The Age Company Ltd & Ors v Liu

The reasoning of the primary judge 34The primary judge dealt with the issue of whether the discretion to grant preliminary discovery was enlivened under two headings. She first dealt with the question of whether reasonable inquiries had been made. She recorded the inquiries made following the refusal of the applicants to supply the information prior to the commencement of the hearing. She pointed to the fact that the reasonableness of the inquiries had to be measured by the cost, delay and uncertainty of alternatives. She stated that an important factor was the indisputable fact that whatever information was available from other sources, the applicants knew with certainty the identity of the persons who provided the material to them. In these circumstances she accepted that the inquiries, although limited, were reasonable. 35Her Honour then dealt with the issue of whether Ms Liu was unable sufficiently to ascertain the identity of the persons concerned despite her inquiries. She referred in particular to the discussions with Mr Junn, the circumstances surrounding the tender of the affidavit of Mr McClintock and his statements at the hearing referred to above. She concluded that the failure to recall Mr Junn was due to a forensic decision, but declined to draw an inference that the evidence of Mr Junn would not have assisted Ms Liu on the issue of reasonable inquiries. She reasoned that it could readily be concluded that the failure to call Mr Junn resulted from the damning statements which had been made by him to Mr Baker, which only emerged after the affidavit of Mr Baker was filed. She stated she regarded the forensic decision as prudent. 36Her Honour rejected the contention that Mr McClintock was seeking to mislead the Court or withhold information in stating that he did not need to recall his client. She stated the more likely inference was that Mr McClintock and his client had formed the view that Mr McClintock's opinion did not form a sufficient basis for commencing proceedings against X. 37In these circumstances the primary judge concluded that no adverse inference should be drawn from the failure to call Mr Junn. She pointed out that Mr Baker did not say he told Mr Junn who the sources were and it was extremely unlikely that he would have. 38In those circumstances the primary judge was satisfied that the plaintiff was unable sufficiently to ascertain the identity of the intended defendants for the purpose of commencing proceedings against them. 39Two matters should be noted. First, her Honour did not directly deal with the submission made by the applicants that the discretion to order preliminary discovery was not enlivened because Ms Liu had not brought forward all the information in her possession concerning the identity of the sources. Second, at the hearing of the appeal senior counsel for the applicants expressly stated that the Court could accept what Mr McClintock said about his conversations with Ms Liu at face value.

The submissions of the parties on appeal 40The applicants submitted that the information obtained from Mr Junn was significant because of the conclusion Mr McClintock was able to draw from it. They submitted that the refusal of the primary judge to draw a Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 inference was "infected" by her view that it would impugn Mr McClintock's conduct. They stated that view was incorrect and was not suggested by them, as the decision not to recall Mr Junn was a forensic decision which legitimately could be taken. 41Further, the applicants submitted that there was no evidence to support the conclusion drawn by the primary judge that the more likely explanation was that those advising Ms Liu or Ms Liu herself had formed the view that they did not have sufficient material to commence proceedings against X. 42At the hearing of the application, senior counsel for the applicants submitted that a court could not make an objective determination of whether the respondent was able to sufficiently identify the identity or whereabouts of a person without being appraised of what information the respondent in fact had and that in those circumstances the failure to call Mr Junn or Ms Liu on the issues arising out of Mr McClintock's affidavit was fatal to the application. Put another way, any evaluation of the sufficiency of inquiries could only be made by a court if it was aware of the inquiries which had been made and their results. 43It was further submitted that the fact that Ms Liu had no information as to the identity of the other sources was immaterial. Senior counsel for the applicants submitted that the appropriate course was to make X a respondent in a motion for preliminary discovery for the identity of the other sources. 44In supplementary submissions filed after the conclusion of the hearing the applicants pointed to a letter written by the solicitors for Ms Liu stating that X had a long history of antagonism to Ms Liu and Mr McClintock's conclusion that X had a vendetta against Ms Liu. They stated that despite those facts no further inquiries were made to ascertain the whereabouts of X including electoral roll searches, telephone book searches, google searches, social media searches, further inquiries of Mr Junn and of former associates of X. The applicants submitted that once X's location was ascertained it would have been reasonable for Ms Liu to join him in the proceedings. 