpac produced documents in answer to the subpoena which showed the transfers from the St George account to the account in the name, Nader Nabil Sedrah, in Egypt referred to above. The plaintiff accepted that his name was Nader Nabil Sedrah, this being a variation of the other name by which he is known, Nader Nabil Sedrah Mohareb.

The plaintiff's evidence of the transfers to Egypt

I accept the plaintiff's evidence that his mother's gold was sold in March 2016 because he had advised her that it would be better if it were in cash. The plaintiff gave evidence in cross-examination that he did not know how the funds had come to be deposited into an account in his name in Egypt, that the money was not his money and that it was possible that it had been put there without his knowledge. The plaintiff was evasive, non-responsive and hesitant in giving evidence on this topic. He also raised his voice when challenged. The following exchanges in cross-examination are telling: "Q. Then it [the business record of the transfer] refers to Nader Nabil Sedrah; that's you? A. Yes. Q. That's your account in Egypt? A. I don't have an account in Egypt. Q. Mr Mohareb, I'll give you the opportunity to answer that question again. That's an account in Egypt? A. I don't have an account in Egypt and as I mentioned before, this could have been or was done, like, that transaction was undertaken by my mother and not by me. Q. Mr Mohareb, I suggest to you that that evidence is false? A. My mother has power of attorney on my behalf on anything she does on my behalf in Egypt so‑ … Q. Do you have any relatives with the name, Nader Nabil Sedrah? A. That document doesn't prove that there's an account in my name in that bank. It doesn't prove that or if there is one, then it was set up on my behalf. … Q. It ended up after an international transfer in an account in your name in Cairo? A. As I mentioned, it may seem strange but this is like, you know, this is ‑ in fact, my mother allows me to use her account and I've given my mother power of attorney to do things on my behalf in Egypt. I haven't been in Egypt for the last 20 years. There's nothing ‑ it might be an unusual arrangement in terms of how family members cooperate on things like that but this is the case."
I note that the plaintiff made statements to the same effect in a directions hearing on 25 October 2019 before Fagan J. Fagan J asked him directly about this matter on 25 October 2019. Ultimately the plaintiff, who had prevaricated in his answers, said: "You know, that is - if and when the application [for security for costs] is put on, that is for when an application is put on."
The plaintiff did not address the transfers in his affidavit filed in opposition to the defendants' application for security for costs. I do not accept the plaintiff's evidence that he did not know how the money came to be in an account in his name or that it was not his money. I found him to be deliberately untruthful in this respect.
In his evidence, the plaintiff admitted that when he came to Australia members of his family lent him money which he repaid when he sold the properties he owned referred to above. His evidence in cross-examination was that, since about 2015, the funds available to him had comprised family funds and savings from his previous work including a "big project" in 2013. He described his relationship with family members in the following exchange in cross-examination: "Q. You operate your mother's St George [account]? A. As I mentioned to you, any of that money, the origin of that money is my family and it was returned to them. Any way you put it, they're appreciative of the fact that I returned it to them and they, you know, helping me in times ‑ in the time of difficulty that I'm in. That's how things work in our family." [Emphasis added.]

The procedural history of the proceedings and further procedural steps in the litigation

