MORAN -v- SCHWARTZ PUBLISHING PTY LTD [No 2] [2015] WASC 35 (3 February 2015)

5 At the outset, I should recall the observations of Darley CJ in McSharry v Railway Commissioners [1897] NSWLawRp 15; (1897) 18 LR (NSW) 33, 36 - 37:

Under English law a man is not precluded by reason of his poverty from bringing his action to enforce his legal rights. If it were so, many a man would find himself powerless in the face of a great wrong done to him. We know, moreover, that many persons are enabled to sue only through the assistance given to them by their friends, or by their attorneys, and if in every case we had to enquire how the plaintiff found the money for his action, we would have time for little else.

...

It may be a great hardship on the defendants that they are subject to an action by a person who, if they succeed, cannot pay them their costs. I have known many cases where the same hardship existed, but if, on the other hand, we were to stop the proceedings on that account, still greater hardship and injustice might be done by depriving the plaintiff of his right.

6 Those hallowed common law observations have been cited with approval in this court by Steytler J (as he then was) in Coyne v West Australian Newspapers Pty Ltd (No 1) (1996) 15 WAR 51, 71 - 72 and by Miller J (Wallwork J agreeing) in Bride v The Australian Bank Ltd [1999] WASCA 88 [17].

7 McSharry did not address, of course, an action claiming damages for defamation. Nonetheless, the common law principles as enunciated, as regards impecunious natural persons still being able to gain access to the courts to enforce their legal rights, remain highly relevant to the present circumstances. Nevertheless, at the end I am of the view, as I will explain, that in this particular case an order for some level of security to be given by or on behalf of this plaintiff is warranted. That security can be provided in tranches as this action, which is still at a relatively early stage, progresses up to a trial.

8 Schwartz and Ms Peters are respectively the publisher and author of the book Have You Seen Simone? ('the Book'), which was published, at least in Western Australia, during June 2014 (see par 4 of the defence of 20 August 2014).

9 The origins of the proceedings are recounted in my earlier reasons: see Moran v Schwartz Publishing Pty Ltd [2014] WASC 334, delivered 18 August 2014. Those reasons dealt with the urgent interlocutory application brought by the plaintiff seeking an injunction to restrain the publication of the forthcoming book. I observed:

The Book describes a private investigation made over time by the second defendant. The Book is described in accompanying publicity as a work of so-called creative non-fiction. Ms Peters attended at a coronial inquest held in 2007 in respect of the 2005 death in Lismore, New South Wales, of a 25-year-old German backpacker, Simone Strobel.

The deceased's then German boyfriend was also in Australia in 2005 in the company of Simone. As a couple they had been travelling around the east coast of Australia. At a point they were joined by two more young tourists from Germany. That was just prior to the time of Simone's murder at Lismore in February 2005.

Simone's boyfriend in 2005 was the plaintiff, then known as Tobias Suckfuell. He is now known as Tobias Frederick Moran, after a change of name, following his marriage to an Australian woman some time around 2012 ...

It appears that the plaintiff, in early 2005, and his then girlfriend, the late Simone Strobel, as German citizens were taking a year off, on working visas in Australia, travelling around by camper van - particularly along the east coast - in Queensland and along the northern parts of the New South Wales coast, including Byron Bay and Lismore. The plaintiff and Simone had been recently joined from Germany by the plaintiff's sister, Katrin, and another male friend from the same village in Germany, a Mr Jens Martin [2] - [6].

10 By his pleaded statement of claim of 10 July 2014, Mr Moran asserts that the Book is defamatory of him in its natural and ordinary meaning as its words can be understood to mean that he murdered Simone Strobel (in 2005). Alternatively, the plaintiff claims that the Book is defamatory of him in the same meaning by way of a true innuendo. The plaintiff has also pleaded a number of circumstances of aggravation against the defendants.

11 By the defendants' pleaded defence of 20 August 2014, they raise (inter alia) a number of defences, including that of justification, a fair report of public proceedings, honest opinion, and qualified privilege. The defendants also formally deny the Book bears, or is capable of bearing, any defamatory meaning of the plaintiff.

12 As regards what is a very substantive Polly Peck/Lucas-Box justification response, the defendants have pleaded that if the Book conveys a meaning defamatory of the plaintiff, it only conveys the meaning that the plaintiff is suspected, on reasonable grounds, of having murdered Simone Strobel.

13 Thus, as presently foreshadowed, that truncated and alternative justification defence, is only raised at the level of asserting that the defendants say it is true that there are reasonable grounds to suspect the plaintiff was the perpetrator of that, still unsolved, 2005 murder. This gradation of justified imputation as regards a criminal act, is sometimes referred to as a Chase level 2 imputation, invoking the tripartite taxonomy explained in Chase v News Group Newspapers Ltd [2002] EWCA Civ 1772; [2003] EMLR 11, and see Mullis A and Parkes R, Gatley On Libel And Slander (12th ed, 2013) [11.13].

14 The plaintiff had sought an urgent interlocutory injunction in June 2014 to restrain the publication of the Book. Ultimately, I denied that restraint relief, on a basis that, in all the then presenting circumstances, particularly by weight of considerations going to the balance of convenience, the court ought not to intervene to inhibit publication of the Book, at that point: see Moran v Schwartz Publishing Pty Ltd. In that context, I noted, as a policy consideration, the strong public interest in freedom of speech and then, as regards the issue of reputational harm to the plaintiff, large amounts of pejorative material already circulating against the plaintiff in the public domain and concerning his alleged involvement in the 2005 murder of Ms Strobel. I also observed upon the availability to Mr Moran of the remedy of common law damages, if he were successful in this action at a trial.