45Junior counsel for Ms Liu submitted that it was not necessary to put before the Court every detail or every inquiry to determine whether reasonable inquiries had been made. She pointed to the inquiries which had been made on 2 February 2011 after the applicants had indicated they would not press par [5] of the motion. She said there was nothing to suggest Ms Liu or her advisors were aware of the whereabouts of X. She submitted that Mr McClintock's conclusion that X was the source was simply speculation and would not be enough for a solicitor to sign a certificate stating there were reasonable grounds to commence proceedings against him. She finally submitted that reasonable inquiries depended on the circumstance of each case and that in the particular circumstances of the present case the inquiries made were reasonable. 46In relation to the failure to draw an adverse inference from the failure to call Mr Junn or recall Ms Liu, she pointed to the fact that it was not obligatory to draw such an inference and the primary judge was justified in concluding that the reason Mr Junn was not called was because of the remarks he was alleged to have made to Mr Baker. She pointed out that the affidavit of Mr Junn was sworn before that of Mr Baker and that in the circumstances which existed after the service of Mr Baker's affidavit, Mr Junn could not be said to be in Ms Liu's camp. 47In supplementary submissions filed after the conclusion of the hearing Ms Liu submitted that the effect of the undertaking given on 13 January 2011 precluded any further inquiries of Mr Junn and Ms Liu in relation to X at least up to 1 February 2011. She pointed to the fact that thereafter inquiries were made. 48Ms Liu in these submissions also pointed out that the confidential emails exhibited to the affidavit of Mr Baker indicated HX was not a source and the sources required that there be no disclosure to Ms Liu, Mr Junn, Mr Fitzgibbon or BC. She also pointed out that an email of 8 February 2010 contained a statement by the applicants that they had not disclosed the identity of the sources to Mr Junn. 49Ms Liu submitted that reasonable inquiries did not mean a requirement to make every inquiry and that, when regard was had to the cost, delay and uncertainty of the outcome of any further inquiries, then the failure to conduct the additional searches suggested by the applicants was reasonable. They also emphasised that the applicants had not conceded that X was one of the sources.

Consideration 50In Roads & Traffic Authority of NSW v Australian National Car Parks Pty Ltd [2007] NSWCA 114, Mason P with whom McColl and Bell JJA agreed, stated the threshold requirements for an order under r 5.2 of the Uniform Civil Procedure Rules in the following terms: "[14] Rule 5.2(1) effectively states two threshold requirements. First, the applicant must be unable sufficiently to ascertain the identity or whereabouts of the intended defendant despite having made reasonable inquiries. What is reasonable is a question of fact in all the circumstances. The availability of other means of ascertainment (eg resort to the FOI Act) does not in itself make it unreasonable to claim an alternative remedy under the rule (see Hughes Aircraft Systems International v Civil Aviation Authority (1995) 217 ALR 303 at 307). The cost, delay and uncertainty of alternative measures is relevant to the rule's 'reasonable inquiries' component." 51The inquiry is an objective one and is not determined by the applicant's belief that the inquiries which were made were reasonable: St George Bank Ltd v Rabo Bank Ltd [2004] FCA 1360; (2004) 211 ALR 147 at [26]. 52To enable such an objective assessment to be made it is necessary, in my opinion, for an applicant for preliminary discovery to disclose to the court the substance of the inquiries which have been made and the result of those inquiries. This is consistent with authorities which have considered the related rule, UCPR r 5.3 and its Federal Court equivalent: Morton v Nylex Ltd [2007] NSWSC 562 at [33]; Glencore International AG v Selwyn Mines Ltd [2005] FCA 801; (2005) 223 ALR 238 at [16]. Indeed, it is self-evident that a court cannot make an assessment of reasonableness without knowing what inquiries have been made and their result. 53However, that does not mean in my opinion that every detail of each inquiry has to be revealed. It is enough if the parties disclose what inquiries have been made and their results. That, in most cases, will indicate whether the inquiries were adequate and what further inquiries could or should have been made. If the evidence means that the court is unable to conclude that reasonable inquiries have been made, then the applicant will fail. Similarly, if the court is unable to conclude that the applicant for preliminary discovery does not in fact know the identity or whereabouts of the putative defendant, the application will also fail. 54Once these principles are applied, the present case can be dealt with relatively shortly. There does not seem to be any dispute as to the adequacy of the inquiries, at least up to the time of the commencement of the hearing. Nor could there be. There is nothing to suggest that further inquiries could be made until Mr McClintock obtained the information from Mr Junn. 55It was reasonable in my opinion for those acting for Ms Liu to proceed on the assumption that the undertaking given on 13 January 2011 prevented them from contacting either Mr Junn or Ms Liu concerning the matters disclosed in the confidential emails and in particular information relating to X. 56The applicants in my opinion were correct in stating that at least from 1 February 2011 Ms Liu and her advisors were relieved of any prohibition against contacting Mr Junn and Ms Liu concerning the possibility that X was a source, subject to their continuing obligation not to make use of