In the first half of 2017 there was significant debate about the imputations which was resolved by McCallum J in a series of judgments. Defences were filed in July 2017. The particulars of justification refer to nine different sets of proceedings brought by the plaintiff against multiple defendants. The plaintiff filed a lengthy reply in both proceedings on 2 November 2017.
On 17 March 2019, Hoeben CJ at CL, the Defamation List Judge, fixed the Fairfax proceedings and the Harbour Radio proceedings for hearing to commence on 3 August 2020 with an estimate of 4 weeks plus. The plaintiff provided discovery and answers to interrogatories on 3 May 2019. Subsequently, in early June 2019, the plaintiff requisitioned a jury. If this matter is to be heard with a jury, the hearing is likely to be longer than it would be with judge alone.
The evidence establishes that there are further steps which may be taken in the proceedings prior to the hearing and other matters which might affect the proceedings. These include: the appeal against the orders made by Fagan J (listed for 5 March 2020); the defendants' applications for leave to file amended defences to incorporate matters which have occurred since the filing of the defences in July 2017 (including matters referred to in Fagan J's judgment); the defendants' proposed application to strike out the plaintiff's claim on the basis of Fagan J's judgment (which they allege confirms that he is a vexatious litigant); and the defendants' proposed application to dispense with the jury.
The defendants accepted that the appeal ought be determined before the strike-out application and that their proposed application to dispense with the jury ought be determined after the strike-out application. It follows that both of these steps must await the Court of Appeal's determination of the plaintiff's appeal.
The defendants submitted that it was not open to them to defer their preparation of this matter for hearing until after the decision of the Court of Appeal had been handed down. They submitted that the ambit of the issues in the proceedings was such as to make it necessary for them to obtain witness statements from a large number of witnesses and that this task could not be done in what might be a relatively short time between the Court of Appeal's decision and the commencement of the hearing.
The plaintiff accepted that, if the Court of Appeal dismissed the appeal from the orders of Fagan J, he would have no case. However, the defendants did not accept that if the Court of Appeal allowed the appeal and set aside the orders made by Fagan J, they would not have a defence to the plaintiff's claim. They submitted that the defence of justification in the defamation proceedings would turn in part on the ordinary meaning of the words "vexatious litigant" whereas the words had a defined meaning in the Vexatious Proceedings Act. Further, they contended that the litigation which fell within the ambit of the application before Fagan J was narrower than the litigation to which the defendants could have recourse in purporting to justify the imputations. Even if the State of New South Wales is permitted to intervene in the proceedings before the Court of Appeal, it will not thereby render itself subject to res judicata or issue estoppel for the purposes of the defamation proceedings. None of the other defendants was otherwise involved in the proceedings before Fagan J or in the appeal and, accordingly, will not be bound by the outcome.

The costs incurred by and to be incurred by the defendants

Fairfax and Ms Hall

The evidence of the defendants as to costs incurred was uncontroverted. Ms Norman deposed that her clients had, as at 16 October 2019, incurred costs and disbursements of $174,492.51. These amounts reflect the substantial number of directions and interlocutory hearings in the matter; the detailed and comprehensive defences; the analysis of the plaintiff's reply (which is 116 pages long and which is supported by an affidavit and accompanying material amounting to several folders); and the interrogatories served by the defendants.
The estimate of four weeks was made before the plaintiff requisitioned a jury and also before the plaintiff served summaries of the evidence of a considerable number of witnesses whom he proposes to call in reply.
Ms Norman estimated, with significant qualifications, that the costs which will be incurred by Fairfax and Ms Hall will amount to $250,000, comprised of the following amounts: Task or stage of proceedings Amount (exclusive of GST) Finalise proposed amended defence $15,000 Strike-out application $15,000 Application to dispense with jury $10,000 Direct preparation for the trial $70,000 Trial (on assumption that it ran for 4 weeks only) $140,000 TOTAL $250,000

The figures for these matters reflect the circumstance that Ms Olsen, solicitor, and Mr Richardson of counsel, are instructed in both the Fairfax and the Harbour Radio proceedings. The figures set out above are estimated on the assumption that the costs will be spread over both proceedings. I accept Ms Norman's opinion that, in her experience, taxation following an order for costs is likely to result in an order that the unsuccessful party pay between 80-90% of the successful party's costs.

Harbour Radio and Mr Hadley

Mr Burke, the solicitor for Harbour Radio and Mr Hadley, deposed that his clients have already spent $149,078.53 on legal costs in the proceedings. He estimated that the costs of direct preparation for the trial would be no less than $70,000 (exclusive of GST) and that the costs of a hearing (on the assumption that it could be completed in four weeks) would be no less than $150,000 (exclusive of GST). These figures take into account the sharing arrangement relating to the services of Ms Olsen and Mr Richardson. Mr Burke deposed that these figures do not take account of various factors, each of which is likely to increase the costs. His opinion regarding the percentage amount on assessment of costs accorded with Ms Norman's.

