Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA

Citation : BOND -v- WEST AUSTRALIAN NEWSPAPERS LTD [No 2] [2008] WASC 249

Actions for breach of confidence and conversion against newspaper proprietor and journalists - Discovery - Interlocutory application for inspection of audiotapes that would reveal the identity of a confidential source - Assumed application of the newspaper rule - Nature, scope and application of the newspaper rule - Meaning of 'necessary in the interests of justice' - Meaning of 'an effective remedy' - Factors to be taken into account in deciding whether to dispense with the newspaper rule

First Appellant : Mr T D Blackburn SC & Ms C Galati

Second Appellant : Mr T D Blackburn SC & Ms C Galati

Third Appellant : Mr T D Blackburn SC & Ms C Galati

A v Hayden [1984] HCA 67; (1984) 156 CLR 532

American Cyanamid Co v Alcoa of Australia Ltd [1993] FCA 490; (1993) 27 IPR 16

Attorney-General v Guardian Newspapers Ltd (No 2) [1990] 1 AC 109

British Steel Corporation v Granada Television Ltd [1981] AC 1096

Brybay Pty Ltd (in liq) v Esanda Finance Corporation Ltd [2002] WASC 309

Campbell v MGN Ltd [2004] UKHL 22; [2004] 2 AC 457

Carroll v The Queen [2009] HCA 13; (2009) 83 ALJR 579

Coco v AN Clark (Engineers) Ltd [1969] RPC 41

Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) [1987] FCA 266; (1987) 14 FCR 434

European Pacific Banking Corporation v Fourth Estate Publications Ltd [1993] 1 NZLR 559

Hennessy v Wright (No 2) (1890) 24 QBD 445

Herald & Weekly Times Ltd v Guide Dog Owners' and Friends' Association [1990] VicRp 40; [1990] VR 451

Hodder v Queensland Newspapers Pty Ltd [1994] 1 Qd R 49

House v The King [1936] HCA 40; (1936) 55 CLR 499

John Fairfax & Sons Ltd v Cojuangco [1988] HCA 54; (1988) 165 CLR 346

Kerrisk v The North Queensland Newspaper Co Ltd [1992] 2 Qd R 398

Langley v The Age Company Ltd [2001] VSC 370

Lew v The Herald & Weekly Times Ltd [1999] VSC 2; [1999] 1 VR 313

McGuinness v Attorney-General (Vic) [1940] HCA 6; (1940) 63 CLR 73

Minister for Immigration and Citizenship v Kumar [2009] HCA 10; (2009) 83 ALJR 539

Penfolds Wines Pty Ltd v Elliott [1946] HCA 46; (1946) 74 CLR 204

Re An Inquiry under the Company Securities (Insider Dealing) Act 1985 [1988] AC 660

Re Pyne [1997] 1 Qd R 326

Rendell v Associated Finance Pty Ltd [1957] VicRp 88; [1957] VR 604

Secretary of State for Defence v Guardian Newspaper Ltd [1985] AC 339

Snell v Pryce [1990] NTSC 2; (1990) 99 FLR 213

State Bank of South Australia v Hellaby (1992) 59 SASR 304

The State of Western Australia v Bond Corporation Holdings Ltd (1991) 5 WAR 40

Thiess v TCN Channel Nine Pty Ltd (No 1) [1991] 2 Qd R 715

Wilson v Metaxas [1989] WAR 285

X Ltd v Morgan-Grampian (Publishers) Ltd [1991] 1 AC 1

1 OWEN JA: I have seen the reasons that Buss JA proposes to publish. I agree with his Honour's analysis of the facts and the law and with his conclusion that leave to appeal should be granted and the appeal allowed. I wish only to make a short additional comment on one issue; namely the role of mediation.

2 In grounds 3 and 4 of the grounds of appeal the appellants contend that the first instance judge erred in giving consideration to whether disclosure might facilitate settlement of the proceedings and in holding that production of the tapes was 'important' for the purposes of mediation.

3 As Buss JA has said, mediation is an essential and important feature of the management of contemporary litigation. In the first instance work of the Supreme Court more than 600 civil actions are mediated each year. Almost every civil action commenced in the court and defended to any extent will go to mediation; some are mediated more than once. The raw data indicate that approximately 63% of actions settle after mediation. Other data suggest that the overall settlement rate to which mediation has contributed may be around 90%. It is also important to bear in mind that mediation has a critical impact well beyond the settlement (in the sense of a final resolution by agreement) of an action. It will often, perhaps even usually, lead to the refinement and limitation of issues disclosed in the pleadings.

4 Mediation, therefore, has a marked effect of the trial load of the court. Many cases, which would otherwise do so, do not get to trial at all. Those that do get to trial may be shorter because many of the issues that were raised during the preparatory phases will have been agreed or abandoned prior to, or otherwise not pressed at, the hearing. In this way mediation makes a vital contribution to the public interest by limiting the need to allocate what is already a scarce resource to the process of final and formal hearings. It also reduces the cost impost on parties.

5 That having been said, the question raised by grounds 3 and 4 is not whether mediation is important in the litigious process overall but as to the role disclosure of the audiotapes would play in this particular action in facilitating mediation and a settlement. It may well be, as the first instance judge noted, that disclosure was 'important' for the purposes of mediation. But it does not necessarily follow that disclosure of the tapes at an interlocutory stage was necessary in the interests of justice, in the sense of being really and substantially needed in order to provide the plaintiff (respondent) with an effective remedy for the wrongs of which he complains. Mediation is itself a flexible process and can be pursued in

numerous ways and according to different protocols, including specific orders to preserve confidentiality. I am not aware of any evidence linking the process of mediation with the provision to or for the plaintiff (respondent) of an effective remedy. Nor, as I understand it, was the form of a possible mediation process addressed. In those circumstances it is difficult to see how the importance of mediation could be regarded as a necessary, rather than a convenient, consideration justifying dispensing with the newspaper rule.

6 My agreement with Buss JA that grounds 3 and 4 have been made out has to be understood accordingly. It should not be seen as questioning or detracting from the critical importance of mediation in the modern case management process.

8 BUSS JA: This is an appeal against the decision of Newnes J to order the appellants to produce for inspection by the respondent two audiotapes of telephone conversations between the third appellant and an unnamed person, the first conversation occurring on 16 December 2005 and the second on 20 December 2005.

9 The appeal raises for consideration the nature, scope and application of the so-called 'newspaper rule'; that is, the rule of practice at common law that a court will not order a media proprietor or its journalists to disclose the identity of a confidential source of information in a defamation or related action, at least at the interlocutory stage, unless disclosure is necessary in the interests of justice or other special circumstances exist.

10 The appeal is interlocutory in character and in consequence the appellants require leave to appeal. See s 60(1)(f) of the Supreme Court Act 1935 (WA). On 25 November 2008, Pullin JA ordered that the application for leave be heard together with the appeal.

11 The appellants are the defendants and the respondent is the plaintiff in pending proceedings in the Supreme Court: CIV 2491 of 2005. The first appellant is, and was at all material times, the proprietor and publisher of a daily newspaper, The West Australian, which is and was at all material times published in and circulated generally throughout Western Australia. The second and third appellants are, and were at all material times, journalists employed by the first appellant.

12 It is convenient to review the pleadings in the pending proceedings before turning to the issues in the appeal.

13 In his further re-amended statement of claim dated September 2008 (statement of claim), the respondent alleges that he is, and was at all material times, the owner and entitled to possession of five used thermal facsimile rolls (the facsimile rolls) upon which were imprinted images of documents received and printed from a private facsimile machine owned and maintained by him at his private residence (par 1). It is alleged that the facsimile rolls contained, amongst other things, thermal images of a seven-page memorandum dated 11 November 2005 from Robert Nelson to the respondent (Nelson memorandum) (par 1).

14 The respondent pleads a cause of action for conversion, as follows:

(a) On or about 1 or 2 December 2005, the facsimile rolls were removed:

(i) from his residence at 10 Warnham Road, Cottesloe; or

(ii) from his residence at 4 Hawkstone Street, Cottesloe; or

(iii) in the course of transit between those addresses (par 4).

(b) On 17 December 2005, the first appellant published an article in The West Australian which referred in detail to some of the documents taken from the respondent including, in particular, the Nelson memorandum (par 5).