the emails (see transcript extracts referred to in par [27] above). In that context Ms Quinn made her inquiries (see par [28] above). Whilst undoubtedly further inquiries could have been made, the question is whether in circumstances when the information became available in the midst of a contested interlocutory hearing, the obligation to make reasonable inquiries required those further steps to be taken. In my opinion it did not. Pursuing further steps would presumably have involved an application to adjourn the proceedings, which may or may not have been granted and a series of further inquiries, the result of which was uncertain. It does not seem to me that such further steps were necessary: cf Roads & Traffic Authority of NSW v Australian National Car Parks supra at [14]; Hughes Aircraft Systems International v Civil Aviation Authority (1995) 217 ALR 303 at 307. 57In this regard the position of the applicants is instructive. They submitted that X should be joined as a party to the preliminary discovery proceedings. It is by no means clear why this would have avoided an order being made against the applicants. Further, it would have prolonged proceedings which had already continued for too long. In this regard the rules must be construed having regard to the overriding purpose contained in s 56 of the Civil Procedure Act 2005 that the rules are intended to facilitate the cheap, just and quick resolution of the real issues in dispute. A further adjournment of the proceedings to enable an application to be brought against X would be contrary to that objective. 58It follows that subject to the issue concerning Mr McClintock's discussion with Mr Junn, the primary judge was correct in concluding that reasonable inquiries had been made. 59So far as Mr McClintock's discussions with Mr Junn were concerned, it was said first that the failure to call Ms Liu and Mr Junn in relation to the matters recorded by Mr McClintock in his affidavit meant that the court was not fully informed of the scope of the inquiries made by or on behalf of Ms Liu or of the information in the possession of Ms Liu or her advisers. It was said that as a consequence of this the application should fail. I do not believe that this is correct. Mr McClintock deposed to a conversation with Mr Junn, as a result of which he drew certain conclusions. That indicated the inquiry he made and the result of it. Whilst the evidence may not have been admissible in that form if tendered by Ms Liu, the applicants having tendered it cannot complain of its form. 60In considering whether further evidence of Ms Liu or Mr Junn was necessary for Ms Liu to discharge the onus that she had made reasonable inquiries and that she could not sufficiently identify the sources, the following matters should be noted. First, there is nothing to suggest either Ms Liu or Mr Junn had any knowledge, as distinct from suspicion, as to the identity of the sources. It was not put to Ms Liu that she knew who the sources were and the evidence to which I have referred in pars [33] and [48] tend to suggest that Mr Junn had no such information. Further, there was absolutely no evidence to suggest that Ms Liu or Mr Junn had any knowledge of any potential sources other than X, or that any further inquiries, apart perhaps from an application for preliminary discovery against X, would reveal the identity of the other sources. In those circumstances the primary judge, in my opinion, was entitled to be satisfied that all information relating to the identity of the sources in the possession of Ms Liu or her advisers was disclosed and that Ms Liu was not aware of the identity of the sources. 61Nor do I think that the primary judge was required to draw an inference that the evidence of Ms Liu and Mr Junn would not have assisted Ms Liu on this issue. First, there is nothing to suggest that they had any information apart from that disclosed by Mr McClintock. Second, having regard to the contents of the conversations between Mr Junn and Mr Baker deposed to in the affidavit of Mr Baker, it was open to the primary judge to infer that Mr Junn was not in Ms Liu's camp: cf Payne v Parker (1976) 1 NSWLR 191 at 201-202. Third, there is no compulsion on a judge to draw a Jones v Dunkel inference: Manly Council v Byrne [2004] NSWCA 123 at [52]. The primary judge gave her reasons for not drawing such an inference in the present case (judgment par [98]-[99]). In my opinion, for the reasons given by her and for the other reasons contained in this paragraph she was justified in not doing so. 62It follows, in my opinion, that the primary judge was correct in concluding that the applicants had made reasonable inquiries and was unable to sufficiently ascertain the identity of the source. 63In those circumstances, although it is appropriate to grant leave to appeal on these grounds, the appeal so far as it is based on these grounds fails.

Grounds 2 to 4 64By these grounds the applicants contended that the primary judge erred in various respects in failing to hold that r 5.2 was invalid as being contrary to the implied freedom of communication on government and political matters. In the alternative they contended that the rule had to be read down so as to be consistent with this implied freedom and that in those circumstances the orders made by the primary judge were orders which she was not empowered to make. The respondents sought to uphold the primary judge's reasoning but by a Draft Notice of Contention filed by the first respondent, contended that the rule did not effectively burden freedom of communication about government or political matters either in its terms, operations or effect.