The State of New South Wales

The evidence of Mr Kelly, solicitor for the State of New South Wales, is that the State of New South Wales has already expended $176,249.26 on costs in the proceedings. Mr Kelly estimated that the trial would require three weeks' preparation at a total cost of $91,500. If the trial could be completed in four weeks, he estimated that its cost would be $122,000. His estimate of future costs was, accordingly, $213,500. These figures did not include amounts for the interlocutory applications referred to above, in which the State of New South Wales proposes to join.
Ms Chrysanthou confirmed in her submissions in reply on behalf of all the defendants that the defendants did not seek security in an amount of their likely future costs. She accepted that an order for security in such an amount would stultify the proceedings. However, she submitted that the amounts were relevant because they showed the extent to which the defendants would be out of pocket if no order for security was made and the prejudice associated with their being sued by a plaintiff who had made himself litigation-proof and who was already bankrupt.

The parties' submissions

The plaintiff admitted that, if he were unsuccessful in the proceedings and a costs order were made against him, he would not be in a position to pay it. He contended that he did not fall within Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 42.21(1)(f) because the transfers were made prior to the matters complained of and that he could not, at that time, reasonably have anticipated that he would bring proceedings against the defendants. He submitted that, in these circumstances, there was no basis for making the order. Further, he submitted that the defendants could have made the application at an earlier time and that the application should be refused on the grounds of delay. He contended that, if an order for security for costs was made, it would stultify the proceedings since he did not have the means to pay it.
The plaintiff contended that he knew nothing about the transfers to Egypt at the time at which they were made but that, in any event, the account statements for the St George Bank account showed that there was a balance in the order of $67,000 after $100,000 had been withdrawn, which told against the proposition that he was making himself "litigation-proof". He also contended that the gold bars stood to the credit of his mother and that therefore I ought not infer that their liquidation and the transfer of the proceeds of sale amounted to conduct which had the effect of divesting the plaintiff of assets which would otherwise be available to satisfy a costs order.
The plaintiff also submitted that his claim in defamation was, in substance, defensive and brought in order to vindicate his reputation which had been damaged by the matters complained of. Further, he contended that the defamation proceedings gave rise to issues of public importance, including the rights of an individual citizen to represent himself in court proceedings.
The defendants confirmed that they did not rely only on UCPR, r 42.21(1)(f) but, rather, relied on the Court's inherent jurisdiction. They submitted that the plaintiff had effectively made himself litigation-proof by having neither assets in his own name nor visible or available income. They contended that he was obviously being supported by his family, who stood to benefit from the litigation if the plaintiff were successful in the proceedings, but who would not, absent an order for security for costs, bear its burden. They submitted that the plaintiff bore the onus of establishing that the proceedings would be stultified if security were ordered and that there was no evidence on that question. They contended that a Jones v Dunkel inference (from Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8) ought be drawn against the plaintiff that nothing his mother or other family members could have said would have assisted him in resisting the application.
The defendants also submitted that there was no relevant delay in that they only became aware of the transfers to Egypt on 28 August 2019, which was less than two months before the filing of the notices of motion for security for costs. Mr Richardson submitted that, had subpoenas been issued concerning the plaintiff's financial affairs before that time, they would have been susceptible to an application that they be set aside as a "fishing expedition", there being no identifiable basis for the suggestion that the plaintiff had divested himself of assets prior to that time.