15 The affidavit evidence submitted by the parties on 26 June 2014 for the hearing of the earlier interlocutory application, as well as counsel's oral submissions during the hearing on 30 June 2014, canvassed many of the alleged facts, possible claims and defences. These were subsequently pleaded out by the statement of claim of 10 July 2014, and in the defendants' pleaded defence of 20 August 2014.

16 In Moran v Schwartz Publishing I also rendered - in the course of that interlocutory examination of the strength of the plaintiff's defamation case - some observations about an underlying factual edifice for suspicion against the plaintiff, emerging from the affidavit materials at that time and upon the possible defamation defences the defendants might raise (see [63] - [71] of those reasons).

This application for security and the parties' evidence

17 The parties have filed written submissions either in support of or opposing the defendants' application for security for costs. They supplemented those submissions by the oral arguments of counsel at a hearing of this application on 5 December 2014.

18 The affidavits relied on in relation to the application, or otherwise relevant to the application, include (in chronological order):

(a) the affidavit of Carmelina Galati in opposition to plaintiff's application for injunctive relief sworn 29 June 2014 ('Galati June Affidavit');

(b) the second affidavit of Tanya Rachel Onofaro in support of an application for an interlocutory injunction sworn 30 June 2014 ('Onofaro June Affidavit');

(c) the affidavit of Carmelina Galati in support of application for security of costs sworn 1 October 2014 ('Galati October Affidavit');

(d) the affidavit of Amanda Sue Templeton sworn 31 October 2014 in opposition to defendants' application for security for costs ('Templeton Affidavit');

(e) the affidavit of Tobias Friedrich Moran affirmed 31 October 2014 in opposition to defendants' application for security for costs ('Moran Affidavit');

(f) the affidavit of Carmelina Galati in support of application for security of costs sworn 14 November 2014 ('Galati November Affidavit');

(g) the affidavit of Virginia Peters in support of the defendants' chamber summons for security for costs sworn 14 November 2014 ('Peters Affidavit');

(h) the affidavit of Christian Alexander Dammann verifying translation of documents from German to English affirmed 19 November 2014 ('Translator Affidavit');

(i) the affidavit of Rachel Megan King in opposition to the defendants' application for security for costs sworn 3 December 2014 ('King Affidavit');

(j) the fourth affidavit of Tanya Rachel Onofaro in opposition to the defendants' application for security for costs sworn 4 December 2014 ('Onofaro December Affidavit');

(k) the affidavit of Carmelina Galati in support of application for security of costs sworn 4 December 2014 ('Galati December Affidavit').

19 The parties' extensive written submissions were of 17 November 2014 (defendants) and 28 November 2014 (plaintiff), respectively.

20 The defendants' chamber summons of 2 October 2014 articulates that the grounds for the security are as set out in the Galati October Affidavit. Circumstances deposed to as relevant to the application for security in that affidavit include:

(1) the likely considerable length of this defamation trial as suggested by the defendants - an estimated five-week duration;

(2) Mr Moran allegedly not being an Australian citizen or a permanent resident of Australia and his failing to disclose a residential address in Australia;

(3) alleged instances in which Mr Moran refused to return to Australia to assist New South Wales police and the New South Wales State Coroner's Court;

(4) an alleged drug-related criminal conviction of Mr Moran in Germany in 2012;

(5) a lack of evidence as to Mr Moran holding any active employment in Australia; and

(6) Mr Moran's alleged lack of ownership of any property assets in Western Australia.

21 The Galati October Affidavit also relates that the defendants seek to rely on the reasons dated 16 October 2007, by Magistrate Paul MacMahon of the New South Wales State Coroner's Court, after the coronial inquest into the death of Simone Strobel (included as an attachment to the Galati June Affidavit), as well as my reasons in Moran v Schwartz Publishing Pty Ltd.

22 By his own affidavit resisting security, Mr Moran deposed that he now:

(a) is married to an Australian citizen (Samantha Moran);

(b) holds a 'permanent visa', entitling him to lawfully live and work in Australia indefinitely;

(d) has been working full-time in Perth as a subcontractor carpenter for a local construction company (see pars 6 - 25 of Moran Affidavit).

23 Mr Moran also deposed that, for privacy reasons, he did not wish to disclose his present residential address in Perth, where he currently rents premises with his Australian wife.

24 As regards the possible effects of a security for costs order made against him, Mr Moran asserts bluntly that he does not own any property in Australia (either solely or jointly), nor own any substantial assets or savings - other than his 1988 Mitsubishi Pajero vehicle (par 39).

25 Mr Moran further deposed that, to date, he has borrowed from family and friends to enable him to prosecute (ie, pay the legal costs he has incurred to date to his lawyers) this action against the defendants, including borrowing $20,000, put up to support his (unsuccessful) application for interlocutory injunctive relief (par 40).