The reasoning of the primary judge 65The primary judge noted that each party accepted that the articles discussed matters of government and politics. However, she concluded that the rule was not invalid and should not be read down in the manner contended for by the applicants. 66In reaching this conclusion the primary judge sought to apply the two limb test in Lange v Australian Broadcasting Corporation [1997] HCA 25; (1997) 189 CLR 520 as modified in Coleman v Power [2004] HCA 39; (2004) 220 CLR 1. The test as modified has recently been stated by the plurality in the High Court in Wotton v Queensland [2012] HCA 2; (2012) 86 ALJR 246 in the following terms (at [25], citations omitted): "Two questions ('the Lange questions') arise with respect to each statutory provision which the plaintiff puts in contention. The terms of the questions are settled. They were recently stated, and applied, by the whole Court in Hogan v Hinch as follows. The first question asks whether in its terms, operation or effect, the law effectively burdens freedom of communication about government or political matters. If this is answered affirmatively, the second question asks whether the law nevertheless is reasonably appropriate and adapted to serve a legitimate end in a manner compatible with the maintenance of the constitutionally prescribed system of government described in the passage from Aid/Watch set out above." 67The reference to Aid/Watch is a reference to the following passage of the joint reasons of the High Court in Aid/Watch Inc v Federal Commissioner of Taxation [2010] HCA 42; (2010) 241 CLR 539 at [44]: "The provisions of the Constitution mandate a system of representative and responsible government with a universal adult franchise, and s 128 establishes a system for amendment of the Constitution in which the proposed law to effect the amendment is to be submitted to the electors. Communication between electors and legislators and the officers of the executive, and between electors themselves, on matters of government and politics is 'an indispensable incident' of that constitutional system." 68The primary judge concluded that the first question posed by the test should be answered in the affirmative. She took the view (judgment [32]) that the first limb of Lange poses a relatively low threshold. She stated that the fact that a court has the power to compel journalists to disclose their sources was a significant consideration. She equated it to the threat to political discussion posed by the law of defamation as discussed in Lange (judgment [36]). 69However, the primary judge found that the law was reasonably appropriate and adapted to serve a legitimate end, in a manner compatible with the maintenance of the constitutionally prescribed system of government. She took the view that the system would be adequately protected by substantial rather than absolute protection of its incidents, concluding that the maintenance of the constitutional system of government should not be regarded as the sole or paramount determinant of legislative power. She pointed to the fact that the newspaper rule operated as a judicial practice of refusing to compel discovery by a journalist of his or her confidential sources: McGuinness v Attorney-General (Vic) [1940] HCA 6; (1940) 63 CLR 73; John Fairfax & Sons Pty Ltd v Cojuangco [1988] HCA 54; (1988) 165 CLR 346. 70Her Honour accepted that an order for disclosure of a confidential source would only be made pursuant to r 5.2 when the interests of justice so required. She concluded that the obligation to consider the policies underlying the newspaper rule in that assessment ensured that the rule was adapted to serving its object in a manner compatible with the implied constitutional freedom (judgment [49]). 71Her Honour rejected the submission that the existence of a discretion in r 5.2 could not be taken into account in considering the second question posed in Lange. She concluded that the exercise of a discretion which requires the court to take the freedom of political communication into account is capable of informing the conclusion of whether or not a particular law meets the compatibility test. 72The primary judge ultimately took the view that automatic exclusion of all confidential sources of political information from the reach of preliminary discovery would be likely to adversely affect the constitutionally prescribed system of government (judgment [58]-[59]). She concluded that in those circumstances it was not necessary to give absolute protection to such sources, considering that the newspaper rule would adequately protect sources unless disclosure was necessary in the interests of justice. As a corollary, she concluded that it was not necessary to extend the newspaper rule to require that the discretion to order preliminary discovery not be exercised in all cases where the source material related to communications of a government or political nature.