(c) The article in question was written by the second and third appellants (par 6).

(i) obtained the facsimile rolls without the consent, permission or authorisation of the respondent;

(ii) despite request, have refused to return the rolls;

(iii) by accessing the rolls and creating copies of the documents from the facsimile images, have dealt with the rolls in a manner inconsistent with the respondent's ownership and rights, and have thereby converted the rolls to the appellants' own use; and

(iv) by converting the rolls and creating copies of and publishing the documents, have dealt with them in a manner inconsistent with the respondent's ownership and rights in the documents, and have thereby converted the documents to the appellants' own use (par 7).

(e) By reason of the appellants' conversion of the facsimile rolls and the documents, the respondent has suffered loss and damage (par 8).

(f) Further, and as to the question of damages only, the article was based on material contained in the documents and was defamatory of the respondent (par 9).

(g) Further, the respondent claims aggravated damages, further and alternatively, exemplary damages (par 10).

(h) Further, the appellants' conduct in converting the rolls and the documents to their own use, and in publishing the defamation, revealed a calculated decision to profit from their wrongdoing and the appellants have, by their wrongdoing, been unjustly enriched and made an unconscionable gain at the respondent's expense (par 11).

15 The respondent also pleads this cause of action for breach of confidence:

(a) The contents of the facsimile rolls and the images of the documents contained in the rolls were plainly and obviously private and confidential correspondence received by the respondent (par 12).

(b) The appellants came into possession of the facsimile rolls and the documents otherwise than from the respondent, or with his permission, consent or authorisation (par 13).

(c) The appellants, by failing to disclose to the respondent that they had obtained the facsimile rolls, knew that the respondent did not authorise the appellants' receipt or use of the rolls or the documents (par 14).

(d) The appellants were aware, before publishing the article which referred in detail to some of the documents including, in particular, the Nelson memorandum, that the publication of the documents would destroy the confidentiality of the documents (par 15).

(e) By reason of the matters referred to at [15(a) - (d)] above, upon receipt of the documents the appellants owed a duty of confidence to the respondent in respect of the facsimile rolls or alternatively the documents, the information contained in the rolls or alternatively the documents, and the use of the rolls or alternatively the documents (par 16).

(f) Further, by reason of the matters referred to at [15(a) - (d)] above, the appellants owed a duty to the respondent not to use the facsimile rolls and the information contained in the rolls contrary to the duty of confidentiality, and so as to enrich themselves (par 17).

(g) In breach of these duties, the appellants published the contents of the documents in the manner referred to at [14(b) - (d)] above (par 18).

(h) By reason of the appellants' publication, the appellants thereby enriched themselves (par 19).

16 In their re-amended defence dated 10 October 2008 (defence):

(a) The appellants deny that on or about 1 or 2 December 2005 or at any time, the facsimile rolls were removed from either of the respondent's residences or in the course of transit between the residences (par 4).

(b) The first appellant admits that it has possession of the facsimile rolls and that it made copies of the images of the documents contained in the rolls, but otherwise all of the appellants deny that:

(i) they obtained the rolls without the respondent's consent, permission or authorisation;

(ii) despite request, they have refused to return the rolls;

(iii) by accessing the rolls and creating copies of the documents, they dealt with the rolls in a manner inconsistent with the respondent's ownership and rights; and

(iv) by converting the documents and printing and publishing the documents, they dealt with them in a manner inconsistent with the respondent's ownership and rights in the documents, and thereby converted them to their own use (par 6A).

(c) The appellants do not admit that the article conveyed or was capable of conveying the defamatory imputation pleaded in the statement of claim, or any defamatory meaning of and concerning the respondent. Alternatively, if, which the appellants deny, the imputation arises, they say it is true in substance and in fact. The appellants allege that the respondent's reputation for business honesty and integrity in reputable business circles at the time of publication of the article was extremely poor. This reputation was based in part on the respondent having been the subject of a sequestration order in 1992 after the collapse of the Bond group, with personal debts of more than $500,000,000 and the respondent being notoriously a person who was convicted of serious criminal offences involving fraudulent conduct on his part, for which he served a substantial term of imprisonment (par 9).

(d) Further and alternatively, the appellants allege that if, which is denied, the pleaded defamatory imputation arises, the article amounted to fair comment on matters of public interest, namely the operations of Madagascar Oil and Lesotho Diamond Corporation and the respondent's continued involvement in those operations. The appellants give particulars of the facts on which the comment was based and plead that the substance of the comment was that the respondent's reputation is unsalvageable (par 10).

(e) The appellants deny that they came into possession of the facsimile rolls and the documents otherwise than from the respondent, or with the respondent's permission, consent or authorisation (par 14).

(f) The appellants deny that they owed a duty of confidence to the respondent. If, which the appellants deny, they owed such a duty then they deny having breached it. Alternatively, if, which the appellants deny, they owed such a duty and breached it, they allege:

(i) the publication of the article was in the public interest;

(ii) the content of the article and the documents disclosed an 'iniquity' in which there was no confidence, namely a dishonest scheme to conceal from investors and potential investors in Madagascar Oil and Lesotho Diamond Corporation the respondent's continued involvement in and management of those companies, and therefore;

(iii) nothing published by the appellants had the quality of confidence; and

(iv) if such material attracted a quality of confidence and the appellants breached it, equitable relief should be refused by reason of (i) and (ii) above (pars 17 - 19).

17 Towards the end of the hearing before this court, there was an interchange between the court and counsel for the appellants as to whether the appellants might apply for leave to further re-amend the defence to make admissions in relation to the allegations in pars 7 and 13 of the statement of claim. However, no application for leave to further re-amend was made before this court published its reasons and entered judgment in the appeal.

The application before the learned primary judge

18 On 12 March 2008, the first appellant gave discovery in the pending proceedings. It discovered, relevantly, the facsimile rolls.

19 On 13 March 2008, the third appellant gave discovery. In his list of documents, the third appellant discovered, but objected to producing for inspection, the two audiotapes of the telephone conversations. The objection to production was expressed to be based on the 'newspaper rule'.

20 Since the first and third appellants have given discovery, the appellants have produced to the respondent, for his inspection, copies of certain documents imprinted on the facsimile rolls including the Nelson memorandum. It appears that the substance of the article published in The West Australian on 17 December 2005 was based primarily on this memorandum.

21 By summons dated 25 March 2008, the respondent made application in the pending proceedings for an order that the appellants produce the two audiotapes for inspection. The learned primary judge ordered that they be produced.

22 A copy of the Nelson memorandum was handed up to the learned primary judge and this court. Counsel for the appellants, without objection from counsel for the respondent, referred this court to various passages in the memorandum. Early in the pending proceedings, the appellants gave an undertaking to the court that they would preserve the confidentiality which the respondent asserted in relation to the facsimile rolls and the documents, until trial or further order.

23 The learned primary judge noted that the appellants accepted that the audiotapes were relevant to the identity of the person who delivered the facsimile rolls into the appellants' possession. His Honour said it was therefore reasonable to infer that the audiotapes will cast some light upon the circumstances in which the appellants obtained possession of the rolls and the documents imprinted on them [47].

24 The learned primary judge recorded that there was an issue in each of the claims for conversion and breach of confidence as to whether the appellants obtained the facsimile rolls without the respondent's authority [48]. His Honour was of the view that the denials by the appellants in pars 6A and 14 of their defence of the allegations in pars 7 and 13 of the statement of claim (see [16(b), (e)] above), appear to imply a positive case that the appellants' possession was in fact obtained with the respondent's permission, consent or authorisation [48] - [49]. His Honour then noted, however, that, in the course of argument, counsel for the appellants disavowed such a case [49].

25 According to the learned primary judge, it remained the position that in respect of both the conversion and the breach of confidence causes of action, the appellants had put the respondent to proof that they obtained the facsimile rolls without his permission, consent or authorisation [50]. Also, and more significantly, there was, in respect of the claim for breach of confidence, an issue as to whether the appellants obtained the rolls in circumstances giving rise to a duty of confidence. The appellants deny in their defence that they were under any duty of confidence or that the rolls and the documents imprinted on them were obviously confidential. They do not, however, plead the circumstances in which they obtained possession. As a result, the defence puts the respondent to proof that the circumstances in which the appellants obtained the rolls gave rise to an obligation of confidence [51].

