HER HONOUR: This is an action for defamation commenced by Mr Tony Kazal against the publisher of The Sydney Morning Herald in respect of an advertisement on Facebook for an article published in The Sydney Morning Herald and in The Age. The defendant seeks security for its costs. This judgment determines that application.
The basis for the application is twofold. First, Mr Kazal is ordinarily resident outside Australia, a circumstance expressly contemplated as a basis for the exercise of the Court's discretion to require security for costs under r 41.21(1)(a) of the Uniform Civil Procedure Rules 2005 (NSW). Secondly, the defendant invokes the Court's inherent jurisdiction in circumstances where it is alleged Mr Kazal has shown himself to be extremely vindictive towards the author of the article, Mr Baker. Fairfax contends it may be inferred that Mr Kazal is unlikely to comply with any costs order in its favour.
The second limb of the application is based on a barrage of raging emails from Mr Kazal addressed to Mr Baker but copied to a wider audience and also published on a Kazal Family website. The emails direct the most strident criticism at Mr Baker for alleged lies in the matter complained of and include threats that Mr Kazal will relentlessly pursue the strongest remedies against Mr Baker (including an assertion, the legal basis for which is not clear, that Mr Baker should spend time in gaol for alleged crimes against the Kazal family).
Mr Baker is not a party to the proceedings but is said (in the written submissions) to be an employee of the defendant. He is elsewhere described as an "investigations reporter" for The Age. The defendant denies being the publisher of The Age (casting doubt on the assertion that an Age journalist is its employee) but admits publication of the matter complained of, which advertised an article published in The Age. In any event, it is clear enough that there is a sufficient connection between Mr Baker and the defendant to infer that the animosity directed at Mr Baker is in some measure also directed at the defendant. Indeed, that is apparent from the content of the emails themselves. The defendant submits that the Court would infer that Mr Kazal would not willingly comply with any order for costs in its favour and accordingly that the Court's inherent jurisdiction to make appropriate orders to protect the defendant's position is invoked.
The present application was not brought at the earliest opportunity. The proceedings were commenced by statement of claim filed 24 May 2016. There were no objections to the form of that pleading. An amended statement of claim was filed on 26 July 2016 only to correct the name of the defendant.
The matter complained of consists of a single post on Facebook which includes a prominent photograph of the plaintiff's face overwritten with the caption:
EXPOSED
THE BRIBE FACTORY:
SYDNEY CONNECTION
Above the photograph appeared the words:
Australia is leagues behind the US when it comes to investigating corrupt multinational companies who bribe their way to success in third world countries.
Beneath the photograph, the narrative continued:
"'More of a problem than you realise': why authorities are losing the battle with wh…"
The advertisement contained an embedded link to the article but the article is not sued on in these proceedings; the matter complained of consists of the advertisement alone. The plaintiff relies upon a single imputation allegedly conveyed by the advertisement, as follows:
The plaintiff is complicit in paying bribes in third world countries.
A defence was filed on 19 August 2016. The defence denies that the matter complained of was capable of conveying or in fact conveyed the imputation pleaded by the plaintiff. Insofar as it denies the capacity of the matter complained of to convey the imputation, it is formulaic. For reasons that escape me, media defendants almost invariably include such a denial in their defences. If capacity is seriously contested, that is ordinarily an issue that should be raised at the first listing, as contemplated by cl 13 of the Defamation List Practice Note SC CL 4. Where capacity is not a real issue in the proceedings, it should not be denied.
The defence otherwise pleads no affirmative defence. It pleads matters in mitigation going principally to the scope of publication. Further particulars of mitigation have subsequently been provided in correspondence from the defendant based on the acrimonious emails described above, which the defendant contends amount to bad conduct on the part of Mr Kazal such as to reduce the amount of damages to which he might otherwise be entitled. That issue is considered below.
In the absence of any affirmative defence there was no occasion for the plaintiff to file a reply. The parties agreed on limited discovery and did not seek to administer interrogatories. At the second listing on 18 November 2016, the matter was referred to the list clerk to obtain a hearing date. On 8 March 2017, the matter was listed for a hearing with a jury fixed to commence on 29 January 2018 with an estimate of three days.
A request for security for costs was first made well after those events, by letter dated 2 June 2017. Its lateness is relevant to the exercise of the Court's discretion. The basis for the request at that time was said to be that it had come to the defendant's attention that Mr Kazal is ordinarily resident outside Australia. The material from which that conclusion was drawn was available to the defendant almost a year earlier. Since at least as early as 6 July 2016, Mr Kazal had been asking (in the context of his complaints about the matter complained of) why he had been described as the "Sydney connection" in the so-called bribe factory when he had lived in Dubai for the past 20 years. That assertion was repeated in many posts, each specifying the number of days or weeks that had passed without apology or retraction since publication of the matter complained of. The absence of any truth defence tends to vindicate those complaints.