General principles and their application in the present case

The UCPR make provision for security for costs. UCPR, r 42.21(1)(f) relevantly provides: "(1) If, in any proceedings, it appears to the court on the application of a defendant - (f) that there is reason to believe that the plaintiff has divested assets with the intention of avoiding the consequences of the proceedings, the court may order the plaintiff to give such security as the court thinks fit, in such manner as the court directs, for the defendant's costs of the proceedings and that the proceedings be stayed until the security is given."
However, the authorities confirm that this Court has inherent jurisdiction to order security in cases which fall outside the UCPR. It is plain from the authorities that the question whether to order security is a discretionary matter, to be determined in light of all relevant circumstances and that this Court has an inherent jurisdiction in addition to the powers provided for under the UCPR: Green (as liquidator of Arimco Mining Pty Ltd) v CGU Insurance Ltd [2008] NSWCA 148; (2008) 67 ACSR 105 at [34]-[36] (Hodgson JA, Basten and Campbell JJA agreeing).
I do not accept that the plaintiff's claim is defensive and that he ought thereby not be subjected to an order for security for costs. He is, in form and substance, the plaintiff in the defamation proceedings. I am not persuaded that the proceedings give rise to any matter of particular public importance.
The statement that "poverty is no bar to a litigant", which was once treated as a rule, has come to be regarded as no more than a relevant consideration: Lucas v Yorke (1983) 58 ALJR 20 at 21 (Brennan J). The impecuniosity of the plaintiff is relevant to the potential oppressiveness of an order for security as well as to the potential prejudice which a successful defendant will suffer because of the inability to recover costs: Li v State of New South Wales [2013] NSWCA 165 at [49] (Ward JA, Macfarlan and Gleeson JJA agreeing).
It is not necessary to show that a plaintiff who is a natural person has arranged his or her affairs after proceedings have been commenced or when they are in "active contemplation". The following passage from the judgment of the Full Federal Court (Black CJ, Sackville and Finn JJ) in Cherry v Read (Federal Court of Australia, 21 November 1996, unrep) is apposite: "…[T]here is no sound policy reason to distinguish between an applicant who divests himself or herself of assets after litigation commences and one who does so in advance of proceedings or whose affairs are otherwise deliberately organised in order to obtain practical immunity from an adverse costs order in any future litigation. In short, we can see no justification for limiting the circumstances in which a court can order an individual to provide security for costs to cases where the denuding of assets, or the deliberate organisation of affairs to avoid acquiring assets, occurs after proceedings have been commenced or are in active contemplation. The vice of someone in Mr Cherry's position organising his affairs for the purpose of avoiding (inter alia) the 'vicissitudes of litigation' is that he seeks, at the expense of his opponent, to take advantage of the benefits of civil litigation without being subjected to its burdens. As the respondents point out, one of the reasons for the courts exercising caution in ordering a natural person to provide security for costs, is that the person's worth is available to meet an adverse costs order. That rationale does not apply in the circumstances of this case."
I am satisfied that, at least by the end of March 2016, the plaintiff had arranged his affairs so that he would not be susceptible to the burdens of litigation. Although I do not consider that the plaintiff contemplated, as at that date, that he would bring proceedings against the defendants, there were already several outstanding costs orders against him in other proceedings which he had brought. He had ready access to the account in his mother's name at the St George Bank. The transfers to an account in Egypt prevented recourse to the $100,000 or current balance by anyone other than the plaintiff himself or his mother, pursuant to a power of attorney. It was, no doubt, convenient for the plaintiff to have any monies which might be the fruit of his previous endeavours or proceeds from the sale of his assets out of reach of those whom he sued so that they would not be available to meet existing or future adverse costs orders. I accept the plaintiff's evidence that he can call on funds from his family when he needs them, as he has done in the past.
The plaintiff was at pains, in cross-examination, to emphasise the current good health and mobility of his mother. I infer that she was available to be called to give evidence in opposition to the defendants' notice of motion and that her evidence would not have assisted the plaintiff.