26 His Honour did not decide whether or not the 'newspaper rule' applies to causes of action for conversion and breach of confidence or whether it is limited to causes of action for defamation and related actions. He held that it was unnecessary to decide the point because he was satisfied that, if the 'newspaper rule' did apply, production of the audiotapes was necessary to do justice between the parties [54] - [55]. His Honour's reasoning towards that conclusion was as follows:

I do not accept the defendants' contention that it is not necessary in order to do justice between the parties for there to be disclosure of the defendants' source of the facsimile rolls and the information on them, because the plaintiff could prove his case on those issues by reference to the nature of the documents themselves and by giving evidence that he gave no authorisation for their possession or use by the defendants.

The audiotapes bear upon substantive matters in issue in the action upon which the plaintiff bears the onus of proof, including whether the defendants obtained the information in circumstances which imposed upon them an obligation of confidence. Currently, the particular circumstances in which the defendants came into possession of that material is apparently known (or at least best known) only to the defendants, and, as I have said, their pleading is silent on that question. The defendants are entitled to adopt that stance but I do not think that at the same time they can deny the plaintiff access to material which will cast some light on those circumstances. The audiotapes are plainly important to the plaintiff's case, and also for the purposes of a mediation which, in the normal course of events, would now be imminent in the interlocutory process. In that connection, I should note that the action is at a reasonably advanced stage, having reached the point where the pleadings are closed and discovery and inspection (save for the audiotapes) has been completed [52] - [53].

27 The learned primary judge then referred to the appellants' alternative submission that, irrespective of the 'newspaper rule', the application should be dismissed under O 26 r 11 of the Rules of the Supreme Court 1971 (WA). Order 26 r 11 provides, relevantly, that an order for inspection will not be made 'unless it is necessary either for disposing fairly of the cause or matter or for saving costs'. His Honour held that it was necessary for the fair disposal of the pending proceedings that an order for production of the audiotapes be made, for the reasons he had given in the context of deciding that production was necessary to do justice between the parties [56] - [58]. He added:

Essential elements of the plaintiff's causes of action are that the facsimile rolls were obtained by the defendants without his permission, consent or authorisation and in circumstances imposing a duty of confidentiality. Those are live issues in the case. The audiotapes are relevant to the circumstances in which the defendants obtained the facsimile rolls in their possession. The action has reached the point where the pleadings are closed and discovery has been given. It is appropriate in the interests of justice that the plaintiff now be able to inspect the audiotapes [58].

1. His Honour erred in concluding (paragraph 54 of His Honour's judgement) that the disclosure at this stage of the proceedings of the audiotapes the subject of the plaintiff's application was necessary to do justice between the parties.
2. In determining that disclosure, at this stage of the proceedings, of the audiotapes was necessary in the interests of justice, His Honour, although stating the correct test, decided the issue on the basis that the production of the tapes was:

(a) 'important' for the plaintiff's case, and

(b) 'important' for the purposes of mediation,

(paragraph 53) and thereby erred in applying a test of whether production was desirable, not whether production was necessary at that stage of [the] proceedings.

1. His Honour erred in holding that in determining whether production was necessary to do justice between the parties, it was relevant to consider whether an order for production might facilitate settlement of the proceedings. The newspaper rule exists for the purpose of the free flow of information by protection of journalists' sources, and is only set aside on the ground of demonstrated necessity to do justice between the parties at the time of the order for production. The fact that disclosure of a journalist's source might assist in the settlement of litigation is irrelevant to whether disclosure is necessary to do justice between the parties, and to hold that the possible facilitation of settlement by disclosure of a source is a relevant matter is to seriously undermine the rule.
2. His Honour erred in holding that the production of the audiotapes was 'important' for the purposes of mediation. There was no evidence before His Honour upon which he could conclude that the identification of the source would facilitate settlement of the proceedings.
3. His Honour erred in ordering production of the audio recordings, having regard to:

(a) the manifest importance of the exposure of the scheme proposed in the facsimile from Robert Nelson to the plaintiff; and

(b) the fact that the production of the audio recordings was not necessary for the plaintiff to prove that the information said to be confidential to the plaintiff was imparted in circumstances importing an obligation of confidence.

The assumption that the 'newspaper rule' applies

29 As I have mentioned, the learned primary judge expressly assumed, without deciding, that the 'newspaper rule' applied to the causes of action pleaded in the statement of claim.

30 The grounds of appeal do not squarely raise the issue of whether or not the 'newspaper rule' applies to the causes of action in question, although the rationale for the rule is mentioned in ground 3.

31 The respondent has not filed a notice of contention to the effect that the learned primary judge's decision should be supported on the ground that the 'newspaper rule' does not apply.

32 In these circumstances, this court informed the parties at the commencement of the hearing of the appeal that it would also proceed on the assumption made by the learned primary judge.

The respondent's submissions on the grounds of appeal

33 As to grounds 1, 2 and 3 of the appeal, counsel for the respondent submitted that disclosure of the identity of the third appellant's source is necessary for the respondent to establish his alleged causes of action for conversion and breach of confidence. Counsel asserted that if the audiotapes are not produced for inspection, the respondent will be without an effective remedy.

34 According to counsel for the respondent, the identity of the source is relevant, and disclosure is necessary, for the respondent to be able to satisfy the burden on him to prove, on the balance of probabilities, all of the essential elements of the causes of action. In particular, it was submitted that:

(a) without disclosure of the identity of the source, the respondent cannot ascertain whether or not the facsimile rolls, and the images of the documents contained in the rolls, had lost their quality of confidence when they were obtained by the source;

(b) an objective test must be applied to determine whether the circumstances of communication were confidential. If the audiotapes are not produced for inspection, the respondent will be unable to prove the circumstances of receipt by the appellants of the information. It is against these circumstances that the objective test must be applied.

35 As to ground 4 of the appeal, counsel for the respondent submitted that the learned primary judge's observations at [53] to the effect that it was important, for the purposes of a mediation and in order to facilitate settlement at mediation, that the audiotapes be produced for inspection now, appear to have been made in the context of a more general observation as to the importance and necessity of that step occurring at the then current interlocutory stage in order to achieve what counsel described as 'legitimate case management outcomes for the disposal of the proceedings'.

36 It was argued that if the learned primary judge erred in taking into account mediation in determining to order that the audiotapes be produced for inspection at the then current interlocutory stage, the balance of his Honour's reasoning in finding that it was necessary to produce the audiotapes now in order to do justice between the parties was sound, and unaffected by error.

37 As to ground 5 of the appeal, counsel for the respondent referred to the learned primary judge's reasons at [23] and [25] and submitted that his Honour, in determining what was necessary to do justice between the parties, took into account the issues in dispute in the proceedings.

38 According to counsel for the respondent, the circumstances in which confidential information is communicated will dictate the purpose for which the communication is made. This will, in turn, determine the scope of the recipient's duty. The receipt of confidential information, in circumstances of confidence, establishes a duty not to use the information beyond the scope of the purpose for which it is conveyed.

39 Counsel for the respondent submitted that the issues raised by ground 5 may be appropriate to the ultimate disposition of the proceeding at trial, but do not assist in the determination of this appeal.

40 Conversion is a common law action in tort which imposes strict liability for a wrongful interference with the right to possession of a chattel. A person may sue for conversion if he or she had either actual possession or an immediate legal right to possession of the chattel at the time of conversion. Proof of ownership is unnecessary. There must be an intentional dealing with the chattel and the dealing must impair the plaintiff's rights to or in respect of the chattel. It is unnecessary, however, to prove that the defendant intended to impair the plaintiff's rights. See, generally, Penfolds Wines Pty Ltd v Elliott [1946] HCA 46; (1946) 74 CLR 204, 229; Rendell v Associated Finance Pty Ltd [1957] VicRp 88; [1957] VR 604, 612 - 613; Brybay Pty Ltd (in liq) v Esanda Finance Corporation Ltd [2002] WASC 309 [14] - [35].

41 The essential elements of an action in equity for breach of confidence are that the information was of a confidential nature, it was communicated in circumstances importing an obligation of confidence, and there was an unauthorised use of the information. See Coco v AN Clark (Engineers) Ltd [1969] RPC 41, 46 - 47; American Cyanamid Co v Alcoa of Australia Ltd [1993] FCA 490; (1993) 27 IPR 16, 19.