26 Significantly, Mr Moran asserts that if an order for costs were to be made against him for the amount sought by the defendants, or 'for any significant sum', he would be unable to meet the costs from his own funds or assets and, therefore, would have to discontinue the action against the defendants (par 43). Crucially to my end conclusion, Mr Moran does not depose that he has even asked the family and friends who have loaned him money to assist him to date (informally, I infer) in meeting his legal bills, if they are or would be prepared to support him further financially, to assist him to provide some level of security to the defendants to contribute to their trial costs - should the plaintiff ultimately lose this trial and, in that event, incur an exposure as the losing party to meet the (taxed, usually) legal costs of the defendants - which, on any view, are here likely to be high.

27 Order 25 r 1 of the Rules of the Supreme Court 1971 (WA) (RSC) provides that this court may order that security for costs be provided by a plaintiff, but that no order shall be made merely on account of the poverty of the plaintiff, or the likely inability of a plaintiff to pay any costs which may be awarded against the plaintiff.

28 Order 25 r 2 then sets out a non-exhaustive list of grounds for ordering security for costs, but without detracting from the generality of RSC O 25 r 1.

29 Order 25 r 3 provides that the power to require the granting of security is discretionary. It lists three factors a court must take into account when exercising that discretion.

The granting of security shall be in the discretion of the Court, and in determining whether an order should be made the Court shall take into consideration -

(a) the prima facie merits of the claim;

(b) what property within the jurisdiction may be available to satisfy any order for costs against the plaintiff;

(c) whether the normal processes of the Court would be available within the jurisdiction for enforcement of any order for costs made against the plaintiff.

30 The factors specified under O 25 r 3 are also not exhaustive: see Engel Pty Ltd (In Liq) v Leeds (Unreported, WASC Full Court, Library No 940403, 20 July 1994) 3 (Malcolm CJ).

31 Any exercise by the court of its power to order security is always an order made to serve the interests of justice: Ailakis v Olivero [2013] WASCA 91. While the power has been described as being 'unfettered', it must be exercised judicially: Mann v Dabelstein [2006] WASCA 176 [16]. The circumstances that may bear upon the exercise of the discretionary power are broad.

32 Mabrouk Minerals Pty Ltd v Mabrouk Holdings Ltd [2008] WASC 132 dealt with an application for security for costs against a corporation, which raises a somewhat more liberal environment towards ordering security for costs. Nevertheless, Newnes J (as his Honour then was) observed at [57]:

It is well-established that the discretion to order security for costs is unfettered and depends upon an examination of all the relevant circumstances. The circumstances in which the discretion should be exercised cannot be stated exhaustively. They will vary from case to case and the weight to be given to any circumstance in a particular case will depend not only upon its own intrinsic persuasiveness but upon the impact of the other circumstances which have to be weighed: PS Chellaram & Co Ltd v China Ocean Shipping Co [1991] HCA 36; (1991) 102 ALR 321, 323.

33 In Knight v Beyond Properties Pty Ltd [2005] FCA 764 [32] Lindgren J observed upon a disinclination of courts to order a plaintiff who is a natural person to provide security for costs, at least in the absence of some other presenting factor beyond mere impecuniosity, citing numerous case authorities reiterating the policy importance of facilitating the ready access of natural persons to the courts. Relevantly, Lindgren J continued at [33] to observe:

In the cases in which natural persons have been ordered to provide security, some factor in addition to impecuniosity has been present: cf Barton v Minister for Foreign Affairs [1984] FCA 89; (1984) 2 FCR 463 (Morling J) at 594 (impecuniosity and residence outside Australia); Cunningham v Olliver (unreported, Burchett J, 21 November 1994) but for delay, security would have been ordered on ground of impecuniosity and bringing of claim to a significant extent for benefit of others); Chang v Comcare Australia [1999] FCA 1677 (Moore J) at [32] (impecuniosity and lack of prospects of success); Loque v Hanson Technologies Ltd [2003] FCA 81 (Weinberg J) (impecuniosity and residence outside Australia); Morris v Hanley [2000] NSWSC 957 (Young J) at [21], [38] and [39] (but for delay, Young J would have ordered security on grounds of impecuniosity and lack of prospects of success and large costs involved to defendants. Young J's decision was reversed on appeal on the ground that defendants had not adequately explained their delay in moving for security, but the Court of Appeal did not consider other aspects of his Honour's reasons: see Morris v Hanley & Ors [2001] NSWCA 374 at [30] - [31]); Melville v Craig Nowlan & Associates Pty Ltd [2002] NSWCA 32; (2002) 54 NSWLR 82 (CA) at [132] (per Heydon JA) (impecuniosity and applicant's failure to show that order would stultify proceeding and sum ordered by primary Judge not oppressive). (original emphasis)

34 It is necessary to point out that Western Australian RSC O 25 r 1 has been, at least until recently, somewhat unique in Australia among the many rules of different courts governing the power of a court to issue an order for security. This is because RSC O 25 r 1 expressly provides that an order for security for costs cannot be made merely on account of a plaintiff's impecuniosity. However, that position has now been adopted elsewhere. The Uniform Civil Procedure Rules 2005 (NSW) (UCPR) were amended in 2013 to include a new rule, r 42.21(1B), which provides:

If the plaintiff is a natural person, an order for security for costs cannot be made merely on account of his or her impecuniosity.