The parties' submissions 73The applicants submitted that the primary judge was correct in concluding that the first question posed by Lange should be answered in the affirmative. Senior counsel for the applicants submitted that the chilling effect of such disclosure was recognised by the newspaper rule, which it submitted rested on the free flow of information: Cojuangco supra at 356. They submitted, however, that the newspaper rule was simply a rule of practice which was subordinate to the interests of the administration of justice. In these circumstances they submitted that the chilling effect of r 5.2 on free speech remained. 74The applicants further submitted that to the extent the remarks of Heydon J in Wotton supra at [42] led to a contrary conclusion, what was said by him was inconsistent with the approach of the majority in that case, who were content to approach the proceedings on the basis that the first question posed in Lange should be answered in the affirmative. 75So far as the second limb of Lange was concerned, the applicants submitted that the primary judge erred in holding that the operation of the newspaper rule led to the conclusion that the second question in Lange should be answered in the affirmative. They submitted that the policy underlying the newspaper rule was something quite different to the freedom of political communication derived from the Constitution. They submitted that the limited protection of free speech under the newspaper rule "cannot possibly be a complete answer to the question whether, or to what extent, the power to order the disclosure of the information in rule 5.2 is compatible with the maintenance of representative and responsible government and in particular the indispensable element of freedom of communication on political matters". 76The applicants submitted that the newspaper rule was inadequate to protect such communications, pointing to the fact that it was only effective at the interlocutory stage of the proceedings and yielded to the interests of justice. They submitted that it was not a decisive matter that r 5.2 may operate to provide a remedy in law to persons who might not be able to achieve a verdict against a known defendant. They submitted that since Lange, "an utterly untrue and highly pejorative reflection can be made on a person in the course of political speech with complete impunity, provided the mistaken defendant acted reasonably". 77As a fallback position the applicants submitted that to conform to the requirements of the constitutional freedom, disclosure pursuant to r 5.2 should be ordered only if the following three conditions were satisfied: "(a) the applicant demonstrates a strong case for a finding of falsity of the communication on a consideration of all the evidence on the application; (b) where the information provided by the putative source has been published by a newspaper or some other disseminator of political information, and the person sought to be examined or to provide documents is responsible for the publication, the applicant demonstrates a strong case for a finding of subjective bad faith on the part of that person; (c) the applicant demonstrates that there is no known party whom he or she can sue." During the course of argument senior counsel for the applicants proposed a further fallback to the effect that disclosure would be ordered only if the conditions in subpars (a) and (c) above were satisfied. 78Senior counsel for the applicants agreed that in any trial the source would have the defensive qualified privilege as stated in Lange but submitted that that did not lead to the conclusion that r 5.2 was compatible with the implied freedom, pointing to the potential limited resources the source would have to defend the claim. He submitted the sources were put in a special position being "the first point of contact with the [type of] information the High Court tells us in Cojuangco is good to expose and should be encouraged". 79Finally senior counsel for the applicants submitted that the question of whether the legislation was compatible invited the question of whether there was a more compatible and more appropriate way it could achieve the same end without doing violence to the maintenance of the implied freedom. 80In her submissions, Ms Liu pointed to the fact that r 5.2 conferred a judicial discretion, which she submitted was required to be exercised conformably with the constitutional limits imposed by the implied freedom. She submitted that r 5.2 does not operate as a direct restraint on political communication and any impact on freedom of communication was at best speculative. In those circumstance she submitted that the first question posed in Lange should be answered in the negative. 81So far as the second limb was concerned she submitted it involved two exercises. First, to determine the purpose or end of the statutory provision; second, to determine whether the law is reasonably appropriate and adapted to achieve that end. She submitted that the purpose of r 5.2 was to facilitate the enforcement of civil causes of actions by proceedings in a court where a person may not otherwise be able to do so, because of lack of information as to the identity or whereabouts of the prospective defendant. She submitted that the rule was reasonably appropriate, relying principally on the absence of any direct effect on political communication. At the hearing senior counsel for Ms Liu pointed to the conditions which had to be met prior to the grant of the order and the existence of the newspaper rule, in support of the proposition that the rule was compatible with the implied freedom. 82The second respondent, the Attorney General for NSW, who intervened pursuant to s 78A of the Judiciary Act 1903 (Cth), submitted that r 5.2 was valid and that there was no need for it to be read down. He submitted that the first question posed in Lange should be answered in the negative, pointing to the fact that orders for disclosure will not be made by a court unless the applicants demonstrate that it is necessary in the interests of justice and that the applicants will not have an effective remedy without the orders being made. In these circumstances he submitted the primary judge erred in concluding that the mere existence of a power to compel disclosure is sufficient to demonstrate a fetter on freedom of communication. This was because, he submitted, the power would only be exercised where the interests of justice outweighed the public interest in maintaining confidentiality of communication with journalists regarding government or political matters. 83So far as the second question was concerned, the Attorney General pointed to the distinction between laws which have the purpose of restricting or regulating discussion of government or political matters and those which affect such discussions incidentally, meaning that a law which has only an incidental effect is more likely to satisfy the second question in Lange than a law of the former type. He submitted that r 5.2 may, in certain circumstances, be essential to the proper enforcement of legal rights and in those circumstances it was not incompatible with the maintenance of the constitutionally protected system of responsible and representative government. 84The Attorney General further submitted that an order under r 5.2 would only be made when required by the interests of justice and once proper regard had been given to the countervailing public interest in maintaining the confidentiality of journalist sources, such interest being of particular weight where the communications were about government or political matters. He further submitted that the fallback positions proposed by the applicants were unnecessary to achieve constitutional validity.