42 A duty of confidence arises whenever a person receives information he or she knows or ought to know is fairly and reasonably to be regarded as confidential. See Attorney-General v Guardian Newspapers Ltd (No 2) [1990] 1 AC 109, 281; Campbell v MGN Ltd [2004] UKHL 22; [2004] 2 AC 457 [14].

43 Information will not be confidential unless it has the necessary quality of confidence about it. If information is public or common knowledge or is generally available to the public, it cannot be confidential irrespective of the circumstances in which it was conveyed. See Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) [1987] FCA 266; (1987) 14 FCR 434, 443; Snell v Pryce [1990] NTSC 2; (1990) 99 FLR 213, 217 - 218.

44 The general law does not protect confidences about the commission of crimes and frauds. See A v Hayden [1984] HCA 67; (1984) 156 CLR 532, 556, 571 - 574, 595 - 596. Also, the disclosure of an 'iniquity' will not be restrained as the subject matter of an obligation of confidence. See Minister for Immigration and Citizenship v Kumar [2009] HCA 10; (2009) 83 ALJR 539 [26]; Hayden, 544 - 547; Corrs Pavey Whiting & Byrne, 454 - 456; Attorney-General v Guardian Newspapers, 282 - 283.

The nature, scope and application of the 'newspaper rule'

45 As I have mentioned, the 'newspaper rule' is a rule of practice at common law whereby a court will not order a media proprietor or its journalists to disclose the identity of a confidential source of information in a defamation or related action, at least at the interlocutory stage, unless disclosure is necessary in the interests of justice or other special circumstances exist. It is not a rule of law or evidence. Rather, it is a limited exception to the general principle that cases are to be tried by courts on the relevant and admissible evidence, and the media and journalists have no public interest immunity in relation to the identity of their sources of information. At common law, no witness has an absolute privilege against answering a relevant question solely on the ground that his or her answer may reveal a confidential source.

46 The origin of the 'newspaper rule', the uncertainty associated with it, and the rationale ultimately provided for its existence after its initial recognition in Hennessy v Wright (No 2) (1890) 24 QBD 445, 449, are discussed in Kerrisk v The North Queensland Newspaper Co Ltd [1992] 2 Qd R 398, 401 - 403, 407 - 408, 415 - 416. The rule had its origin in the practice of the English common law courts in defamation actions of refusing to order production and inspection of documents and of refusing to order a defendant to disclose his or her source of information at the interlocutory stage, unless there were special circumstances which justified the making of such an order. See John Fairfax & Sons Ltd v Cojuangco [1988] HCA 54; (1988) 165 CLR 346, 351 - 352.

47 In McGuinness v Attorney-General (Vic) [1940] HCA 6; (1940) 63 CLR 73, the editor of a newspaper refused to disclose to a Royal Commission the source of information for an article which appeared in his newspaper and alleged that members of the Parliament of Victoria had received bribes. The editor claimed that his refusal to state the source of his information had a good legal foundation. He asserted that at the trial of an action he could not be compelled to disclose his source and that he did not refuse, without lawful excuse, to give an answer to the Commission.

No one doubts that editors and journalists are at times made the repositories of special confidences which, from motives of interest as well as of honour, they would preserve from public disclosure, if it were possible. But the law was faced at a comparatively early stage of the growth of the rules of evidence with the question how to resolve the inevitable conflict between the necessity of discovering the truth in the interests of justice on the one hand, and on the other the obligation of secrecy or confidence which an individual called upon to testify may in good faith have undertaken to a party or other person. Except in a few relations where paramount considerations of general policy appeared to require that there should be a special privilege, such as husband and wife, attorney and client, communications between jurors, the counsels of the Crown and State secrets, and, by statute, physician and patient and priest and penitent, an inflexible rule was established that no obligation of honour, no duties of non-disclosure arising from the nature of a pursuit or calling, could stand in the way of the imperative necessity of revealing the truth in the witness box. Claims have been made from time to time for the protection of confidences to trustees, agents, bankers and clerks, amongst others, and they have all been rejected (102 - 103). (emphasis added)

49 His Honour then examined the foundation and nature of the 'newspaper rule' as a rule of practice:

By a long line of cases a practice is recognised of refusing to compel such a defendant to disclose the name of the writer of an article complained of as a libel or of the sources of information he has relied upon. The foundation of the rule is the special position of those publishing and conducting newspapers, who accept responsibility for and are liable in respect of the matter contained in their journals, and the desirability of protecting those who contribute to their columns from the consequences of unnecessary disclosure of their identity. The cases are collected in Lyle-Samuel v Odhams Ltd ((1920) 1 KB 135) and South Suburban Co-operative Society Ltd v Orum ((1937) 2 KB 690), which are the latest authorities upon the application of the rule. The appellant stands upon these decisions and says that they disclose a development which, in reason and logic, should not stop at discovery, but should supply a general justification for withholding the names of contributors and the sources of information at all stages of any legal proceeding. The answer is that it is not a rule of evidence but a practice of refusing in an action of libel against the publisher, etc., of a newspaper to compel discovery of the name of his informants. It 'rests not on a principle of privilege, but on the limitations of discovery,' to quote the comment of Professor Wigmore, who expresses himself somewhat strongly against the pretensions to a privilege on the part of journalists (Treatise on Evidence, 2nd ed, vol 5, sec 2286, n 7) (104 - 105). (emphasis added)

50 Dixon J and the other members of the High Court held that the existence of the 'newspaper rule' and the rationale for its existence did not form any ground for holding that a lawful excuse existed for the editor's refusal to answer as to his sources of information.

51 In Cojuangco, the respondent applied to the Supreme Court of New South Wales under pt 3, r 1(1) of the Rules of the Supreme Court 1970 (NSW) for preliminary (or pre-action) discovery of documents that would reveal the identity of sources of information upon which an article published by the appellant in a newspaper had been based. The article included the sentence 'One of the leading local US banks maintains that of the Philippines' US$26 billion foreign debt, the President and "cronies" like coconut King Eduardo Cojuangco, and sugar baron Roberto Bendicto, not to mention the First Lady, have totally squandered US$9 billion of it'.

52 The appellant opposed the making of an order for preliminary discovery. First, it contended that the respondent had 'an effective remedy' in damages against it and, in consequence, discretionary considerations militated in favour of refusing to make the order. Secondly, the appellant asserted that the application should be dismissed on the basis of the 'newspaper rule'.

53 The primary judge decided that because the appellant might plead and succeed on a defence of qualified privilege under s 22 of the Defamation Act 1974 (NSW), a defence not available to the persons whose identity was in question, the interests of justice required the making of an order for preliminary discovery. The appellant's appeals to the Court of Appeal of New South Wales and the High Court were dismissed.

54 Mason CJ, Wilson, Deane, Toohey and Gaudron JJ reiterated the fundamental principle that the media and journalists have no public interest immunity from being required to disclose the identity of a source of information when the disclosure is necessary in the interests of justice (354). Their Honours analysed the competing public policy considerations, in the context of the defamatory material in the article, as follows:

The point is that there is a paramount interest in the administration of justice which requires that cases be tried by courts on the relevant and admissible evidence. This paramount public interest yields only to a superior public interest, such as the public interest in the national security. The role of the media in collecting and disseminating information to the public does not give rise to a public interest which can be allowed to prevail over the public interest of a litigant in securing a trial of his action on the basis of the relevant and admissible evidence. No doubt the free flow of information is a vital ingredient in the investigative journalism which is such an important feature of our society. Information is more readily supplied to journalists when they undertake to preserve confidentiality in relation to their sources of information. It stands to reason that the free flow of information would be reinforced, to some extent at least, if the courts were to confer absolute protection on that confidentiality. But this would set such a high value on a free press and on freedom of information as to leave the individual without an effective remedy in respect of defamatory imputations published in the media (354). (emphasis added)

55 Their Honours referred to Dixon J's explanation of the nature and effect of the 'newspaper rule' in McGuinness (which they described as 'authoritative' (355)), and noted that two factors of importance emerge from his Honour's comments:

First, the rule is one of practice, not of evidence. Secondly, although the rule rests on a recognition of the public interest in the free flow of information, the law gives effect to that recognition of the public interest by exercising a discretion to refuse to order disclosure of sources of information in interlocutory proceedings in defamation and, perhaps, other analogous actions, even though disclosure would be relevant to the issues for trial in the action. The law does not protect that public interest to the extent of conferring an immunity on the media from disclosure of its sources (356). (emphasis added)

56 The High Court in Cojuangco observed that although the courts have refused to accord absolute protection to the confidentiality of the identity of a media proprietor's or journalist's confidential source of information, the 'newspaper rule' nevertheless imposes some restraints on the right of a litigant to compel disclosure of the identity of the source (354). Their Honours explained these restraints, as follows:

In effect, the courts have acted according to the principle that disclosure of the source will not be required unless it is necessary in the interests of justice. So, generally speaking, disclosure will not be compelled at an interlocutory stage of a defamation or related action and even at the trial the court will not compel disclosure unless it is necessary to do justice between the parties (354 - 355). (emphasis added)

Their Honours added that the liability of a media proprietor and its journalists to disclose confidential sources of information in the interests of justice is in itself 'a valuable sanction' which will encourage media proprietors and their journalists to exercise their powers with a proper sense of responsibility and in the knowledge that any abuse of power is capable of causing detriment to an individual (355). If media proprietors and their journalists had an immunity from the disclosure of confidential sources of information, the immunity would enable an irresponsible media proprietor or journalist to hide behind anonymous (or, in some cases, fictitious) sources (355).

57 Mason CJ, Wilson, Deane, Toohey and Gaudron JJ then noted that the 'newspaper rule' (being no more than a rule of practice and not a rule of law or evidence) merely 'guides or informs the exercise of the judicial discretion in interlocutory proceedings in defamation (and related) actions' (356). However, equally, 'special circumstances' may justify the making of an order compelling disclosure (356). The law gives effect to the public policy consideration underlying the 'newspaper rule' (namely, the public interest in the free flow of information) by conferring on the court a discretion to refuse to order disclosure of a confidential source of information at the interlocutory stage of defamation (and related) actions, notwithstanding the relevance of the identity of the source to the issues to be tried in the proceedings (356).

58 The 'newspaper rule' does not apply directly to proceedings for preliminary (or pre-action) discovery. It does, however, apply by analogy.

59 Mason CJ, Wilson, Deane, Toohey and Gaudron JJ held that the policy considerations which underpin the 'newspaper rule' are undoubtedly factors to be taken into account by a court in the exercise of its discretion to make an order for preliminary (or pre-action) discovery. Otherwise, the making of an order for preliminary discovery would undermine the application of the rule at the interlocutory stage of defamation (and related) actions (357). An applicant for preliminary discovery (at least under pt 3, r 1(1) of the Rules of the Supreme Court (NSW)) must establish that the making of the order is 'necessary in the interests of justice'; that is, the order is necessary to provide the applicant with 'an effective remedy' in respect of the actionable wrong he or she alleges (357). Their Honours then said:

Where an applicant complains of a defamatory publication in a newspaper a court will refuse an order for preliminary discovery if it appears that the applicant has an effective remedy against the newspaper or journalist without the necessity for making such an order. But where, as here, it appears that the newspaper and the journalist may well plead statutory qualified privilege under s 22 of the Defamation Act, a judge is entitled to exercise his judicial discretion in favour of making the order sought if the newspaper and the journalist do not relinquish that defence and the judge considers that the defence might well prevail. In this respect we agree with Mahoney JA that Hunt J's reference to 'the likelihood of a successful defence' was susceptible of misunderstanding but that in its context the reference should be read as a statement that the defence was open to be pleaded and might well succeed. So understood, his Honour's statement was in our opinion correct (357). (emphasis added)

60 A number of propositions of importance emerge from McGuinness, the joint reasons in Cojuangco and later decisions.

61 First, the 'newspaper rule' exists for the protection or advancement of the public interest, and not the private interests of media proprietors or journalists. See Herald & Weekly Times Ltd v Guide Dog Owners' and Friends' Association [1990] VicRp 40; [1990] VR 451, 461.

62 Secondly, the rule only applies to the identity of the confidential source of information, and not to the information provided by the source to the media proprietor or its journalists. See Thiess v TCN Channel Nine Pty Ltd (No 1) [1991] 2 Qd R 715, 719.

63 Thirdly, the rule only applies in the context of a 'defamation or related action' or proceedings for 'defamation and, perhaps, other analogous actions': Cojuangco (354, 356). Compare British Steel Corporation v Granada Television Ltd [1981] AC 1096, where the majority of the House of Lords held that the rule was confined to defamation actions and did not extend to actions for breach of confidence (1173, 1181, 1197, 1203).

64 Fourthly, the court exercises a judicial discretion in deciding at an interlocutory stage of defamation and related actions whether to make or refuse an order which will, directly or indirectly, disclose the identity of a confidential source. See Cojuangco (356).

65 Fifthly, although it may be 'convenient' in the conduct of litigation for a party to the litigation to be informed, through the processes of discovery and inspection of relevant documents and the administration of interrogatories, of the identity of a confidential source, mere 'convenience' is not a sufficient reason, at the interlocutory stage, to dispense with the rule. See Hodder v Queensland Newspapers Pty Ltd [1994] 1 Qd R 49, 57 - 58.

66 Sixthly, the mere relevance in pending proceedings of the identity of a confidential source to a fact in issue is not a sufficient reason, at the interlocutory stage, to dispense with the rule. See Lew v The Herald & Weekly Times Ltd [1999] VSC 2; [1999] 1 VR 313 [34].

67 Seventhly, at the interlocutory stage of pending proceedings, disclosure of the identity of a confidential source, by means of discovery and inspection or interrogatories, will not be compelled unless it is 'necessary in the interests of justice' or other 'special circumstances' exist. See McGuinness (102 - 105); Cojuangco (354 - 355); Hodder (57 - 58).

68 Eighthly, although the rule only arises, strictly speaking, in pending proceedings, it may also arise, in an analogous form, in an application for preliminary (or pre-action) discovery. This was, of course, the position in Cojuangco. See O 26A of the Rules of the Supreme Court (WA) in relation to applications for discovery from non-parties and potential parties.

69 These propositions raise at least three issues which require analysis:

(a) What is the meaning of the expression 'necessary in the interests of justice'?

(b) What factors are to be taken into account in determining whether, in the court's discretion, it is 'necessary in the interests of justice' to dispense with the 'newspaper rule'?

(c) What is the relevance and significance of a plaintiff being left without 'an effective remedy' if the 'newspaper rule' is not dispensed with?

70 My analysis of these issues will be confined to the direct application of the 'newspaper rule' at the interlocutory stage of pending proceedings between the applicant for disclosure and the media proprietor or journalist in question.

The meaning of the expression 'necessary in the interests of justice': the United Kingdom statutory provision

71 In the United Kingdom, the 'newspaper rule' has been superseded by a statutory provision which confers a privilege against disclosure of the identity of a confidential source. The provision is embodied in s 10 of the Contempt of Court Act 1981 (UK), which provides:

No court may require a person to disclose, nor is any person guilty of contempt of court for refusing to disclose, the source of information contained in a publication for which he is responsible, unless it be established to the satisfaction of the court that disclosure is necessary in the interests of justice or national security or for the prevention of disorder or crime. (emphasis added)

72 Although there are significant differences between the nature and status of the 'newspaper rule' at common law and the statutory privilege under s 10 of the Contempt of Court Act, it is, nevertheless, useful to review the approach of the House of Lords to the construction, scope and application of the expression 'necessary in the interests of justice' in s 10.

73 In X Ltd v Morgan-Grampian (Publishers) Ltd [1991] 1 AC 1, the primary judge, Hoffmann J, ordered Mr Goodwin, a young journalist, to disclose the notes of a conversation which he had had with an anonymous informant, in the course of which he had been given highly confidential information contained in the plaintiffs' business plan. A copy of the business plan had been wrongfully removed from the plaintiffs' premises. Mr Goodwin had promised his informant that he would not reveal the informant's identity. Hoffmann J inferred from the evidence that the information was stolen and that Mr Goodwin's source was either the thief or someone who had been in contact with the thief. The plaintiffs thought that discovery of Mr Goodwin's notes would reveal the identity of his source and thereby enable the plaintiffs to recover the missing copy of their business plan and to obtain injunctive relief against any unauthorised person who had seen its contents. The Court of Appeal dismissed an appeal from Hoffmann J's decision and the House of Lords affirmed the decision of the Court of Appeal in part. The point on which the House of Lords reversed the Court of Appeal is not relevant, for present purposes.