35 Prior to r 42.21(1B), the impecuniosity of a natural person plaintiff was 'one factor that may be relevant among many', although New South Wales courts looked to usually apply the recognised common law principle that poverty is no bar to a litigant, unless some extra factor was present - see NSW Law Reform Commission, Security for Costs and Associated Orders, Report 137 (2012) [2.65] - [2.69]; Morris v Hanley [2001] NSWCA 374; Idoport Pty Ltd v National Australia Bank Ltd [2001] NSWSC 744; Green v CGU Insurance Ltd [2008] NSWCA 148; Viavattene v Morton [2011] NSWSC 1173. I observe that Ritchie's Uniform Civil Procedure NSW currently states, at 42.21.10C:

... the mere impecuniosity of a 'natural person' plaintiff provides no basis for ordering security for costs: UCPR r 42.21(1B) and Idoport Pty Ltd v National Australia Bank Ltd [2001] NSWSC 744; BC 200105623 at [53]; O'Neill v De Leo [1993] TASSC 162; [1993] 2 Tas R 225 (legal aided plaintiff). However, if the power to order security was authorised on other grounds, the impecuniosity of a natural plaintiff can be a relevant consideration in the exercise of the discretion.

36 There is no rule or provision analogous to RSC O 25 r 1, or UCPR r 42.21(1B) in the Federal courts. The comments by Lindgren J in Knight v Beyond Properties Pty Ltd are to be understood in that context.

37 For the present application it is also relevant to consider and weigh together the principles of case management which are necessarily applicable to matters in the Commercial and Managed Cases (CMC) List (see Trafalgar West Investments Pty Ltd As Trustee For The Trafalgar West Investments Trust v Superior Lawns Australia Pty Ltd [No 3] [2013] WASC 150 [9] - [10]. All defamation actions commenced in this court are case managed in the CMC List of an allocated CMC judge.

38 At the conclusion of counsel's arguments on 5 December 2014, it had become apparent that several of the defendants' initial arguments raised towards supporting seeking an order for security for costs had fallen away.

39 In particular, the defendants seemed to accept, or at least did not seek to contest, that Mr Moran was currently a person who was, albeit a German citizen, nevertheless ordinarily resident in Western Australia (hence RSC O 25 r 2(b) could not be engaged). Issues regarding a nondisclosure of Mr Moran's current residential address and his alleged overseas drug conviction were also not pursued. It was common ground that Mr Moran was personally impecunious. He did not own any real property or chattel property assets in the jurisdiction, save for his old Pajero vehicle.

40 The defendants nevertheless say that there is still good and proper reason why security for their costs should be ordered.

41 First, it was submitted that although Mr Moran himself was accepted to be personally impecunious and therefore was, in effect, 'judgment-proof' (ie, the defendants would be unlikely to recover any of their trial costs from him, if they were successful at a trial and obtained the usual order in their favour for their taxed costs to be met by Mr Moran as the unsuccessful plaintiff in the litigation). Nonetheless it was said an order for security for costs would not stultify the litigation, because Mr Moran nonetheless would still likely receive, to that end, financial support from third parties (ie, from his family and friends) to enable him to continue his action, much as he had received such support to date.

42 It was said by the defendants that it could be inferred that Mr Moran's third party financial support would likely continue, on the same basis of, inter alia, already considerable financial support provided on an informal basis by his family and friends to date, and as was pragmatically demonstrated by the plaintiff's engagement of an expensive and specialist team of defamation lawyers from Bennett + Co, who were not said or suggested to be acting pro bono.

43 On that basis then, the defendants submit that Mr Moran presented, so it was put, as only nominally or conveniently impecunious, in an exceptional sense, as his personal impecuniosity did not manifest, at least to date, as any actual bar to his continuing this litigation to a trial. It was submitted, in such exceptional circumstances, Mr Moran carried, in effect, an onus to show that an order for security for costs would actually stultify his action and that he had not discharged that onus by his inadequate materials. An alternative view for this proposition was that the likely prospect of the availability of third party financial support to assist Mr Moran in providing security, manifested as an additional ground beyond mere impecuniosity upon which security for costs might be ordered. This raised a circumstance relevant to the exercise of the Court's discretion in favour of the defendants.

44 Second, it was submitted that Mr Moran, by par 43 of his affidavit particularly, had been less than completely forthright, concerning whether or not, if an order for substantial security against him was made, he may nevertheless still be able to secure third party financial support from the same third party quarters to meet that demand. There was, for instance, nothing in his affidavit to say that he had approached those sources and had been rebuffed or, for instance, that some 'cap' had been placed upon the largess of his family and friends - which he had enjoyed so far - and presumably would for the meeting of his own trial cost liabilities to Bennett + Co.

45 Third, the likely very high legal expenses of proceeding with this defamation trial of some weeks' duration, would pose a great financial hardship for the defendants, which was not in the interests of justice. The high litigation costs suffered by the defendants therefore presented as a factor to be added to the impecuniosity of Mr Moran, weighing in overall favour of the court exercising its discretion to order security.

46 Against all that, for the plaintiff, it was submitted, resisting any level of security, that the defendants had not established any sufficient ground or a 'trigger' that could support in principle the court's assessment of the present application - beyond showing the plaintiff's mere impecuniosity under RSC O 25 r 1.

47 It was submitted that whether Mr Moran might secure some future access to support funds from family and friends to meet an order for security in the context of the broader issue as to whether an order for significant security would effectively stultify his action had not properly arisen for consideration by the court, given the state of the evidence submitted.