Consideration 85The starting point in considering the constitutional validity of r 5.2 is a construction of the rule itself: Coleman v Power supra at [3] [147]-[148]; Gypsy Jokers Motorcycle Club Inc v Commissioner of Police [2008] HCA 4; (2008) 234 CLR 532 at [11]; Sunol v Collier (No 2) [2012] NSWCA 44 at [25]. 86Rules 5.1 and 5.2, so far as relevant, are in the following terms: "5.1 Definitions In this Part: applicant means an applicant for an order under this Part. identity or whereabouts includes the name and (as applicable) the place of residence, registered office, place of business or other whereabouts, and the occupation and sex, of the person against whom the applicant desires to bring proceedings, and also whether that person is an individual or a corporation. 5.2 Discovery to ascertain prospective defendant's identity or whereabouts (1) This rule applies if it appears to the court that: (a) the applicant, having made reasonable inquiries, is unable to sufficiently ascertain the identity or whereabouts of a person (the person concerned) for the purpose of commencing proceedings against the person, and (b) some person other than the applicant (the other person) may have information, or may have or have had possession of a document or thing, that tends to assist in ascertaining the identity or whereabouts of the person concerned. (2) The court may make either or both of the following orders against the other person: (a) an order that the other person attend the court to be examined as to the identity or whereabouts of the person concerned, (b) an order that the other person must give discovery to the applicant of all documents that are or have been in the other person's possession and that relate to the identity or whereabouts of the person concerned. ... (7) Unless the court orders otherwise, an application for an order under this rule: (a) must be supported by an affidavit stating the facts on which the applicant relies and specifying the kinds of information, documents or things in respect of which the order is sought, and (b) must, together with a copy of the supporting affidavit, be served personally on the other person." 87Rule 5.2, coupled with the definition in r 5.1, imposes the following preconditions on the making of an order. The first arises from the definition in r 5.1, namely, that the applicant for preliminary discovery desires to commence proceedings against the person whose identity or whereabouts is sought. That desire, as Barrett JA stated in Roads and Traffic Authority of NSW v Care Park Pty Limited [2012] NSWCA 35 must be a genuinely held and objectively based desire (see at [106], Beazley and Campbell JJA agreeing). Thus applications which are capricious or lack an objective basis will be rejected. The second precondition is that the applicant for orders must have made reasonable inquiries. Although this does not mean that every avenue or inquiry must be exhausted, orders will not be made solely on the basis that the applicant is of the belief that an application under r 5.2 is the most convenient way of obtaining the information. 88Third, as Barrett JA pointed out in Roads and Traffic Authority of NSW v Care Park the "purpose of commencing proceedings" is the yardstick by which the sufficiency of the information in the applicant's possession is assessed (at [97]). Thus the information sought pursuant to r 5.2 must be necessary for the purpose of commencing the proceedings and will be limited to that information which is objectively necessary, having regard to the rules of court, to enable such proceedings to be commenced. 89Finally, even if those preconditions are satisfied, r 5.2(2) gives the court a discretion whether or not to make an order. It was common ground between the parties that the discretion would only be exercised in favour of the applicant when it is in the interests of justice to do so. The existence of a prima facie case against the proposed defendant is relevant to the exercise of the discretion: Stewart v Miller (1979) 2 NSWLR 128 at 139-140; Roads and Traffic Authority of NSW v Australian National Car Parks Pty Ltd supra at [13]. 90Two further matters should be noted in dealing with the construction of the rule. First, the rule does not in its terms limit the power or discretion of the Court in respect of the disclosure of sources where the information in question relates to government or political communications. If that limitation was there, there would be no issue as to the validity of the rule: Wotton supra at [10], [21]-[22], [31]. In the passages cited the plurality in Wotton applied the dicta of Brennan J in Miller v TCN Channel Nine Pty Limited [1986] HCA 60; (1986) 161 CLR 556 at 613-614 to the effect that a general discretion conferred on an administrative body can only be exercised in accordance with constitutional requirements and limitations and an exercise outside these requirements and limitations would be ultra vires. The Court did not conclude whether the same approach would be applied to a discretion conferred on a court. That question, together with a question of whether the rule can be read down to preserve its constitutional validity, (see Interpretation Act 1987 (NSW) s 31; Coleman v Power supra at [110]) only arises if the rule, to the extent it otherwise permits disclosures of sources of government and political matters, is invalid. 91The second matter is this. In considering r 5.2 I have not taken the newspaper rule into account. The newspaper rule has repeatedly been held to be a rule of practice: McGuinness supra at 104-105; Cojuangco supra at 356. It has no relevance to the construction of the provision. 