74 The proceedings in Morgan-Grampian were not governed by the common law, but by s 10 of the Contempt of Court Act. The statutory privilege embodied in s 10 operates unless the party seeking disclosure can satisfy the court that 'disclosure is necessary', relevantly, 'in the interests of justice'. At common law, the court has a discretionary power to dispense with the 'newspaper rule'. By contrast, as Lord Oliver of Aylmerton (Lord Templeman & Lord Griffiths agreeing) noted in Morgan-Grampian:

When the section says that the court 'may' not order disclosure, it is positing the very reverse of the discretion [at common law]. It means that the court must not, is not permitted, to make such an order unless certain conditions are fulfilled (51).

75 In Morgan-Grampian, 43, Lord Bridge of Harwich (Lord Templeman, Lord Griffiths, Lord Oliver & Lord Lowry agreeing) referred to this dictum of Lord Diplock in Secretary of State for Defence v Guardian Newspaper Ltd [1985] AC 339, in which his Lordship discussed s 10 generally:

The exceptions include no reference to 'the public interest' generally and I would add that in my view the expression 'justice', the interests of which are entitled to protection, is not used in a general sense as the antonym of 'injustice' but in the technical sense of the administration of justice in the course of legal proceedings in a court of law, or, by reason of the extended definition of 'court' in section 19 of the 1981 Act before a tribunal or body exercising the judicial power of the state (350).

76 Lord Bridge agreed with Lord Diplock that to construe 'justice' as the antonym of 'injustice' in s 10 would be 'far too wide' (43). But Lord Bridge said that to confine it to 'the technical sense of the administration of justice in the course of legal proceedings in a court of law' was too narrow. His Lordship explained:

It is, in my opinion, 'in the interests of justice', in the sense in which this phrase is used in section 10, that persons should be enabled to exercise important legal rights and to protect themselves from serious legal wrongs whether or not resort to legal proceedings in a court of law will be necessary to attain these objectives. Thus, to take a very obvious example, if an employer of a large staff is suffering grave damage from the activities of an unidentified disloyal servant, it is undoubtedly in the interests of justice that he should be able to identify him in order to terminate his contract of employment, notwithstanding that no legal proceedings may be necessary to achieve that end (43).

77 Lord Bridge observed that his construction of the phrase 'in the interests of justice' emphasised the importance of the balancing exercise which the court was required to perform. It was necessary for the court to commence with three assumptions. First, the protection of sources is a matter of high public importance. Secondly, nothing less than necessity will be sufficient to override it. Thirdly, the necessity must be based on another matter of high public importance, namely the interests of justice (41). His Lordship then said in relation to the balancing exercise:

It will not be sufficient, per se, for a party seeking disclosure of a source protected by section 10 to show merely that he will be unable without disclosure to exercise the legal right or avert the threatened legal wrong on which he bases his claim in order to establish the necessity of disclosure. The judge's task will always be to weigh in the scales the importance of enabling the ends of justice to be attained in the circumstances of the particular case on the one hand against the importance of protecting the source on the other hand. In this balancing exercise it is only if the judge is satisfied that disclosure in the interests of justice is of such preponderating importance as to override the statutory privilege against disclosure that the threshold of necessity will be reached (43 - 44).

78 Lord Bridge, while not attempting to give comprehensive guidance as to how the balancing exercise should be performed, indicated the kind of factors which will require consideration:

In estimating the importance to be given to the case in favour of disclosure there will be a wide spectrum within which the particular case must be located. If the party seeking disclosure shows, for example, that his very livelihood depends on it, this will put the case near one end of the spectrum. If he shows no more than that what he seeks to protect is a minor interest in property, this will put the case at or near the other end. On the other side the importance of protecting a source from disclosure in pursuance of the policy underlying the statute will also vary within a wide spectrum. One important factor will be the nature of the information obtained from the source. The greater the legitimate public interest in the information which the source has given to the publisher or intended publisher, the greater will be the importance of protecting the source. But another and perhaps more significant factor which will very much affect the importance of protecting the source will be the manner in which the information was itself obtained by the source. If it appears to the court that the information was obtained legitimately this will enhance the importance of protecting the source. Conversely, if it appears that the information was obtained illegally, this will diminish the importance of protecting the source unless, of course, this factor is counterbalanced by a clear public interest in publication of the information, as in the classic case where the source has acted for the purpose of exposing iniquity. I draw attention to these considerations by way of illustration only and I emphasise once again that they are in no way intended to be read as a code (44).

79 In Re An Inquiry under the Company Securities (Insider Dealing) Act 1985 [1988] AC 660, the House of Lords held that 'necessary' in s 10 of the Contempt of Court Act is not an absolute concept. It is a relative concept and involves a value judgment. Lord Griffiths suggested that 'necessary' in s 10 has a meaning that lies somewhere between 'indispensible' on the one hand, and 'useful' or 'expedient' on the other, and that it was for the judge to decide towards which end of the scale of meaning he or she will place it on the facts of any particular case (704). His Lordship suggested that the nearest paraphrase is 'really needed' (704). See also Morgan-Grampian (42 - 43, 53).

80 In Morgan-Grampian, Lord Oliver said that the sense of s 10 was this:

The court is not permitted to require the disclosure of a journalistic source unless it is satisfied that one or more of the four enumerated considerations (ie the interests of justice, etc) are of such preponderating importance in the individual case that the ban on disclosure imposed by the opening words of the section really needs to be overridden (53).

The meaning of the expression 'necessary in the interests of justice': the Australian common law relating to the 'newspaper rule'

81 The word 'necessary' and the phrase 'in the interests of justice', in the context of the common law relating to the 'newspaper rule', form the composite expression 'necessary in the interests of justice'. It is, of course, the composite expression which must be construed, but its individual components (that is, 'necessary' and 'in the interests of justice') take colour from their mutual association. The process of construction must be undertaken against the background of 'the dynamic tension between the competing public interests' (Hodder, 56) underpinning the 'newspaper rule' on the one hand, and the power of the court to dispense with the rule in special circumstances on the other.

82 The established qualification to the 'newspaper rule', namely that the rule will be overridden if overriding it is necessary in the interests of justice, is the prime example of the more general qualification to the rule, namely the existence of special circumstances.

83 As Fitzgerald P noted in Hodder, there are few reported cases in which special circumstances have been found to exist (54). His Honour mentioned Thiess and Kerrisk as examples (54). See also Langley v The Age Company Ltd [2001] VSC 370.

84 In McGuinness, Dixon J referred to 'the necessity of discovering the truth in the interests of justice' (emphasis added), and the inevitable conflict between that fundamental principle and the obligation of secrecy or confidence which a newspaper proprietor or journalist may in good faith have undertaken to a source of information (102). His Honour also referred to the 'newspaper rule' operating to protect a newspaper proprietor or journalist from 'unnecessary disclosure' of the identity of a confidential source (104) (emphasis added).

85 The concept of 'necessity', in determining whether it is necessary in the interests of justice in any case to dispense with the 'newspaper rule', is relative and involves the making of a value judgment based on the facts and circumstances of the particular case.

86 In European Pacific Banking Corporation v Fourth Estate Publications Ltd [1993] 1 NZLR 559, Henry J said that in deciding, at the interlocutory stage of pending proceedings, whether the 'newspaper rule' should be overridden, the first real question is whether 'disclosure is necessary, in the sense that there is a compelling reason for it, to enable a proper determination of the trial issues' (567).

87 In my opinion, the court will ordinarily, in the exercise of its discretion, refuse to order the disclosure of the identity of a confidential source, at the interlocutory stage of pending proceedings, unless it is satisfied that disclosure is really needed or there is a compelling reason for disclosure, at that time, to enable the issues at the trial to be properly and fairly determined as between the parties; for example, to enable the plaintiff to establish the elements of a cause of action alleged in the proceedings, or otherwise to do justice between the parties.