It cannot seriously be suggested that the defendants bear responsibility for the plaintiff's present impecuniosity since, on his own admission, he has not worked for years. I do not accept the plaintiff's submission that his circumstances have been contributed to by the defendants.
I am satisfied that there was no relevant delay. Although the proceedings had been on foot for about two and a half years before the application was made, the defendants did not have a basis for investigating the plaintiff's financial affairs until they learned of the sums which had been transferred to Egypt in March 2016. A premature subpoena would have lacked legitimate forensic purpose: Attorney-General (NSW) v Chidgey [2008] NSWCCA 65; (2008) 182 A Crim R 536 at [64] (Beazley JA). I consider that the timing of the application has been adequately explained by the defendants and does not reflect any dilatoriness on their part. Further, I note that the defendants have expended considerable sums on the proceedings already, for which no security is sought, their applications being limited to future costs.
Despite the strenuous submissions made by the plaintiff that his case was "strong" (largely on the basis of the judgment of Schmidt J, who dismissed the Attorney-General's application for an order under the Vexatious Proceedings Act) and the defendants' submissions that his case is weak (including on the basis of the judgment of Fagan J who made an order under the Vexatious Proceedings Act), I do not regard myself as being in a position to judge the relative merits of the parties' cases. I accept the defendants' concession that the plaintiff's claim is reasonably arguable. In Jazabas Pty Ltd v Haddad [2007] NSWCA 291; (2007) 65 ACSR 276, McClellan CJ at CL said (at [83]), with the concurrence of Mason P: "…The question which must be asked is whether the claimants' case is bona fide and raises real issues to be tried. Unless obviously hopeless the prospect of success or failure is of little relevance…"
I accept the defendants' submission that there is no evidence that the plaintiff's family members, who are presently supporting him and who would, in accordance with the usual arrangements in that family, be expected to share in the proceeds of any victory by the plaintiff in the proceedings, are not in a position to provide security. There is no evidence that an order for security will stultify the proceedings. The plaintiff bears the onus on that matter: Bell Wholesale Co Ltd v Gates Export Corporation (No 2) (1984) 2 FCR 1 at 4 (Sheppard, Morling and Neaves JJ); [1984] FCA 34.
While there is no basis in the evidence for inferring that an order for security for costs would stultify the proceedings, it was accepted that an order for security of anything like the magnitude of the amount which the defendants expect to have to spend to defend the proceedings, would have that effect. The willingness of those standing behind an impecunious plaintiff to provide security for costs was considered by Barrett JA (McColl and Macfarlan JJA agreeing) in LRSM Enterprise Pty Ltd v Zurich Australian Insurance Limited [2014] NSWCA 88 (LRSM). LRSM concerned an application for security against an impecunious corporate plaintiff. However, the discussion in that case of the potentially reasonable unwillingness of those standing behind a plaintiff is relevant in the present case. Barrett JA said, of present relevance: "[42] … In Dae Boong International Co Pty Ltd v Gray [2009] NSWCA 11 at [26], Hodgson JA accepted that Bell Wholesale indicates that, if a company wishes to have the benefit of a finding that litigation will be stultified, it must prove that the persons who substantially stand to benefit are unable to provide the security. He continued: 'If that is not proved, it does not necessarily make the impecuniosity of the company and difficulties with providing security irrelevant; and if it can be shown that those persons are reasonably unwilling, even though possibly able, to provide the security, that may be a factor that would be taken into account.' [43] On that approach, proof by a corporate plaintiff of what might be termed rationally and practically reasonable unwillingness of creditors to give financial support is something that may be taken into account in the exercise of the undoubtedly wide discretion with respect to security for costs. The correctness of that approach was expressly confirmed by Allsop CJ and Middleton J in Madgwick v Kelly [2013] FCAFC 61; 212 FCR 1 (at [81]). Their Honours were of the view (at [83]) that 'unwillingness in itself is not determinative, and the question of the reasonableness of any unwillingness to contribute must be considered in determining what is fair in all the circumstances'. They added (at [87]) 'that questions of unwillingness, the difficulties of drawing conclusions about stultification, and the overall risk of stultification' are 'considerations that may be proper to take into account'."
