New South Wales Supreme Court CITATION : Corby v Channel Seven Sydney Pty Limited [2008] NSWSC 245 HEARING DATE(S) : 20/03/2008 JUDGMENT DATE : 26 March 2008 JURISDICTION : Common Law JUDGMENT OF : McCallum J DECISION : The Notice of Motion is dismissed. I order the defendants to pay the plaintiff's costs of the application. CATCHWORDS : COMMON LAW - application for order for security for costs - factors relevant to the exercise of discretion to order security - enforcement of an Australian judgment - whether plaintiff ordinarily resident outside NSW Constitution LEGISLATION CITED : Evidence Act 1995 Uniform Civil Procedure Rules 2005 CATEGORY : Procedural and other rulings CASES CITED : Australian Building Construction Employees and BLF v Commonwealth Trading Bank [1976] 2 NSWLR 371 Logue v Hansen Technologies Ltd [2003] FCA 81 Mercedes Pearl Esma Corby (Plaintiff) Channel Seven Sydney Pty Limited (1st Defendant) Seven Network Limited (2nd Defendant) PARTIES : Australian News Channel Pty Limited (3rd Defendant) Anna Coren (4th Defendant) Bryan Seymour (5th defendant) Jodiee Maree Power (6th defendant) FILE NUMBER(S) : SC 20086/07 COUNSEL : Mr S M Littlemore QC / Ms S T Chrysanthou (Plaintiff) Mr T E F Hughes QC/ Mr T D F Hughes (Defendants) SOLICITORS : Kalantzis Lawyers (Plaintiff) Mallesons Stephen Jaques (Defendants) - 13 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION McCALLUM J 26 MARCH 2008 20086/07 Mercedes Pearl Esma Corby v Channel Seven Sydney Ptd Ltd & 5 Ors JUDGMENT 1 HER HONOUR: By Notice of Motion filed 27 February 2008, the defendants seek security for their costs of the proceedings and an order that the proceedings be stayed until the security is given. The application is made under r 42.21 of the Uniform Civil Procedure Rules 2005. The sole basis for the application is the allegation that the plaintiff is ordinarily resident outside New South Wales. The defendants contend that the plaintiff is ordinarily resident in the Republic of Indonesia. 2 The amount of security sought is not quantified in the Notice of Motion. Mr TEF Hughes of Queen's Counsel, who appeared with Mr TDF Hughes for the defendants, indicated that the defendants do not seek security for any past costs, nor for the whole of the estimated costs of the hearing and its preparation (calculated to be $798,961) but seek a "moderate amount" to cover the contingency that the defendants, if successful in defeating the claim, will have to enforce a judgment for their costs by bringing proceedings in the Republic of Indonesia. There is no provision for reciprocal enforcement of judgments as between Australia and Indonesia. 3 The defendants sought to adduce evidence as to the process that would be likely to be required to enforce an Australian judgment for costs against the plaintiff in Indonesia and the likely costs involved in the conduct of any such proceedings. Mr Littlemore of Senior Counsel, who appeared with Ms Chrysanthou for the plaintiff, objected to that evidence on the basis that it was served too late for the plaintiff to deal with it and on the additional basis that it was "thrice-removed hearsay". I upheld the objection on the first ground. However, Mr Littlemore acknowledged that, even in the absence of such evidence, the Court would be entitled to proceed on the basis that there would be additional costs involved if the defendants had to enforce an Australian judgment for costs by taking proceedings against the plaintiff in Indonesia. 4 The plaintiff tendered a letter from the defendants' solicitor sent just over a week before the hearing of the application in which it was stated that the defendants would be prepared to accept the provision of security in an amount of $100,000. Mr Hughes indicated, however, that the letter was not intended to fix the amount that the Court may think fit to order. 5 The principal proceeding is a claim for defamation by the plaintiff against the defendants arising out of the broadcast in February last year of three stories on Channel Seven's "Today Tonight" program and one news story also broadcast on Channel Seven. The stories feature interviews with the sixth defendant, Jodie Power, who was formerly a good friend of the plaintiff. The plaintiff claims that the stories convey imputations that she is a drug smuggler and a drug dealer and poses a threat to the safety of Jodie Power. The defendants have pleaded defences of truth, contextual truth, comment and qualified privilege. The proceedings are listed for hearing with a jury for three weeks commencing on 28 April 2008. That date was allocated on 8 October 2007. Whether the plaintiff is ordinarily resident outside New South Wales 6 The primary factual question is whether the plaintiff is ordinarily resident outside New South Wales. There was a lively debate at the hearing as to that issue. The plaintiff has strong ties with both Bali and Queensland. There was no suggestion that she is ordinarily resident in New South Wales. However, Mr Littlemore submitted that s 117 of the Constitution requires r 42.21(1)(a) to be read down to mean "ordinarily resident outside Australia": Australian Building Construction Employees and BLF v Commonwealth Trading Bank [1976] 2 NSWLR 371 at 373G. Mr Hughes did not take issue with that proposition and conducted the application on the basis that the Court's power to order security was enlivened by the fact that the plaintiff is ordinarily resident in Bali and not in Queensland. 