The factors to be taken into account in determining whether, in the exercise of the court's discretion, it is 'necessary in the interests of justice' to dispense with the 'newspaper rule'

88 The factors to be taken into account in deciding whether, in the exercise of the court's discretion and at the interlocutory stage of pending proceedings, it is necessary in the interests of justice to require disclosure of a confidential source, will depend on the facts and circumstances of the particular case, but they will, ordinarily, include the following.

89 First, the common law's recognition in the 'newspaper rule' of the public interest in the free flow of information by the imposition of restraints on the disclosure of the identity of a media proprietor's or journalist's confidential source of information, at the interlocutory stage of defamation and related actions, notwithstanding the relevance of the identity of the source to the issues to be tried. Secondly, whether, in the particular case, the information which the source has revealed, on a confidential basis, appears to be a matter of genuine public interest, including whether the information discloses an iniquity. Thirdly, the manner in which the information was obtained, including whether it was obtained by lawful means. Fourthly, the pleadings in the pending proceedings, including the elements of the plaintiff's causes of action, any admissions by the defendant, and the apparent reasonableness or unreasonableness of any denials or non-admissions in the defence. Fifthly, whether the plaintiff is likely to experience real and substantial difficulty in proving any element of any cause of action without the disclosure of the identity of the confidential source. Sixthly, whether any difficulty in proof as a result of the non-disclosure of the identity of the source is likely materially to complicate the trial or unduly to extend its length, to involve significant expense for the plaintiff (especially an indigent plaintiff or a plaintiff with limited financial resources) or to cause significant inconvenience to a proposed witness. Seventhly, the apparent importance to the plaintiff and generally of the rights which he or she seeks to vindicate in the pending proceedings.

90 The factors I have enumerated are, of course, merely examples. They are not an exhaustive list. Plainly, different factors will be relevant, and some factors will be given greater or lesser weight, depending on the facts and circumstances of the particular case.

91 It must be emphasised, however, that the 'newspaper rule' will not be overridden unless the court is satisfied in the particular case, in the exercise of its discretion, that, at the interlocutory stage, the public policy consideration underpinning the rule is outweighed by special circumstances (invariably, disclosure of the source is really needed or there is a compelling reason for disclosure, at that time, to enable the issues at the trial to be properly and fairly determined as between the parties). See Cojuangco, 357 - 358; Hodder, 56 - 58. Compare the expression of the nature of the discretion in State Bank of South Australia v Hellaby (1992) 59 SASR 304, 313.

The relevance and significance of a plaintiff being left without 'an effective remedy' if the 'newspaper rule' is not dispensed with

92 In Cojuangco, the appellant opposed the making of an order for preliminary (or pre-action) discovery on the ground, relevantly, that the respondent had 'an effective remedy' in damages against it. Whether or not the respondent had an effective remedy against the appellant media proprietor or a journalist in respect of the defamatory publication was relevant to the necessity for making an order for preliminary discovery, which was likely to reveal the identity of the source and enable the respondent to sue the informer. That is, whether an effective remedy existed or not was a factor to be taken into account in forming the value judgment as to whether disclosure was necessary in the interests of justice and in the context of an application for preliminary discovery. The High Court held that where, as in the case before them, it appears that the media proprietor or the journalist may well plead statutory qualified privilege under s 22 of the Defamation Act, 'a judge is entitled to exercise his judicial discretion in favour of making the order sought if the newspaper and the journalist do not relinquish that defence and the judge considers that the defence might well prevail' (357).

93 The High Court in Cojuangco did not explain in detail the meaning to be ascribed to the expression 'an effective remedy'. There has been some discussion of the expression in later cases which, like Cojuangco, were concerned with applications for preliminary (or pre-action) discovery. See Guide Dog Owners' and Friends' Association, 453, 456 - 459, 463; Re Pyne [1997] 1 Qd R 326, 329 - 330; Lew, 323 - 324.

94 In my opinion, if a plaintiff in pending proceedings will be left without 'an effective remedy' against the defendant in those proceedings or there is a real (as distinct from a fanciful) prospect that the plaintiff will be left without such a remedy, unless the defendant is ordered to disclose the identity of a confidential source, then this circumstance will, ordinarily, be a powerful (if not the decisive) factor favouring the exercise of the court's discretion, at the interlocutory stage, to order disclosure.

The merits of grounds 1 and 2 of the appeal

95 It is convenient to consider grounds 1 and 2 of the appeal together.

96 The learned primary judge's decision to order the appellants to produce the audiotapes for inspection by the respondent involved the exercise of a judicial discretion. The principles of law which regulate the circumstances in which an appellate court may review a primary judge's exercise of discretion therefore apply. It is necessary for the appellants to establish an express or inferred error. See House v The King [1936] HCA 40; (1936) 55 CLR 499, 504 -505; Carroll v The Queen [2009] HCA 13; (2009) 83 ALJR 579 [7] - [8].

97 The appellants accept that the learned primary judge stated the correct test. This concession was properly made. His Honour stated the 'newspaper rule' in terms that were adapted adequately to the circumstances of the case, namely 'a newspaper proprietor and its journalists will not be required to reveal the newspaper's source of information in a defamation or related action unless that is necessary in order to do justice between the parties' [21]. He then cited Cojuangco.

98 The learned primary judge rejected the appellants' contention that it was not necessary, in order to do justice between the parties, for there to be disclosure of the third appellant's confidential source because the respondent could prove his case by reference to the nature of documents themselves and by giving evidence that he gave no authorisation for their possession or use by the appellants [52]. His Honour appears to have rejected that contention for two reasons. First, the audiotapes were 'plainly important to [the respondent's] case' [53]. Secondly, the audiotapes were 'plainly important ... for the purposes of a mediation which, in the normal course of events, would now be imminent in the interlocutory process' [53].

99 A little later, the learned primary judge elaborated upon his reasons for ordering disclosure:

In the present case, I consider it is necessary for the fair disposal of the action that an order for production of the audiotapes be made, for the reasons I have expressed above. Essential elements of the plaintiff's causes of action are that the facsimile rolls were obtained by the defendants without his permission, consent or authorisation and in circumstances imposing a duty of confidentiality. Those are live issues in the case. The audiotapes are relevant to the circumstances in which the defendants obtained the facsimile rolls in their possession. The action has reached the point where the pleadings are closed and discovery has been given. It is appropriate in the interests of justice that the plaintiff now be able to inspect the audiotapes [58].

100 As to the respondent's claim for conversion, par 6A of the defence denies the allegation in par 7 of the statement of claim that the appellants obtained the facsimile rolls without the respondent's consent, permission or authorisation. As to the respondent's claim for breach of confidence, par 14 of the defence denies the similar allegation in par 13 of the statement of claim that the appellants obtained possession of the rolls and the respondent's documents otherwise than from the respondent or with his possession, consent or authorisation. The appellants have therefore put the respondent to proof that they obtained the rolls without his (express or implied) permission, consent or authorisation.

101 Further, as to the respondent's claim for breach of confidence, there is an issue on the pleadings as to whether the appellants obtained the relevant information in circumstances giving rise to a duty of confidence. In pars 17 and 18 of the defence, the appellants, relevantly, deny that they owed a duty of confidence to the respondent. The appellants then plead that if, which is denied, they owed such a duty, they did not breach it (par 19). The appellants have therefore put the respondent to proof that the circumstances in which they obtained the relevant information gave rise to a duty of confidence.

102 In my opinion, although the learned primary judge purported to apply 'the test of necessity', it is apparent, on analysis of his Honour's reasons (especially pars [52], [53] and [58]) in the circumstances of the present case, that he must, in fact, have applied a less stringent test. His Honour determined the respondent's application on the basis of his view that it would be desirable or convenient, in the interests of justice as between the parties and in the interests of the expeditious resolution of the proceedings, for the audiotapes to be produced by the appellants and inspected by the respondent.

103 In any event, it was not reasonably open to the learned primary judge to conclude that, in the circumstances of the present case, it was necessary (in the sense of disclosure being really needed or there being a compelling reason for disclosure), at the current interlocutory stage, to order production and inspection of the audiotapes (with the consequent revelation of the third appellant's source) in order to do justice between the parties. I am of that opinion for the following reasons.

104 First, counsel for the respondent did not advance any reason why the respondent could not give evidence at the trial to the effect (consistently with the allegations in the statement of claim) that he did not at any time give his consent, permission or authorisation to the appellants obtaining or being given possession of the facsimile rolls or the images of the documents contained in the rolls.