92Turning to the first question posed by Lange, the principles guiding the question of whether the challenged legislation operates as a burden on government and political communications, so as to require an affirmative answer, have as Heydon J pointed out in Wotton at [41], been the subject of relatively little consideration. 93Notwithstanding this it is clear, contrary to the submissions of Ms Liu, that the fact that the burden is indirect does not mean that the first question must be answered in the negative. Although it has been stated on a number of occasions that laws which directly inhibit government or political communications will be much more difficult to justify than laws which do so indirectly (Mulholland v Australian Electoral Commission [2004] HCA 41; (2004) 220 CLR 181 at [40]; Australian Capital Television Pty Ltd v The Commonwealth [1992] HCA 45; (1992) 177 CLR 106 at 169; Levy v State of Victoria [1997] HCA 31; (1997) 189 CLR 579 at 618-619; Hogan v Hinch [2011] HCA 4; (2011) 243 CLR 506 at [95]-[96]), none of these cases provide support for the proposition that an indirect burden can never infringe the constitutional requirement. 94In Coleman v Power supra, Callinan J at [298] expressed the view that for the first question raised in Lange to be answered in the affirmative the legislation in question must pose a realistic threat to the implied freedom. In Wotton supra, Heydon J at [54]-[55], expressed the view that this formulation was correct. Heydon J also accepted the submissions of the Solicitor-General in Wotton to the effect that there must be a real or an actual burden upon relevant communications (at [54]). 95If that approach was accepted, there would be much to be said to support the proposition that a law which only requires disclosure in the limited circumstances provided for in r 5.2 and which is subject to a discretion to be exercised in the interests of justice, would not amount to such a real or actual burden on political or government communications so as to require the first question to be answered in the affirmative. However, as Heydon J pointed out, that approach is more limited than that of McHugh J in Coleman v Power, where his Honour said the question would be answered in the affirmative if the law "directly and not remotely restricts or limits the content of those communications or the time, place, manner or conditions of their occurrence" (Coleman v Power at [91]). Further, in its consideration of the newspaper rule, the High Court in each of McGuinness and Cojuangco stated that the rule rests on the public interest in the free flow of information, a conclusion which would suggest that r 5.2 can have the effect of limiting freedom of communication, including government and political communications. In those circumstances, on the present state of authority, it seems to me that the first question in Lange should be answered in the affirmative. 96In dealing with the second question posed in Lange as modified in Coleman v Power (see par [66] above) it is necessary to bear the following matters in mind: (a) Rule 5.2 secures a legislative end, namely, to facilitate civil causes of action where persons who legitimately wish to bring proceedings are frustrated or prevented from doing so by lack of information as to the identity or whereabouts of the proposed defendants: see Roads and Traffic Authority of NSW v Care Park supra at [8]. (b) The implied freedom of communication on government and political matters is not an absolute freedom: Lange at 561; Mulholland v Australian Electoral Commission supra at [40]. As Gleeson CJ pointed out in that paragraph, there are many laws, of which the defamation law considered in Lange is an example, which affect government or political communications but which are nonetheless valid. (c) The requirement that the restriction is reasonably appropriate and adapted articulated in Lange does not mean it must be unavoidable or essential. Rather it involves close scrutiny, congruent with a search for compelling justification: Mulholland at [40]; Roach v Electoral Commission [2007] HCA 43; (2007) 233 CLR 162 at [85]; Rowe v Electoral Commissioner [2010] HCA 46; (2010) 243 CLR 1 at [161]. (d) As I have stated above, laws which indirectly affect government and political communications are less likely to infringe the implied freedom than laws which have a direct impact on such freedoms. 97Importantly, in Lange, the High Court upheld a litigant's right to sue for defamation and the validity of s 22 of the Defamation Act 1974 (NSW) (the precursor to s 30 of the Defamation Act 2005 (NSW)). In that case the Court made the following comments (at 568, citations omitted): "The purpose of the law of defamation is to strike a balance between the right to reputation and freedom of speech. It is not to be supposed that the protection of reputation is a purpose that is incompatible with the requirement of freedom of communication imposed by the Constitution. The protection of the reputations of those who take part in the government and political life of this country from false and defamatory statements is conducive to the public good. The constitutionally prescribed system of government does not require - to the contrary, it would be adversely affected by - an unqualified freedom to publish defamatory matter damaging the reputations of individuals involved in government or politics. The question then is whether the common law of defamation, as it has traditionally been understood, and the statute law regulating the publication of defamatory matter are reasonably appropriate and adapted to the protection of reputation having regard to the requirement of freedom of communication about government and political matters required by the Constitution." 