The defendant's letter of 2 June 2017 sought security for costs in the sum of $100,000, being 75% of the estimated future costs of the proceedings. No component was sought for past costs at that stage. At a time when all interlocutory steps were complete and all that remained was to prepare for a short hearing on defamatory meaning and damages, the letter estimated that "future interlocutory steps" and trial preparation would require 60 hours of work performed by a senior associate, 30 hours of work performed by a partner, 8 days of preparation by junior counsel and 5 days of preparation by senior counsel. The estimate also included the cost of all four lawyers at the hearing - a partner, a senior associate, senior counsel and junior counsel. The experience and ability of the lawyers in question is beyond dispute but one cannot help wondering what they will all do at the hearing. The claim was at least confined to the cost of the first day of the trial.
The plaintiff declined to provide the security sought.
In the application before me, a revised estimate was provided contemplating that, for future interlocutory steps and trial preparation, the defendant would require 30 senior associate hours, 15 partner hours, 4 days of junior counsel and 3 days of senior counsel together with the costs of all four lawyers for the first day of trial. Those costs were estimated to be in the order of $83,580. However, the application was extended to seek security for a portion of the costs already incurred with the result that the amount sought in fact increased, now being $110,000 (68% of total past and estimated future costs).
The plaintiff maintained his opposition to the application but has made an open offer to provide security in the sum of $20,000.
The evidence establishes that the plaintiff is ordinarily resident outside Australia and that he has no assets in Australia. It is not suggested that any costs judgment given in Australia would be enforceable in the United Arab Emirates and, in any event, as noted by Mr Gray SC on behalf of the defendant, the purpose of requiring security for costs under r 41.21(1)(a) is to obviate the need for a defendant to have to undertake steps to enforce a costs judgment overseas. Mr Gray submitted that, in the circumstances, absent any countervailing consideration, the Court would ordinarily order security.
There is ample authority to that effect. It is enough for present purposes to refer to the decision in PS Chellaram & Co Ltd v China Ocean Shipping Co (1991) 102 ALR 321 at 323; [1991] HCA 36 at [7] where McHugh J said:
… for over 200 years, the fact that a party, bringing proceedings, is resident out of the jurisdiction and has no assets within the jurisdiction has been seen as a circumstance of great weight in determining whether an order for security for costs should be made. Indeed, for many years the practice has been to order such a party to provide security for costs unless that party can point to other circumstances which overcome the weight of the circumstance that that person is resident out of and has no assets within the jurisdiction.
Mr Gray submitted that there is an additional factor on the defendant's side of the ledger in the present case, namely, the inference to be drawn from the plaintiff's campaign of "stalking and denigrating" Mr Baker. A sample of the material relied upon to sustain that inference was included with the letter dated 2 June 2017 requesting security for costs.
Mr Dibb, who appears for the plaintiff, conceded that the correspondence may be described as "unfortunate". That is perhaps an understatement. Repeatedly addressing Mr Baker as "Mr Bribe Taker Story Maker Baker", Mr Kazal has bombarded the hapless journalist with vitriolic threats to expose his "wilful lies", accusing Fairfax Media of "the most appalling instance of abuse of media power to attack innocent victims of crime in support of the person who stole from them". By way of example, he states:
I will not rest until you apologise for the lies you told so as to correct the public record and serve time in prison for the despicable crimes you committed against me and my entire family!
I accept that the vitriolic tone of the correspondence provides some base for apprehending that the last thing Mr Kazal would wish to have to do would be to contribute to the payment of Fairfax's costs of these proceedings. I am less confident in inferring that he would fail to do so if ordered by the Court but it may be accepted that there would appear to be a risk of that occurring.
In my view, however, there is a strong countervailing consideration, which is the apparent strength of the plaintiff's case. Mr Gray acknowledged that the defendant will only succeed at trial if the jury rejects the sole imputation pleaded or does not find that the plaintiff was positively identified by any readers of the matter complained of. However, he submitted that the Court should not proceed on this application on the assumption that the plaintiff will succeed at trial, contending that that will not be known until the jury has considered the evidence and given its answers in respect of those issues.
