Court of Appeal Supreme Court New South Wales Medium Neutral Citation: The Age Company Ltd & Ors v Liu [2013] NSWCA 26 Hearing dates: 20 and 21 September 2012 Decision date: 21 February 2013 Before: Bathurst CJ at [1]; Beazley JA at [107]; McColl JA at [108] Decision: 1 Grant the applicants leave to appeal in respect of Grounds 2 to 9 of the document headed "Second Further Amended Draft Notice of Appeal" which appears behind Tab 3 of the Application Book filed in connection with these proceedings. 2 Direct the applicants to file a Notice of Appeal incorporating these grounds within 7 days of the date hereof. 3 Order that the appeal be dismissed. 4 Order that leave to appeal otherwise be refused. 5 Order that the applicants pay the respondents' costs of the application for leave to appeal and the appeal. [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Catchwords: CONSTITUTIONAL LAW - implied freedom of communication on matters of government and politics - Uniform Civil Procedure Rules 2005 r 5.2 - power to order disclosure of confidential source - relevance of court's discretion to order disclosure - whether rule effectively burdens freedom - whether rule reasonably appropriate and adapted to legitimate end in manner consistent with maintenance constitutionally prescribed system of government PRACTICE AND PROCEDURE - Uniform Civil Procedure Rules 2005 r 5.2 - discretion to order preliminary discovery - whether discretion enlivened - whether reasonable inquiries made - whether unable to sufficiently ascertain the identity or whereabouts of person notwithstanding inquiries PRACTICE AND PROCEDURE - admissibility of evidence - Evidence Act 1995 s 87 - admission by a party - whether representation made by person with authority to make statements on behalf of party - whether statements constitute admission APPEAL - principles for grant of leave to appeal - decision not to admit evidence - whether decision attended by error Legislation Cited: Civil Procedure Act 2005 (NSW) s 56 Constitution Defamation Act 1974 (NSW) s 22 Defamation Act 2005 (NSW) s 30 Evidence Act 1995 (NSW) s 87 Interpretation Act 1987 (NSW) s 31 Judiciary Act 1903 (Cth) s 78A Uniform Civil Procedure Rules r 5.2, r 5.3 Cases Cited: Aid/Watch Inc v Federal Commissioner of Taxation [2010] HCA 42; (2010) 241 CLR 539 Australian Capital Television Pty Ltd v The Commonwealth [1992] HCA 45; (1992) 177 CLR 106 Be Financial Pty Limited as Trustee for Be Financial Operations Trust v DAS [2012] NSWCA 164 Coleman v Power [2004] HCA 39; (2004) 220 CLR 1 Glencore International AG v Selwyn Mines Ltd [2005] FCA 801; (2005) 223 ALR 238 Gypsy Jokers Motorcycle Club Inc v Commissioner of Police [2008] HCA 4; (2008) 234 CLR 532 Hogan v Hinch [2011] HCA 4; (2011) 243 CLR 506 Hughes Aircraft Systems International v Civil Aviation Authority (1995) 217 ALR 303 John Fairfax & Sons Pty Ltd v Cojuangco [1988] HCA 54; (1988) 165 CLR 346 Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 Lange v Australian Broadcasting Corporation [1997] HCA 25; (1997) 189 CLR 520 Levy v State of Victoria [1997] HCA 31; (1997) 189 CLR 579 Manly Council v Byrne [2004] NSWCA 123 McGuinness v Attorney-General (Vic) [1940] HCA 6; (1940) 63 CLR 73 Miller v TCN Channel Nine Pty Limited [1986] HCA 60; (1986) 161 CLR 556 Morton v Nylex Ltd [2007] NSWSC 562 Mulholland v Australian Electoral Commission [2004] HCA 41; (2004) 220 CLR 181 National Commercial Banking Company of Australia v Batty [1986] HCA 21; (1986) 160 CLR 251 Payne v Parker (1976) 1 NSWLR 191 Polkinghorne v Holland (1934) 51 CLR 143 Roach v Electoral Commission [2007] HCA 43; (2007) 233 CLR 162 Roads & Traffic Authority of NSW v Australian National Car Parks Pty Ltd [2007] NSWCA 114 Roads and Traffic Authority of NSW v Care Park Pty Limited [2012] NSWCA 35 Rowe v Electoral Commissioner [2010] HCA 46; (2010) 243 CLR 1 Seiwa Australia Pty Limited v Beard [2009] NSWCA 240; (2009) 75 NSWLR 74 Stewart v Miller (1979) 2 NSWLR 128 Sunol v Collier (No 2) [2012] NSWCA 44 St George Bank Ltd v Rabo Bank Ltd [2004] FCA 1360; (2004) 211 ALR 147 Wotton v Queensland [2012] HCA 