98The court held in those circumstances that if a defence of qualified privilege was generally available in relation to the publication of government and political matters, subject to a requirement of reasonableness, the common law of defamation and s 22 of the Defamation Act would be compatible with the implied freedom within the meaning of the second question in Lange. In that context the Court considered that, having regard to the necessity to protect reputation, the law went no further than what was reasonably appropriate for that purpose (at 575). 99Taking the matters to which I have referred above into account, it seems to me that a rule such as r 5.2 is appropriate and adapted to serve a legitimate end in a manner compatible with the maintenance of a constitutionally prescribed system of government. It achieves the objective of protecting persons from false and defamatory statements by unidentified persons when they may otherwise have no redress, having regard to the defence of qualified privilege available to the newspaper journalist or media outlet which transmits the information. The source will have the defence of qualified privilege available if he or she meets its requirements. In these circumstances, in my opinion, the rule achieves a legitimate end in a manner compatible with the maintenance of a constitutionally prescribed system of government. The maintenance of such a system of government does not, in my opinion, require that persons who provide information but decline to reveal their identity should be put in a better position than persons whose identity can be ascertained without resort to r 5.2 or its equivalent. This is all the more the case when, as I have indicated above, the threshold provisions of r 5.2 must be made out and the question of whether there is a prima facie case demonstrated will be a relevant matter in the exercise of the discretion. 100It follows from what I have said that there is no need to read down the rule or otherwise limit the discretion conferred on the Court to achieve its constitutional validity. 101In those circumstances the second question raised in Lange should be answered in the affirmative. The constitutional challenge to the rule therefore fails. Leave to appeal in respect of Grounds 2 to 4 inclusive should be granted, but the appeal dismissed.

The conduct of the proceedings in the Court below 102I have set out the requirements for an order under r 5.2 above and indicated that the existence of a prima facie case may be relevant in the exercise of discretion. However, that does not mean that litigants, and in particular defendants, are entitled to treat an application for preliminary discovery as a dress rehearsal for the proceedings and to seek findings on matters which will ultimately depend on an assessment of the whole of the evidence by a judge or a jury at the trial of the action. 103In the present case the hearing took 10 days due largely, it would appear, to the defendants seeking to embark on an examination of the merits of the plaintiff's claim on the basis it was a relevant matter for discretion. This is not an appropriate course to adopt in relation to an interlocutory matter of the nature of that in question here and is contrary to the objectives in s 56 of the Civil Procedure Act 2005 and to the obligations on litigants and their advisers to conduct litigation in accordance with the overriding objective in that section. 104Although I would have thought it abundantly clear, let me emphasise that applications for preliminary discovery are interlocutory applications, where it is quite inappropriate for contested issues of fact between the parties to be litigated, much less decided upon. That is not to say that the person against whom discovery is sought is not entitled to challenge the proposition that the applicant has met the threshold requirements or to point to deficiencies in the factual allegations deposed to, or the legal basis of the claim proposed to be made, to demonstrate the absence of any viable claim. However, any cross-examination on these issues should be conducted on the basis that the proceedings are of an interlocutory nature at which it is inappropriate to litigate contested questions of fact. There is certainly no justification for applications for preliminary discovery to be conducted in the way which occurred in this case. 105In making these remarks I do not intend to suggest that the applicants' advisers were acting other than in a manner which they believed to be in the best interests of their clients. However, the fact remains that the proceedings should not have been conducted in the fashion in which they were and it is something which should not occur in the future.

Orders 106In the circumstances I would make the following orders: 1 Grant the applicants leave to appeal in respect of Grounds 2 to 9 of the document headed "Second Further Amended Draft Notice of Appeal" which appears behind Tab 3 of the Application Book filed in connection with these proceedings. 2 Direct the applicants to file a Notice of Appeal incorporating these grounds within 7 days of the date hereof. 3 Order that the appeal be dismissed. 4 Order that leave to appeal otherwise be refused. 5 Order that the applicants pay the respondents' costs of the application for leave to appeal and the appeal. 107BEAZLEY JA: I agree with the reasons of and orders proposed by the Chief Justice. 108McCOLL JA: I agree with Bathurst CJ's reasons and the orders his Honour proposes.

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