In support for that approach, Mr Gray submitted that, where a plaintiff has what may appear to be a strong case, "that has not been traditionally considered to be a reason to refuse security", citing Cheng XI Shipyard v The Ship 'Falcon Trident' [2006] FCA 759 per Besanko J at [11], [18]. With great respect to Mr Gray, I do not think the remarks cited stand as authority for the proposition asserted. Justice Besanko said that the plaintiff's prospects of success are relevant, citing an earlier decision of the Federal Court, but said that in the circumstances of the case before him, he could not determine the merits of the plaintiff's claim and the defendant's set-off and counter-claim.
In any event, earlier authorities as to security for costs must now be considered in the light of the provisions of Pt 6 of the Civil Procedure Act 2005 (NSW). In Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management & Marketing Pty Ltd [2013] HCA 46, the High Court reiterated what had been pointed out in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 at 211 [92] to [93], 213 [98]; [2009] HCA 27, namely, that case management is an accepted aspect of the system of civil justice administered by the courts in Australia. Specifically, the Court endorsed the proposition that "a different approach [is] required to tackle the problems of delay and cost in the litigation process". After summarising the relevant provisions of the Civil Procedure Act, the Court said at [56] to [57]:
The evident intention and the expectation of the CPA is that the court use these broad powers to facilitate the overriding purpose. Parties continue to have the right to bring, pursue and defend proceedings in the court, but the conduct of those proceedings is firmly in the hands of the court. It is the duty of the parties and their lawyers to assist the court in furthering the overriding purpose.
That purpose may require a more robust and proactive approach on the part of the courts. Unduly technical and costly disputes about non-essential issues are clearly to be avoided. However, the powers of the court are not at large and are not to be exercised according to a judge's individualistic idea of what is fair in a given circumstance. Rather, the dictates of justice referred to in s 58 require that in determining what directions or orders to make in the conduct of the proceedings, regard is to be had in the first place to how the overriding purpose of the CPA can be furthered, together with other relevant matters, including those referred to in s 58(2). The focus is upon facilitating a just, quick and cheap resolution of the real issues in the proceedings, although not at all costs. The terms of the CPA assume that its purpose, to a large extent, will coincide with the dictates of justice.
Those remarks are of the highest relevance in the conduct of a list such as the Defamation List. There is perhaps no other field of the law in which a more robust approach is required in tackling the technical and the arcane.
It may be acknowledged that the dictates of justice pull in different directions in the present case and require careful assessment. On the one hand, authority supports the defendant's contention that, all things being equal, the Court will ordinarily make an order for security for costs in the case of an overseas plaintiff who has no assets in the jurisdiction. On the other hand, there is a real question in the present case as to whether such an order best serves the overriding purpose.
It is my assessment that the plaintiff's case is strong, at least on the issue of defamatory meaning. The assessment of damages may be more complex and that of course informs the likelihood that the plaintiff might be ordered to pay a portion of the defendant's costs even if he obtains judgment in his favour. That issue is complicated by the defendant's reliance on the plaintiff's alleged bad conduct in his campaign of harassment against the journalist as a matter that should reduce any award of damages.
The parties took me to a number of authorities on that issue and addressed them in detail. My consideration of those authorities has led me to conclude that the issue is complex and that the likely impact of the plaintiff's conduct towards Mr Baker on any damages award cannot be predicted with any confidence.
Certainly, it appears to be accepted that, in principle, "bad conduct" on the part of a plaintiff may enter into the assessment of damages, depending on the circumstances. However, the scope of that principle is unclear. The defendant relied on the following statement of Lord Hailsham in Cassell & Co Ltd v Broome [1972] AC 1027 at 1071F:
The bad conduct of the plaintiff himself may also enter into the matter, where he has provoked the libel, or where perhaps he has libelled the defendant in reply. What is awarded is thus a figure which cannot be arrived at by any purely objective computation. This is what is meant when the damages in defamation are described as being "at large." In a sense, too, these damages are of their nature punitive or exemplary in the loose sense in which the terms were used before 1964, because they inflict an added burden on the defendant proportionate to his conduct, just as they can be reduced if the defendant has behaved well - as for instance by a handsome apology - or the plaintiff badly, as for instance by provoking the defendant, or defaming him in return. In all such cases it must be appropriate to say with Lord Esher M.R. in Praed v Graham, 24 Q.B.D. 53, 55:
" … in actions of libel … the jury in assessing damages are entitled to look at the whole conduct of the defendant" (I would personally add "and of the plaintiff") "from the time the libel was published down to the time they give their verdict. They may consider what his conduct has been before action, after action, and in court during this trial."