48 It was further submitted for Mr Moran that, to the extent the issue of whether third party financial support might be available to meet an order for security did arise, it was for the court to be satisfied, on the basis of all the evidence provided by the parties, whether this would occur. In that context, it was submitted that Mr Moran had been clear (and essentially unchallenged) about his lack of funds or assets, and that the defendants had made no attempt to cross-examine Mr Moran over or about his sources of financial support from family and friends.

Disposition of the defendants' application for security

49 This is indeed, on my assessment, an unusual application for security which is advanced against a natural person plaintiff. Evidently, the application does not meet any of the nominated grounds for possibly ordering security, as set out in RSC O 25 r 2 - but which, of course, are non-exhaustive.

50 This plaintiff is obviously not a corporation. Thus the wholly unfettered power of the court to order security for costs against an impecunious corporate plaintiff under s 1335(1) of the Corporations Act 2001 (Cth) does not manifest. Further, it was not contended that the present proceedings were vexatious, or that Mr Moran was a nominal or 'puppet' plaintiff - suing for the actual benefit of a third party, or to shield such parties from an award for costs. Rather, this plaintiff is simply a natural person - albeit personally impecunious in that he owns, it appears, no property in this jurisdiction, except his old car with a genesis dating to the year of Australia's bicentenary - who now resides in Western Australia and who seeks to vindicate his personal reputation by this defamation action.

51 Both parties seem to accept, as regards the absence of realisable assets owned by Mr Moran personally, that he would not be able to meet a costs award made against him after a trial. But the fact of Mr Moran being impecunious and likely being unable to presently meet a costs award is clearly not enough of itself to enliven this court's discretion to order security against Mr Moran, in the sense of providing a proper ground beyond impecuniosity upon which security might be granted.

52 RSC O 25 r 1 renders it very clear - 'no order shall be made merely on account of the poverty of the plaintiff or the likely inability of the plaintiff to pay any costs awarded against him'. Hence, something more is required to be shown by the defendants in order for the court to enliven a possible exercise of discretion against an otherwise impecunious natural person such as Mr Moran. The authors of Civil Procedure Western Australia at [25.1.1] observe that RSC O 25 r 1 reflects the principle, for which Cowell v Taylor (1885) 31 Ch D is often cited as the authority, namely that poverty itself is no bar to a personal litigant. The state of the law, in this respect, now differentiates very significantly between applications for security for costs made against a natural person, and security applications made against a 'corporation', pursuant to s 1335(1) of the Corporations Act 2001.

53 It is necessary then to very closely examine all the underlying circumstances in the present case to determine whether there may be some further relevant factors to possibly enliven the exercise of discretion to order security for costs against this natural person plaintiff.

Factors beyond the individual plaintiff's impecuniosity

54 I am left in no doubt that a defamation trial of the proportions the defendants postulate as being necessary to ventilate their foreshadowed justification of a Chase level 2 imputation of reasonable suspicion of guilt as regards the 2005 murder of Simone Strobel at Lismore, New South Wales, will be an expensive exercise. Clearly, such a trial will be an expensive exercise for all, consuming several weeks of trial time and, as the defendants forecast, require the evidence of a large number of witnesses, mostly from New South Wales and overseas.

55 Even if a more abbreviated trial could be run, the likely trial costs are still highly likely to run to several hundred thousand dollars.

56 To advance his case, Mr Moran has, on the submission of counsel for the defendants, engaged a law firm from the 'top end of the city' (clarified to mean, at ts 147, in regards to 'top end' high legal costs) for his defamation action in Western Australia. There is, I accept, nothing to suggest Mr Moran's solicitors and counsel are acting on a pro bono basis, or on a contingent fee arrangement in which payment of legal costs is conditional upon a successful trial outcome for the plaintiff - see, eg, Del Bosco v Outtrim [2008] NSWSC 105; Shackles v Broken Hill Pty Co Ltd [1996] VicRp 76; [1996] 2 VR 427; Zakka v George Elias t/as Cadmus Lawyers [2012] NSWCA 277.

57 For present purposes, a hypothesis of an unsatisfied taxed costs award of roughly $500,000 after a successful trial defending this action would, I will accept, constitute a financial hardship for these defendants. But to recall the words of Darley CJ in McSharry - the 'same hardship' is experienced by many other defendants in actions involving impecunious natural persons. Without more, a high, irrecoverable potential legal costs outlay in this matter - and the factual circumstances attending the parties - does not of itself constitute a viable ground beyond impecuniosity to enliven a basis for making an order for security.

58 Concerning the assessed merits of the plaintiff's defamation action, it is not presently necessary, for the purposes of satisfying RSC O 25 r 3(a), to engage in a rigorous examination of the action for it to become apparent, to echo the words of Steytler J in Coyne, that there appears

at least enough in the proceedings to warrant their going to trial. While I would not, at this stage of the proceedings ... be prepared to describe the plaintiff's claims against the defendants as strong, I am equally not, at this stage of the proceedings, prepared to describe the defendants' prospect of successfully defending the actions as being so good as, in itself, to warrant an order for the provision of security for costs by the plaintiff (70).

59 However, it was further submitted on behalf of the defendants that the family and friends of Mr Moran may be inferred to be 'standing behind' him, in a sense of them receiving some 'benefit' from his success in his defamation action, if it was successful, and that this consideration should weigh as the additional factor - supporting an order for security.