7 The plaintiff is the sister of Schapelle Corby, who became well-known in Australia when she was arrested in late 2004 in Bali after a large bag of cannabis was found in her luggage. She was charged, tried and convicted in Bali; she remains in prison there. 8 The undisputed evidence in the proceedings before me was that the plaintiff has spent most of her time in Bali since the day Schapelle Corby was arrested, and indeed had already travelled to Bali for an extended holiday prior to that day. 9 The principal evidence relied on by the defendants was the contents of two documents discovered by the plaintiff which were first provided to the solicitors for the defendants by way of inspection of discovered documents in the middle of January this year. Mr Hughes submitted that, before the defendants' solicitors received that material, there would not have been a sufficient basis for an application for security. 10 The first document is a statement made by the plaintiff to Queensland police on 13 March 2007. In that statement the plaintiff sets out the circumstances on the basis of which she believes that, following the broadcast of the matters complained of, she was lured to a public meeting by "Today Tonight" camera crews for an interview and confrontation with Jodie Power. However, that was not the purpose for which the defendants relied on that statement. Mr Hughes submitted that I should not rely on it as to the truth of those allegations. The statement was, rather, relied on by the defendants for the following statements which Mr Hughes said were in the nature of admissions; (a) the plaintiff's statement that she "currently resides" at an address in Kuta, Bali; (b) the plaintiff's statement that on 26 February 2007 she "returned to Australia" with her young son because her father had fallen extremely ill and that she had been "staying with [her] family members whilst in Australia". 11 The second discovered document relied on by the defendants in support of the application is a copy of an article that appeared in the Sunday Telegraph Magazine on 15 April 2007. It features an interview with the plaintiff which, relying on the contents of the article itself, appears to have been conducted after the publication of the matters complained of in February 2007 but before the commencement of these proceedings on 30 March 2007. The article reports many statements attributed to the plaintiff which suggest that, as a result of her sister's imprisonment in Bali, the plaintiff has made a new life in Bali and settled there with her Balinese husband and her children. 12 The defendants also relied on addresses stated at various times in documents filed in these proceedings and on the plaintiff's response to a Notice to Produce, as to which they rely both on what was produced and what was not produced. In particular, the defendants rely on an absence of the kind of financial and personal records that would have been generated if the plaintiff had been resident in Queensland during the period leading up to the hearing of the application. 13 The evidence relied on by the defendants reveals the following about the plaintiff's place of residence (much of which is drawn from a helpful summary included in the defendants' submissions). The plaintiff met her Balinese husband in 1993; they travelled for a number of years before settling on the Gold Coast in 1998. They returned to Bali in 1999 to marry and then resumed life in Australia. In 2004, they decided to take an extended holiday in Bali before their eldest child was due to start school on the Gold Coast. During that holiday, Schapelle Corby was arrested and for the following two and a half years, the plaintiff spent almost all of her time living in Bali because she wanted to be close to her sister. She and her husband lived in a house owned by a member of her husband's family and the children started going to school in Bali. 14 The plaintiff's solicitor first took instructions from her in December 2006. At that time she was heavily pregnant and had returned to Australia to have her third child. During that time the plaintiff was living at a house in Tugun, Queensland, with her brother. The house was owned by her father. 15 The plaintiff appears to have lived at Tugun for December and most of January. She gave birth to the child on 8 January 2007 and stayed in Australia long enough to obtain a passport for him. She returned to Bali on 22 January 2007. During that time, her husband and two other children remained in Bali. 16 The matters complained of were broadcast on 12, 13 and 14 February 2007. The first matter complained of includes footage of a reporter outside a house in Bali stating "here we are at Mercedes Corby's home in Bali, just a short ten minute drive from Kerobokan Prison". I understand from the parties' submissions that that is the prison at which Schapelle Corby is serving her sentence. 