In Bond v The Trustee of the Property of Alan Bond, a Bankrupt (1994) 32 ALD 770, French J ordered security for costs in the sum of $7,500 by way of bank guarantee in proceedings brought by Alan Bond, who was then bankrupt, against his trustee. His Honour inferred from the considerable financial support provided to Mr Bond from members of his family that the sum of $7,500 would be forthcoming given that the amount at stake in the proceedings was $300,000.
The present case is to be distinguished from Bond v The Trustee of the Property of Alan Bond, a Bankrupt, in which there was no room for reasonable unwillingness given that what was sought by way of security was $7,500 in return for the chance of recovering $300,000. The proportionality between the costs and the fruits of a successful judgment is otherwise in the present case. The disproportionality between costs and quantum of damages is notorious in proceedings for defamation, particularly where, as here, the defendants have pleaded justification, which requires them to prove the truth of the imputations. Indeed, UCPR, r 42.34, expressly exempts defamation proceedings from the usual rule that a plaintiff who receives a judgment in the Supreme Court for an amount less than $500,000 is not entitled to costs. In the present case, even if the plaintiff's relatives had the means to provide security in an amount of, say $500,000 (being about two thirds of the defendants' probable total future costs), one would not expect any rational person to do so when the potential fruits of the litigation (measured in the quantum of any award of damages), even if wholly successful, would be likely to be only a fraction of that sum.
Another factor which affects the amount and timing of the security ordered is that the future conduct of the proceedings is particularly uncertain by reason of the matters referred to above, including the effect of the eventual judgment in the Court of Appeal following the plaintiff's appeal against Fagan J's orders.
The defendants relied on the evidence which showed that the plaintiff had, as at 31 March 2016, $100,000 standing to an account in his name in Egypt and $67,000 in an account which, though in the name of his mother, was available for his personal use. They submitted that, in the absence of evidence as to the current balances of those accounts, I could infer that these monies would be available to meet an order for security for costs. Having regard to the period of time between the evidence and the present day, I am not prepared to draw an inference as to the balance of either of these accounts, although I accept that, whatever is presently in the St George Bank account is available for the plaintiff's own use.
The prejudice to which the defendants are subjected by the plaintiff's lack of apparent assets and income in circumstances where he continues to be financially supported by his family, in the context of the other factors referred to above, is sufficient to persuade me that it is appropriate to require the plaintiff to provide security for costs. In deciding on the timing and amount of such security it is important to ensure that the order and the amount of the order do not cause the plaintiff to suffer oppression.
I am persuaded that it is appropriate for a staged approach to be adopted in the present case: APEP Pty Ltd v Smalley (1983) 8 ACLR 260. I propose to order security for the costs of preparing the matter up until the end of May 2020 and not, at present, for the immediate pre-hearing preparation or for the hearing itself. The reason for a staged approach in the present case is that there are several uncertainties associated with the litigation and it would be potentially unjust to the plaintiff to require him to provide security for the future costs of the whole of the proceedings at this stage. I accept the defendants' submissions that, in order to be ready for the hearing of this matter, they need to undertake preparation now and cannot simply wait for the outcome of the appeal from Fagan J's judgment.
Having regard to the considerations referred to above, I am persuaded that it is appropriate to order the plaintiff to pay into Court the sum of $75,000 which is intended to provide a modicum of security for the costs of the defendants' preparation for the period to 31 May 2020. The security is to be divided equally between the three sets of parties, since this would appear to reflect their respective roles in the litigation.

Costs

The parties agreed that the costs of the defendants' notices of motion ought follow the event.

Orders

For the reasons given above, I make the following orders in proceedings 2017/25606 and 2017/35614: 1. Order the plaintiff to provide security for costs by paying into Court on or before 20 December 2019 the sum of $75,000, which is to comprise security in the amount of $25,000 for each of: 1. Harbour Radio Pty Ltd and Ray Hadley; 2. Fairfax Media Publications Pty Ltd and Louise Hall; and 3. The State of New South Wales. 1. If security is not provided as directed by 20 December 2019, stay the proceedings from 21 December 2019. 2. Order the plaintiff to pay the defendants' costs of the defendants' notices of motion for security for costs.

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