60 But I am not persuaded of this so-called benefit to others argument for several reasons. First, obviously, this is a defamation action by which Mr Moran, as the sole plaintiff, seeks to vindicate his own personal reputation against what he says is the very seriously defamatory imputation, on his case, that the defendants' Book went beyond just suggesting reasonable grounds for suspicion against him, but actually conveyed the imputation as to his guilty participation in what is a still unsolved murder of Simone Strobel at Lismore in 2005. Hence, this is a highly personal action concerned only with damage to the plaintiff's reputation. Second, to the extent Mr Moran's family might 'benefit' if his defamation action is successful, that outcome would be a surrounding reputational benefit at best. There is nothing to suggest that Mr Moran's family and friends would share, for example, in any award of damages to him. Broader reputational benefits would accrue only vicariously, through the familial association with Mr Moran and his vindication at trial. Third, it was not contended that the extended Moran family members bore any obligation to share in the financial risks of this lawsuit - indeed, had they attempted to participate they would have been rejected - lacking the necessary standing to participate, on the basis that they had not been defamed. Finally, there is no evidence of any Moran family members or friends attempting to direct this litigation, such as might, for instance, require a notification under RSC O 9A, an issue I discuss further below.

61 The absence of any benefits to others aside, the defendants at base still argue that Mr Moran's local family and friends should be assessed currently as more than likely to provide, and to continue to provide, whatever level of funds is required to enable the plaintiff to pursue his action and, if this court so orders, are more likely than not to assist Mr Moran financially to meet any obligations to the defendants for security for the costs of a trial that might be made against the plaintiff. In my view, this last factor is the real key.

62 As I have observed, this is a most unusual defamation case. It seems clear - as will be discussed further below - that an otherwise impecunious plaintiff has been and will be financially supported to run this case to a trial - even if the exercise runs to the order of several hundred thousand dollars for the plaintiff's incurred costs to his lawyers. But so far nothing at all is said about the amenability of these same beneficial supporters to assist Mr Moran in providing security for the defendants' costs, were the defendants to win the trial. The silence upon that key issue is, I find, rather deafening.

63 In exercising a discretion under RSC 25, it is necessary to bear in mind the 'important principle' underlying an order for security for costs, namely that, subject to certain limited exceptions, a successful party in litigation is entitled to an award of costs in its favour: Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 [67] (McHugh J). The principle, as observed by McHugh J in Oshlack, is

grounded in reasons of fairness and policy and operates whether the successful party is the plaintiff or the defendant. Costs are not awarded to punish an unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party. If the litigation had not been brought, or defended, by the unsuccessful party the successful party would not have incurred the expense which it did. As between the parties, fairness dictates that the unsuccessful party typically bears the liability for the costs of the unsuccessful litigation [67]. (footnotes omitted)

64 Thus a court must seek, in circumstances where the impecuniosity of a natural person is manifest, to achieve some balance between ensuring that a fair protection is provided to a defendant, whilst avoiding an injustice to an impecunious plaintiff by unnecessarily shutting them out: Soia v Bennett [2012] WASCA 231 [15].

65 In that context, it is appropriate for a court to consider whether a personally impecunious plaintiff is likely, given the evidence before the court, to receive third party financial support (whether from litigation funders, family, or associates) sufficient to enable the plaintiff to pursue the action or to meet any order for costs that might be made against him or her: Marks-Issacs v Fowler [2005] NSWCA 37; Hastings v Hastings [2009] NSWCA 294 [14]; Aboriginal Group Training WA (Inc) v Peedac Pty Ltd [2004] WASC 51.

66 As to evidence regarding the likelihood of such financial support being available, a court is entitled to be bold, when a party fails to give evidence on matters of which it clearly has knowledge: The Insurance Commissioner v Joyce [1948] HCA 17; (1948) 77 CLR 39 [49] (Rich J). However, a court should not speculate and should only draw an adverse inference if a factual substratum exists supporting that conclusion: Montfroy v Roads Corporation [2005] VSC 320 [91]; The Owners of Strata Plan 62930 v Kell & Rigby Holdings Pty Ltd [2010] NSWSC 612 [182]. Thus, if a plaintiff claims the benefit of personal impecuniosity (as a shield, in effect, against the making of an order for security) but clearly does receive considerable third party financial support to prosecute an action, a court may appropriately consider whether an adequate disclosure of the financial circumstances of the plaintiff has been made, including as to the nature, extent and continuity of third party financial support, plus what other evidence exists in relation to this issue.

67 Here I am left, ultimately, to assess the defendants' assertion regarding the likely high level of ongoing third party financial support to trial, against the rather scant evidence provided by Mr Moran and by the surrounding circumstances of the evident funding of these proceedings since their inception in June 2014. In that regard, Mr Moran's sworn evidence is that 'to date' he has borrowed money from family and friends to enable him to prosecute his action, but that if an order for 'significant' security for costs were made against him, he would not be able to meet that obligation from his 'own funds and assets' (see par 40 and par 43 of the Moran Affidavit). This is too vague and overall is unsatisfactory, on my assessment. There is no elaboration in his affidavit evidence about the level of Mr Moran's own continuing third party financial support to meet his lawyers' undoubtedly high legal costs to run this action to a trial. In this regard, I am somewhat sympathetic to the defendants' submission that Mr Moran has been to date less than forthcoming upon this issue as to how he will continue to receive support from the same family and friends and the quantitative extent of that support. Nor has he deposed to asking those who have heavily supported him to this point, if they would support him further in providing security to the defendants were a security order to be made.