17 On 26 February 2007, the plaintiff returned to Australia with her infant son because her father had fallen extremely ill. It was during that stay, on 13 March 2007, that the plaintiff made the statement to Queensland police. As noted above, Mr Hughes submitted that I could not rely on that statement as to the truth of its contents, but that I should have regard to it only for the admissory statements made by the plaintiff in respect of her place of residence. With great respect to Mr Hughes, I do not think that is correct. The statement was put into evidence by the defendants, as an annexure to an affidavit sworn by the solicitor for the defendant, Mr Keegan. It contained representations made out of Court by the plaintiff in which she intentionally asserted the existence of certain facts. Those facts were, in short, that she was contacted by a man who represented to her that he had obtained extremely confidential documents from the husband of a journalist who was killed in a plane crash in Indonesia and that, although the documents would not "acquit Schapelle", they would assist her and would prove that the AFP had lied. The man arranged to meet the plaintiff at McDonalds at Nerang in Queensland to hand over the documents. When the plaintiff arrived at the arranged time, she was confronted by "Bruce Seymour Today Tonight" (the fifth defendant is Bryan Seymour, a reporter from Today Tonight) and a number of camera crews. She was followed to her car and asked whether she would take the lie detector test (a question posed in one of the matters complained of, on the premise that either she or Jodie Power is lying). She saw the sixth defendant, Jodie Power, in the car park. 18 Mr Hughes submitted that, although he relied only on the admissory statements in the police statement going to the issue of place of residence, as a matter of fairness, the whole of the statement had to be tendered. It seems to me that, the statement having been tendered for another purpose without application for an order under s 136 of the Evidence Act 1995 limiting the use to be made of it, the effect of s 60 of the Evidence Act is that the statement is in evidence for all purposes. However, since the matter was not fully argued, I have come to the view that the fairer course would be not to rely on the contents of the statement as to the truth of its contents insofar as it includes allegations about the conduct of the defendants. 19 Nonetheless, the statement does provide support for the evidence given by the plaintiff's solicitor on information and belief that the plaintiff would have stayed in Australia for longer last March if not for the conduct described in the statement. In my view, it is not inappropriate for me to have regard to the evidence for that purpose. The plaintiff returned to Bali shortly after the events the subject of her statement to police. I accept the likelihood that she would have stayed longer in Australia on that occasion, but for her perception of the conduct of the defendants described in the statement. 20 The proceedings were commenced on 30 March 2007. The address of the plaintiff stated in the Statement of Claim was the address in Tugun, which is the house the plaintiff was sharing with her brother while she was in Australia for the birth of her third child, during which time she first instructed her solicitor. 21 On 21 September 2007 the plaintiff verified her list of documents. The affidavit was sworn in Bali. The address given was the Tugun address. On 2 October 2007 the plaintiff filed an Amended Statement of Claim which also identified the address at Tugun as her address. 22 The plaintiff's solicitor gave evidence on information and belief that, in mid to late October 2007, the plaintiff "changed residential address" from the address in Tugun to an address in Loganlea. It was common ground that the plaintiff did not in fact return to Australia when that change of residential address occurred. Her belongings were moved from the address at Tugun to the address at Loganlea by her brother. The address at Loganlea is the house where the plaintiff's mother lives. 23 In January 2008, the plaintiff returned to Australia for a period coinciding with the death of her father on 17 January 2008. She returned to Bali at some stage in either January or February 2008. The defendants' application for security for costs was filed on 27 February 2008. The plaintiff returned to Australia on 9 March 2008, enrolled her two eldest children in school in Queensland and has remained in Australia since that date. Her solicitor gave evidence on information and belief that she will be in Australia "up to and including the trial commencing on 28 April 2008" and that "she has no intention of leaving Queensland in the near future or at all other than to travel to Sydney for the trial… and to attend related conferences with her legal advisors in Sydney". 24 Mr Littlemore submitted, in effect, that the defendants' emphasis on the amount of time that the plaintiff has spent living in Bali up until March of this year is misconceived, since the relevant question is whether the plaintiff is ordinarily resident outside Australia at the time of hearing of the application. He submitted that the evidence indicates that, at the present time, the plaintiff is ordinarily resident in Queensland. With great respect to Mr Littlemore, I do not think that it is appropriate for me to disregard the history of periods of residence in Bali in circumstances where the period of residence in Queensland began only eleven days before the hearing of the application. The evidence in respect of the enrolment of the plaintiff's two eldest children at a State school in Queensland indicates that they were enrolled on 10 March 2008 and were, unsurprisingly, "still currently enrolled and attending" as at 11 March 2008. In those circumstances, it is appropriate to have regard not only to the circumstances since the plaintiff's return to Australia on 9 March 2008 but to the longer history, which in my view discloses that the plaintiff is torn between Bali and Queensland. 