2; (2012) 86 ALJR 246 Category: Principal judgment Parties: The Age Company Ltd (ACN 004 262 702) (First Applicant) Richard Baker (Second Applicant) Phillip Dorling (Third Applicant) Nick McKenzie (Fourth Applicant) Helen Liu (First Respondent) Attorney-General (NSW) (Second Respondent) Representation: TD Blackburn SC, ATS Dawson & LE Brown (Applicants) B McClintock SC & G Rubagotti (First Respondent) MG Sexton SC & S Free (Second Respondent) Minter Ellison (Applicants) Kennedys Lawyers (First Respondent) Crown Solicitor's Office (Second Respondent) File Number(s): 2012/67632 Publication restriction: No Decision under appeal Jurisdiction: 9111 Citation: [2012] NSWSC 12 Date of Decision: 2012-02-01 00:00:00 Before: McCallum J File Number(s): 2010/224488 Judgment 1BATHURST CJ: Preliminary By Statement of Claim filed on 3 February 2011, the respondent Ms Liu brought proceedings against three defendants named in the Statement of Claim as John Doe 1, John Doe 2 and John Doe 3 ("the sources"). Paragraph [2] of the Statement of Claim alleged that the identity of the sources was not known to Ms Liu. 2Paragraph [3] of the Statement of Claim alleged that the sources published certain material to The Age newspaper which, it was alleged, contained imputations of corrupt conduct by Ms Liu, including corrupt dealings with a Federal Labor politician, a Mr Joel Fitzgibbon. It was alleged that the sources authorised republication of the relevant material by The Age newspaper, The Sydney Morning Herald newspaper, The Canberra Times newspaper and those newspapers' associated websites. It was alleged in the Statement of Claim that Ms Liu suffered loss and damage to her character, credit and reputation as a result of such publication and republication and that the sources were liable for those damages. 3By Notice of Motion filed on 5 July 2010, Ms Liu sought orders pursuant to r 5.2(2)(a) of the Uniform Civil Procedure Rules for preliminary discovery from The Age newspaper, a Mr Richard Baker, a Mr Phillip Dorling and a Mr Nick McKenzie ("the applicants"). The latter three applicants were journalists employed by the publisher of the newspapers which published the alleged defamatory material. The orders sought were as follows: "1. An order pursuant to Rule 5.2(2)(a) of the Uniform Civil Procedure Rules that the second to fourth defendants inclusive attend the Court on such date as the Court may determine to be examined as to the following matters: (a) the identity and further description of the person or persons who provided to them or any one or more of them or to any other person on behalf of the first defendant [the proprietor of The Age ], the documents referred to in the affidavit of Elaine Quinn sworn on 2 July 2010; (b) the manner and circumstances in which the second to fourth defendants or any other person on behalf of the first defendant obtained the documents including the person or persons from whom the documents were obtained. 2. An order pursuant to UCPR 5.2(2)(b) that the defendants give discovery of the documents referred to in order 1(a) above. 3. An order that the defendants and each of them produce to the Court on the examination referred to in order 1 above all memoranda, notes, notebooks, audio recordings video recordings, diaries, draft articles, correspondence, records of interview and other documents and papers or copies thereof which relate to or record any interview, meeting, conversation or other actions with the person from whom the defendants obtained the documents referred to in order 1 above and which identify any such person or persons by name or further description." 4Following a hearing that occupied some ten days, the primary judge, in a judgment which I might respectfully say is both clear and carefully reasoned, ordered that the applicants give discovery to Ms Liu of all documents that were or had been in their possession and which related to the identity or whereabouts of the sources. 