68 Certainly, courts in the past have been prepared to draw reasonable inferences, on the basis of previous third party financial support, to the effect that such support will also be available into the future: see, eg, Bond v Trustee of the Property of Alan Bond, A Bankrupt [1994] FCA 882; (1994) 20 AAR 1.

69 During arguments on 5 December 2014, counsel for the plaintiff referred me to comments made by Moore J in Chen v Pyramid Building Society (In Liq) [1999] FCA 272 in a (somewhat different) context of an application for security for costs against a bankrupt natural person for an appeal. Moore J said:

Unless I was satisfied that funds were available from others to certify any order for costs, then I would not order it in this case. While, as I earlier noted, the appellant has retained solicitors and counsel in this application, that fact is not a sufficient foundation for concluding that funds would be available to provide security. An affidavit of the appellant was read in these proceedings and no attempt was made to crossexamine him about the source of funds he may be deploying to retain solicitors and counsel in these proceedings [12].

70 But for Western Australia cross-examination on interlocutory affidavits sworn in interlocutory applications is usually avoided and is very much an exception rather than the rule. The defendants are not to be legitimately criticised for not pressing to have Mr Moran cross-examined on the omissions from his affidavit, such as at par 43.

71 The defendants submit that ongoing and significant third party financial support can be properly and rationally inferred here, in part, from Mr Moran's engagement of, as it is put by counsel for the defendants, a legal team from the 'top end of town'. What is to be properly inferred from a person's engagement of solicitors and counsel arose in Chen and in Coyne. In Chen, Moore J found that while the appellant, who was bankrupt and subject to a sequestration order, was impecunious at least to the extent his property had vested in the trustee, he nonetheless had 'retained solicitors and counsel from which it might be inferred that the appellant is not devoid of financial support from others' [9]. However, as is clear from the extract cited above that inference was not enough in Chen to support a conclusion that the appellant would be able to provide security. Similarly, in Coyne, Steytler J said:

While the defendants invited me to infer, from the fact that the plaintiff had been able to retain solicitors and experienced counsel in these proceedings, that he must have access to some funds other than those disclosed by him I am not persuaded that there is sufficient in the evidence to enable me to draw any such conclusion (73).

72 Yet in the present matter, Mr Moran has only touched on his very significant (to date, at least) source of funds in the broadest and vaguest of terms. He has not disclosed any real level of information at all about whether his current levels of friend and family support will continue and, if so, in what amount. Mr Moran has not even said whether he has asked those who have supported his considerable legal expenses to date, if they would be prepared to assist further, as regards his meeting of a security for costs order imposed upon him, advantaging the defendants' trial costs if Mr Moran loses at trial.

73 Thus, as regards the totality of the evidence presently available, the key issue is what conclusions can be drawn regarding future third party financial support, based on what Mr Moran has deposed to in his affidavit and the inferences that might be drawn from:

(a) his engagement of a local legal team of specialist defamation lawyers who are not acting pro bono;

(b) the prior course of conduct of Mr Moran's local family and friends in financially supporting his litigation to date; and

74 The third party financial support Mr Moran has received to date includes the provision of: (1) $20,000 as security for the costs of his (unsuccessful) application for an interlocutory application for an interlocutory injunction earlier in 2014; and (2) another $20,000 to secure the plaintiff's undertaking as to damages for that interlocutory injunction (see the email correspondences in annexures 'TRO-9' and 'TRO-10' in the Onofaro June Affidavit and statements by counsel for Mr Moran in the hearing of the interlocutory injunction application on 30 June 2014 at ts 31 - 32). On the submission of Mr Moran's counsel at that hearing, those amounts were deposited into a trust fund held by his solicitors on 30 June 2014 (ts 32). My reasons for judgment in that ultimately unsuccessful application were delivered ex tempore on 1 July 2014. I made orders that the costs of that injunction application would be the defendants' costs in the cause, to be taxed. Thus, although the amount of $20,000 securing the plaintiff's undertaking as to damages for an injunction could be said to fall away at that point, the other security of $20,000 for the costs of that interlocutory application remains as an obligation for Mr Moran, pending the ultimate determination of this action.

75 The third party financial support Mr Moran has received to date must presumably also include, given Mr Moran's accepted impecuniosity, the offer on behalf of Mr Moran of 18 July 2014, of an additional $30,000 to 'top up' the security for costs held by Mr Moran's solicitors - up to a total amount of $50,000 (see pages 27 38 of the Galati October Affidavit). That offer was not accepted.

76 As to the legal costs incurred by Mr Moran to his own lawyers to date, no evidence was presented as to the financial arrangements Mr Moran has entered into with his legal team. But, as I have already said, there is no indication that they are working pro bono, or on a contingency basis, with their payment being made conditional upon Mr Moran succeeding in these proceedings.

77 There is nothing else to suggest any kind of formal litigation funding arrangement, as between Mr Moran and his family and friends, such as might, for example, require a notification under RSC O 9A. Order 9A requires a party to notify the Principal Registrar, and each other party to the action, of the identity of any person, other than a practitioner for the party, who provides funding or other financial assistance to the party for the purposes of conducting the case, and who exercises direct or indirect control or influence over the way the party conducts the case. The plaintiff's submissions of 28 November 2014 indicated that there are no 'documented or formal agreements' as regards the financial support received by Mr Moran (pars 35 - 39).