25 In Logue v Hansen Technologies Ltd [2003] FCA 81, Weinberg J noted that the English authorities suggest the possibility for a person to have two ordinary residences, one within the jurisdiction and one outside. His Honour stated that, in such a case, the Court has power to order security for costs, but that person's connection with the jurisdiction in which the proceedings were commenced will be relevant to the exercise of the discretion. His Honour said "the closer the connection, the greater the relevance. If the claimant has an established home, and is resident, though not "ordinarily resident" in that country, security will rarely be ordered". Weinberg J expressed the view in Logue that the issue whether or not the plaintiff was ordinarily resident in Australia in that case depended heavily on his purpose for being here at the time of the application and, in particular, whether he had formed a "settled purpose" to reside in Australia. 26 It is clear enough on the evidence that, in the recent past and at least since publication of the matters complained of, the plaintiff has from time to time been ordinarily resident in Bali. In that respect, I accept the submission put by Mr TDF Hughes that it is more accurate to say that she has lived in Bali and occasionally visited Australia than the other way around. On the other hand, the plaintiff clearly has significant ties with Australia. She was born and raised in Queensland; she and her three children are all Australian citizens and her husband is an Australian resident; she is on the Australian electoral roll and is enrolled to vote in Queensland and her two eldest children are currently enrolled at a Queensland State school. Mr TDF Hughes submitted that the evidence discloses only an intention to remain in Australia up to and including the time of the trial, after which the plaintiff could easily remove the boys from school in Queensland and return to Bali. That is plainly so (the same can be said of their enrolment at schools in Bali last year), but that does not derogate from the proposition that there are indications of a settled purpose to remain in Queensland for the time being. 27 Whilst I accept Mr Littlemore's submission that the relevant time to consider where the plaintiff is ordinarily resident is the time of the hearing of the application, I have not found that issue easy to resolve having regard to the very short period of time since the plaintiff moved back to Australia. One of her motives for doing so may be the need to spend substantial periods of time here for the purpose of the trial. It is difficult to see that as a settled purpose to reside in Australia. Nonetheless, the fact that she has enrolled her children in a school in Queensland and has an established home there (living with her mother) is more indicative of a settled purpose to remain there. 28 I have come to the conclusion that, although the plaintiff has recently moved back to Queensland, the true position is that she is ordinarily resident in Bali. In Australia, she has an established home and is presently resident, though not "ordinarily resident". Accordingly, the power to order security for costs is enlivened and it is necessary to consider whether I should exercise my discretion to do so. In doing so, I am mindful of the remarks of Weinberg J in Logue at [24] that, in such a case, security will rarely be ordered. Factors relevant to the exercise of discretion 29 The purpose of the power is to secure justice between the parties. The discretion to order security is a broad discretion and the considerations relevant to its exercise are not restricted by special rules. 30 It is relevant first to consider whether the plaintiff's claim is made in good faith and is reasonably arguable. Mr Hughes QC acknowledged that it is. He submitted, conversely, that the defendants' defences are also reasonably arguable. That may be so, but for present purposes, it is the plaintiff's claim that I am concerned with. The fact that the claim is acknowledged to be reasonably arguable is a matter that weighs in favour of the plaintiff. 31 Another relevant consideration is whether the making of the order would unduly stultify the plaintiff's ability to pursue the proceedings. There was evidence from the plaintiff's solicitor, on information and belief, that if the plaintiff were required to pay $100,000 by way of security, she would be unable to continue to prosecute these proceedings. I have some hesitation in relying on evidence on information and belief in an application of this kind. Mr TDF Hughes placed considerable emphasis on the fact that the plaintiff has not sworn an affidavit herself in opposition to the defendants' present application. For my part, I find it unsurprising that she did not do so, in circumstances where it appears likely that the outcome of the proceedings will turn upon a battle as to the credibility of the plaintiff on the one hand and that of the sixth defendant on the other. In those circumstances, most experienced trial advocates would not expose their client to a pre-trial cross-examination on an ancillary application if they could possibly avoid it, and I do not think that I should draw any inference adverse to the plaintiff about the form of the evidence. 