105 Secondly, the text of the Nelson memorandum (in particular, the nature of the proposed scheme disclosed by the memorandum and the advice from Mr Nelson to the respondent set out in it) could, of its own force, lead to an inference that the respondent would not, in fact, have given his consent, permission or authorisation to the appellants obtaining or being given the memorandum. The proposed scheme appears to have involved the deliberate misleading or deception of members of the public.

106 Thirdly, at the hearing before the learned primary judge, the respondent relied on an affidavit of Nicola Emma Batalin sworn 25 June 2008. This affidavit annexed an email from Kay Barrington on behalf of the respondent to his solicitors. The email sets out the respondent's answers to six questions asked of him by his solicitors, as follows:

1. Why did you retain the used facsimile rolls? (why hold 5 rolls?)

In a box in the office at 10 Warnhan [sic] Road where we were living at the time.

1. Did any of your employees or associates have access to or know of the existence of the used facsimile rolls?

1. Did you direct or permit any of your employees or associates to deal with the used facsimile rolls? Did you then authorise them to dispose of the rolls (such as then throw them out)?

1. Can you provide any possible explanation as to how the West Australian Newspaper came into possession of your used facsimile rolls?

They appear to have disappeared at the time of the move from 10 Warnhan [sic] Road to 4 Hawkstone Street.

The respondent's answer at no 5 of the email indicates that there should be no difficulty in the respondent giving evidence that he did not give his consent, permission or authorisation to the appellants obtaining or being given possession of the facsimile rolls and the documents imprinted on them.

107 Fourthly, whether or not the material in the facsimile rolls possessed the necessary quality of confidence is an objective question which is to be determined, primarily, from an examination of the material itself. No doubt, the rolls and the documents imprinted on them may be tendered in evidence at the trial through the respondent, upon his identifying them.

(a) the content of the audiotapes (including the identity of the third appellant's source) is relevant to whether or not the appellants obtained the facsimile rolls without the respondent's consent, permission or authorisation and in circumstances giving rise to a duty of confidence; and

(b) the obtaining of that evidence will be 'important' (as the learned primary judge described it) to the respondent's case and for the purposes of the mediation,

those conclusions do not address the critical issue, that is, whether an order for disclosure at the current interlocutory stage is necessary, in the relevant sense, to do justice between the parties.

109 Sixthly, although the content of the audiotapes and the identity of the third appellant's source are likely to have probative force in relation to some elements of the respondent's case, I am satisfied that production and inspection of the audiotapes is not necessary, in the relevant sense, at the current interlocutory stage. The respondent will not be left without 'an effective remedy' against the appellants in the pending proceedings if production and inspection of the audiotapes is, at least at this stage, refused.

110 Seventhly, my examination of the Nelson memorandum reveals that, on the face of it, the appellants exposed a proposed scheme which was to involve the deliberate misleading or deception of members of the public. It is, however, neither essential nor appropriate to make a finding, at this stage, on the point. It may be that evidence at the trial from the respondent (or, perhaps, Mr Nelson) may cast a different light upon the memorandum. But, at this stage, the information revealed by the third appellant's source, on a confidential basis, appears to be a matter of genuine public interest.

111 Eighthly, it is not possible, at this stage, to make a finding as to the manner in which the facsimile rolls came into the appellants' possession. However, even if they were obtained by unlawful means, that fact would not be sufficient, in the present case, either alone or in combination with other matters favourable to the respondent, to displace the 'newspaper rule' now.

112 Ninthly, although the appellants' denials, in their defence, of pars 7 and 13 of the statement of claim are, at least arguably, unreasonable, that circumstance is not sufficient, either alone or in combination with other matters favourable to the respondent, to require that the 'newspaper rule' be overridden now.

113 Tenthly, if any difficulty in proof as a result of the non-production of the audiotapes arises at the trial, the respondent may make a further application to the trial judge for their production and inspection. Any such application, if successful, is unlikely materially to complicate the trial, or unduly to extend its length, or to involve significant expense for the respondent. It may, however, require an adjournment and cause some inconvenience, but that consideration is not sufficient, either alone or in combination with other matters favourable to the respondent, to require that the 'newspaper rule' be overridden now.

114 Eleventhly, it is difficult, at this stage, to make an accurate assessment of the importance generally of the rights which the respondent seeks to vindicate in the present proceedings. I am, however, willing to assume, for present purposes, that the rights in question are important to the respondent and are, to some extent, of importance generally. These considerations are not sufficient, however, either alone or in combination with other matters favourable to the respondent, to require that the 'newspaper rule' be overridden now.

115 Grounds 1 and 2 of the appeal have been made out.

The merits of grounds 3 and 4 of the appeal

116 It is convenient to consider grounds 3 and 4 of the appeal together.

117 The learned primary judge appears to have been of the view that production and inspection of the audiotapes (and the consequent revelation of the identity of the third appellant's source) might facilitate settlement at mediation.

118 Mediation, in its broad context, is an essential and important feature in the management of contemporary litigation. Its purpose is not merely to endeavour to settle litigious disputes as soon as possible, but also to identify and confine the real issues between the parties at trial if a settlement cannot be achieved. See also O 1 r 4A of the Rules of the Supreme Court in relation to the elimination of delays and O 1 r 4B in relation to the system of case flow management.

(1) Actions, causes and matters in the Court will, to the extent that the resources of the Court permit, be managed and supervised in accordance with a system of positive case flow management with the objects of -

(a) promoting the just determination of litigation;

(b) disposing efficiently of the business of the Court;

(c) maximising the efficient use of available judicial and administrative resources; and

(d) facilitating the timely disposal of business at a cost affordable by parties.

(2) These Rules are to be construed and applied and the processes and procedures of the Court conducted so as best to ensure the attainment of the objects referred to in paragraph (1).

120 This Rule does not, in my opinion, qualify or erode the expression of the 'newspaper rule'. However, where there is evidence to the effect or on the basis of which it may be concluded that the disclosure of the identity of a confidential source is likely to be conducive to the settlement of pending proceedings at a court-ordered mediation, that factor may be taken into account in deciding whether, in the exercise of the court's discretion and at the interlocutory stage, it is necessary in the interests of justice to dispense with the rule.

121 Although the learned primary judge held that the identity of the third appellant's source was 'important for the purposes of a mediation', there was no evidence before his Honour to the effect or on the basis of which he could have found or inferred that disclosure was 'important' for this purpose.

122 Ground 4 of the appeal has been made out, but ground 3 fails.

123 It is unnecessary to deal separately with ground 5 of the appeal. I have already dealt with the substance of the ground in the course of considering grounds 1 and 2.

124 In general, an applicant for leave to appeal must demonstrate that the relevant decision was wrong or at least attended with sufficient doubt to justify the grant of leave, and that substantial injustice would occur if the decision were left unreversed. See Wilson v Metaxas [1989] WAR 285, 294. It must be emphasised, however, that these are not rigid or exhaustive requirements, and leave may be granted if, in all the circumstances, it is in the interests of justice to grant leave. See The State of Western Australia v Bond Corporation Holdings Ltd (1991) 5 WAR 40, 56 - 57.

125 I would grant leave to appeal. Grounds 1, 2 and 4 of the appeal have merit. Also, I am satisfied that a substantial injustice would occur if the appellants were ordered, in effect, to divulge the identity of the third appellant's source without that being necessary, in the relevant sense, at the current interlocutory stage. It would be inconsistent with the public policy consideration underpinning the 'newspaper rule' and would disregard the important protection which the rule confers, in appropriate circumstances and in the public interest, on the confidential source of a media proprietor or its journalists. I repeat, however, for the avoidance of doubt, that this court has proceeded on the assumption made by the learned primary judge that the 'newspaper rule' applies to the causes of action pleaded in the statement of claim. That is, this court has not decided the point. See [29] - [32] above.

126 The learned primary judge's exercise of discretion should be set aside. This court has the materials necessary to re-exercise the discretion.

127 I would allow the appeal and, for the reasons given at [102] - [114] and [117] - [121] above, I would, in the exercise of my discretion, dismiss the respondent's summons dated 25 March 2008 for an order that the appellants produce the audiotapes for inspection. No special circumstances exist which, at this stage, make it necessary to dispense with the 'newspaper rule'.