That passage was cited with approval by the English Court of Appeal in Newsgroup Newspapers Ltd v Campbell [2002] EWCA Civ 1143 at [32]. The Court of Appeal in that case had "no doubt" that the plaintiff's "wholly disreputable conduct which was established in the course of determining the issues in the litigation itself" was of the utmost relevance in the assessment of damages. However, the conduct relied upon in that case was unique. The defamation complained of was that the plaintiff was a paedophile. He sought aggravated damages on the basis of a contention that the defendant had doctored a video so as to prove its case against him. The defendant by way of counter allegation contended that the plaintiff had himself doctored a video in order to deceive the Court on that issue (to lend colour to his allegation of doctoring against the newspaper). The Court upheld the counter allegation and concluded (at [119]) that the plaintiff had engaged in "an elaborate and long-lasting attempt to pervert the course of justice". In those very serious circumstances and applying the principles stated in Cassell v Broome, the Court reduced an award of damages of 350,000 pounds to 30,000 pounds.
Mr Gray also relied on the decision of the Western Australia Court of Appeal in Coxon v Wilson [2016] WASCA 48 where the Court cited with approval the statement in Cassell v Broome that the plaintiff's damages may be reduced "where he has provoked the libel, or where perhaps he has libelled the defendant in reply". That was an application for leave to appeal against an interlocutory decision striking out a plea of mitigation based on the contention that the plaintiff had provoked the libel. However, the basis for the Court's decision appears to have been that the plea fell within the principles outlined by the English Court of Appeal in Burstein v Times Newspapers Ltd [2000] EWCA Civ 338. The case does not directly address the issue that will arise in these proceedings.
For completeness, it should be noted that Mr Dibb foreshadowed an argument at trial that the plaintiff's emails to Mr Baker, rather than amounting to conduct that will mitigate damages, provide the most cogent evidence of hurt to feelings in the face of the newspaper's flat refusal to accept responsibility for the alleged defamation notwithstanding the absence of any affirmative defence.
In short, it is neither possible nor appropriate in the present application to attempt to assess the likely quantum of damages in the event that the plaintiff obtains a favourable verdict from the jury. As already noted, the amount of any award may influence the issue of costs. The position as to costs may also be influenced by considerations of the kind identified in s 40 of the Defamation Act which at this stage cannot be known. But I think it can at least be predicted that, if the issue of defamatory meaning is determined in his favour (which seems likely), Mr Kazal will receive something more than nominal damages.
Although I would regard the plaintiff's case for obtaining a verdict in his favour to be strong, it must be acknowledged that the defendant is entitled to defend the claim in the manner allowed under the Defamation Act 2005 (NSW). It follows that the defendant is perfectly entitled to have a jury determine the question whether its short, unambiguous advertisement, which identifies the plaintiff by photograph, conveys the imputation pleaded by the plaintiff.
Mr Gray stated that an argument will also be put to the jury that the plaintiff's imputation, if conveyed, was not defamatory, asserting that some people would think paying bribes was "something you had to do to do business in some countries" and that that also is properly a question for the jury. With unfeigned respect to Mr Gray, I would regard that as an approach bordering on the cynical.
There are two features of the proceedings which, in my view, militate against requiring security in the amount sought. First, I consider that, while the defendant is entitled to have its ambitious defence on the issue of defamatory meaning determined by a jury, the dictates of justice do not require that the plaintiff should be compelled to provide security for the costs of its doing so. A pragmatic assessment of the real issues in the proceedings in this case might well have seen the defendant admit liability and move directly to an assessment of damages. Prompt reconciliation would have mitigated the hurt suffered by the plaintiff and so served the objects stated in s 3 of the Defamation Act. The defendant is entitled to takes its chance with a jury but it should not fall to the plaintiff to secure the cost of that exercise.
Secondly, I accept Mr Dibb's submission that the quantum of the defendant's past and anticipated future costs in this case suggests a luxurious defence. I think it would be inimical to the overriding purpose to require the plaintiff to make provision for such an approach.
Taking into account my assessment of the plaintiff's prospects of success, which in turn informs the likelihood of his being ordered to pay a portion of the defendant's costs, and having regard to my duty to further the overriding purpose, I consider that the amount of security offered by the plaintiff is adequate and appropriate to secure the defendant's likely, proper exposure to costs.
For those reasons, I make the following orders:
1. That the plaintiff give security for the defendant's costs in the sum of $20,000 within 14 days.
2. In the event that security is not given within that period, that the proceedings be stayed until the security is given.
3. That the defendant pay the plaintiff's costs of the application.
[2]
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Decision last updated: 19 September 2017