32 Nonetheless, the position remains that there is no direct sworn evidence as to the likelihood that an order for security would stultify the prosecution of her claim. I am left to assess the reliability of that contention against the other material. Mr Hughes QC relied on evidence that discloses that the plaintiff has received a substantial sum by way of payment for a book about Schapelle Corby of which the plaintiff was a co-author. Mr Littlemore relied on the evidence as to the amount of costs that the defendants have already incurred defending the proceedings, and, in effect, invited me to infer that an individual plaintiff would also incur substantial costs in preparing for such a trial. Otherwise, there was no evidence before me as to the actual means of the plaintiff other than the evidence on information and belief referred to above. 33 The plaintiff is now thirty-three years old. She gave her occupation as "home duties" in the statement to Queensland police given in March 2007. Her bank statements, tendered by the defendants, indicate that she had a healthy bank balance in March 2006 which has slowly been depleted with small, frequent withdrawals consistent with the ordinary lifestyle of a mother of young children. 34 The plaintiff's solicitor has deposed to the fact that she has incurred "tens of thousands of dollars" in legal costs and that her Counsel spent "weeks" preparing for this matter in January. 35 In the circumstances, although the evidence is not directly sworn by the plaintiff, I accept that an order for security for costs in the sum of $100,000 may well prevent the plaintiff from continuing to prosecute her claim against the defendants, particularly when the trial date is so close. 36 The most compelling discretionary consideration against granting the orders sought is the delay in bringing the application. I do not accept the submission put by Mr Littlemore that I should conclude that the application is motivated, not by fear about the costs position but by a desire on the part of the defendants opportunistically to exploit the plaintiff's personal situation of spending time in Bali to support her sister. Nonetheless, there is plain prejudice to the plaintiff as a result of the timing of this application. The proceedings have been listed for hearing since early October last year. As noted above, the plaintiff's Counsel have spent weeks preparing for the hearing, as was appropriate having regard to the breadth of material referred to in support of the defendants' defences. During that time, the plaintiff had to make an application to the Duty Judge seeking orders to compel the defendants to comply with the timetable for the preparation of the matter. 37 The unfairness of making an order for security for costs at such a late stage is demonstrable. If the order did in fact prevent the plaintiff from prosecuting her claim, it would not only preclude her from prosecuting an apparently arguable claim, it would also preclude her from ever recovering the legal costs she has already incurred. 38 The defendants submitted that the application could not reasonably have been made any earlier, since it was only in the middle of January that the two discovered documents annexed to the affidavit of Mr Keegan were provided to the defendants for inspection. I do not accept that submission. It is clear that the defendants were in possession of material disclosing that the plaintiff lived in Bali from well before the time of the publication of the matters complained of. As indicated above, the matter complained of itself includes footage of a reporter (the fifth defendant) who states that he is outside the plaintiff's "home in Bali". 39 Against the potential unfairness to the plaintiff must be weighed the prejudice to the defendant if it has to incur more costs enforcing a judgment in Bali. There was no real dispute that the corporate defendants would be well able to absorb any such additional costs. On the one hand, they should not have to absorb those costs and that is the basis for the power to order security, but against the risk that the plaintiff will be precluded by an order from prosecuting her claim, the strong financial position of the corporate defendants is another factor weighing in favour of the plaintiff. 40 I note that the amount of security sought in the most recent letter from the defendants' solicitors of $100,000 is less than the amount paid to the sixth defendant for providing the interview, which was $120,000. The sixth defendant was also provided with an indemnity against being sued for defamation, which discloses (if it were not obvious in any event) that the other publishers of the matters complained of must have contemplated the risk of being sued. Mr Hughes QC did not disagree with the proposition that the apparent appetite of the defendants for the risk of being sued for defamation was a relevant consideration in the exercise of my discretion, but contended that it was not relevant in this case because the defendants seek only a "moderate amount". In my view, if the corporate defendants were willing to pay $120,000 to obtain a story that plainly carried the risk of defaming a person who then lived in Bali, the interests of justice between the parties do not require me to give the defendants protection against the small portion of their overall costs that may be incurred in order to enforce a judgment in that place. 41 For those reasons, I decline to exercise my discretion to order the plaintiff to provide security for the defendants' costs in these proceedings. The Notice of Motion is dismissed. I order the defendants to pay the plaintiff's costs of the application. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. 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