78 Hence, the third parties that Mr Moran apparently relies upon informally are individual family members and friends rather than, for example, a corporate entity such as a family company that might be expected to underwrite the costs of an action and be able to provide security, as in Mobila v Voudiotis [2002] VSCA 72; (2002) 4 VR 327.

79 In the end, some observations rendered by French J (as his Honour then was) in Bond have, I find, an applicability here as a matter of guiding principle.

80 Bond dealt with an appeal from a decision of the Commonwealth Administrative Appeals Tribunal (AAT) involving a bankrupt (Mr Alan Bond) who had received substantial financial support from family members. Order 53 r 8 of the Federal Court Rules 1979 (Cth) (FCR) (now repealed) provided that, as regards an appeal from an AAT decision:

(1) The Court may, in special circumstances, order that such security for costs of an appeal to the Court be given as it thinks fit.

(2) Subject to subrule (1), no security for costs of an appeal to the Court shall be required.

81 In assessing whether special circumstances existed, French J observed:

I consider that in assessing whether or not special circumstances exist and in looking at Bond's circumstances generally, I am entitled to look through the forms to the substance. In this case, there is a substantial record of considerable financial support from members of his family in relation to legal proceedings and expenses associated with his accommodation and travel. And, looking through the forms to the substance, I am entitled to make, I think, a judgment about the probability of the continuance of that kind of support in this case and the probability that this appeal is being funded by support derived from those sources. I think the probabilities are that it is being so funded ... So I think the special circumstance in this case is that he is nominally impecunious but is being funded or likely to be funded by members of his family. The framework that they have set up and the course of conduct which they have established indicates that a security order would be met. In other words, I think it is highly unlikely, that this appeal would be stultified by the making of such an order in these circumstances [14].

82 The distinguishing issue of 'special circumstances' by reference to FCR O 53 r 8, of course, does not arise in the context of an application for an order for security for costs under RSC O 25. Nevertheless, the overall circumstances here do resonate to some extent to those manifested in Bond, particularly as regards an ongoing 'course of conduct' involving a 'substantial record of considerable financial support'.

83 I would, with respect, also seek to invoke the approach taken by French J in Bond, to look through form to the substance underneath. That phrase evokes the equitable maxim of a court of equity looking through the form to the substance of things done. Of course, the jurisdiction of this court to make an order for security for costs is not an equitable one, but the exercise of the discretion does require, for example, consideration of issues of fairness of the kind as mentioned by McHugh J in Oshlack.

84 Taking that approach, I am in the end satisfied, on the presented evidence, on the balance of probabilities, that Mr Moran is more than likely to receive ongoing financial support, notwithstanding his presenting personal impecuniosity, for the purposes of RSC O 25 r 1. The extra ingredient required and now demonstrated, beyond Mr Moran's impecuniosity and undoubted inability to personally meet a high award of taxed costs to the successful defendants, should he lose this trial, is the coyness about fully disclosing the substantial funding Mr Moran undoubtedly enjoys to meet his own legal costs of this action in what will be an expensive trial. In my view, Mr Moran has not adequately condescended to explain why it is that the financial largess he undoubtedly enjoys to pursue and pay for his own legal costs of advancing the action does not extend to his opponents' taxed costs, should he lose the trial.

85 As regards the question of whether an order for security would stultify Mr Moran's action, I am correlatively not persuaded, on the basis of the poor state of evidence advanced by Mr Moran on this same issue, that the action would be stultified, in a sense of Mr Moran being thereby forced to abandon his pursuit of this claim which is, without commenting on its merits, legitimately advanced (ie, not vexatious or improper). The prospect of a stultification by means of the granting of security against a plaintiff must be shown in its own right: Del Bosco v Outtrim [2008] NSWSC 105 [22]. That case dealt with an appeal against an order of an Associate Judge that a natural person plaintiff provide security in proceedings under the Property (Relationships) Act 1984 (NSW).

86 Here once again Mr Moran's coyness regarding his third party financial support cuts both ways in this respect. As described above, I am satisfied that substantial and on-going third party financial support is available to Mr Moran and that such support will be sufficient for him to pay to take this action to trial. It is another question, of course, whether an order for security would provide an additional financial burden which the plaintiff could not meet. However, Mr Moran has not established to my satisfaction, on the balance of probabilities, that this would be the case.

87 On that basis, an order for security is appropriate. But security at the level of $780,000 would, effectively, be an order approaching the level of providing a complete indemnification to the defendants. In my view, an order for substantial security is called for. The draft bill estimate of the defendants' taxed costs at around $780,000, should they be successful at the trial, is reliable. But the figure for security should be reduced to roughly two-thirds of that figure, to $500,000.

88 Concerning that level of overall security, it is appropriate that it be ordered to be provided in tranches as the action progresses to a trial. I would order that $100,000 security be provided by 28 February 2015, under payment or bank guarantee arrangements the parties' solicitors can resolve as between themselves. Absent that security instalment, the action will be stayed from that time. The balance of the security is to be provided at the time of the filing of an entry for trial by the plaintiff, or as I may otherwise order.

89 The defendants, being successful, should prima facie have their taxed costs of this application as well. The defendants, as the essentially successful party upon this application, should, after conferral with the plaintiff's solicitors, provide a minute of orders reflecting these reasons, hopefully agreed, within 14 days of the publication of the reasons. If there is any dispute over appropriate orders, then I will resolve such matters on the papers.