5The applicants sought leave to appeal from her Honour's judgment. The draft grounds of appeal were as follows: "1 Her Honour wrongly refused to admit into evidence certain representations made by Donald Junn in paragraphs 37 - 41, and alternatively paragraphs 40 - 41, of the affidavit of Richard Joseph Baker sworn 1 December 2010 as evidence of admissions made by the plaintiff, because her Honour held that the person through whom the alleged admissions were made, Donald Junn, was not authorised by the plaintiff to make such admissions. Further, her Honour wrongly refused to admit into evidence certain representations made by Donald Junn in paragraphs 1 - 6 of the affidavit of Donald Martin Junn sworn 22 February 2010. Her Honour should have admitted the representations on the basis that it was reasonably open to the Court to find: (a) that Donald Junn had authority to make statements on behalf of the plaintiff in relation to the matter with respect to which the representations were made, in accordance with section 87(1)(a) of the Evidence Act 1995; further and alternatively (b) that Donald Junn had authority to act for the plaintiff in the capacity of solicitor, and the representations related to a matter within the scope of his authority, in accordance with section 87(1)(a) of the Evidence Act 1995. In so rejecting those paragraphs as admissions of the plaintiff, her Honour failed to take relevant matters into account in the exercise of her discretion. 1A Her Honour erred in that she misapplied section 87(1)(a) of the Evidence Act and imposed a different and higher test than the test required by the section. 2 Her Honour erred in concluding that rule 5.2 of the Uniform Civil Procedure Rules (rule 5.2) was reasonably appropriate and adapted to serve a legitimate end in a manner which is compatible with the maintenance of the constitutionally prescribed system of representative and responsible government. Her Honour should have held that rule 5.2 was not effective to require the disclosure of the identity of persons who made communications on government or political matters because of the restraint on legislative power implied in the Constitution in relation to communications on those matters. 3 Her Honour erred in holding (at [49] and [61]) that the obligation to consider the policy underlying the newspaper rule, in considering the discretion under rule 5.2, ensures that rule 5.2 is reasonably appropriate and adapted to serve a legitimate end, and compatible with the constitutionally prescribed system. Taking into account the policy underlying the newspaper rule in considering whether to exercise the discretion under rule 5.2 involves no more than taking into account the desirability of the free flow of information to the news media in deciding whether to exercise that discretion, which does not answer the question whether rule 5.2 is compatible with the constitutionally prescribed system of government. 3A Further and in the alternative, the order made by her Honour (at [213]) was beyond the power conferred on the Court by rule 5.2, in that the order was not in conformity with the implied freedom of communication on government or political matters contained in the Constitution. 4 Her Honour erred in holding (at [62]) that the newspaper rule could be set aside in the case of a confidential source that has provided information on government or political matters. Her Honour should have held that the newspaper rule was of absolute effect in such circumstances by reason of the implied freedom of communication in such matters. 7 Her Honour erred in finding that the plaintiff had made reasonable enquiries to ascertain the identity of the persons concerned. The evidence before the Court was that the plaintiff's senior counsel, on the basis of information given to him by the plaintiff's solicitor Donald Junn, concluded that David Liu was one of the sources. The fact that there was, without exception, no evidence of: (a) The nature of the information given to the plaintiff's senior counsel which led him to that conclusion; and (b) any enquiry by the plaintiff of Donald Junn about that information, should not reasonably have led her honour's [sic] being satisfied that reasonable enquiries have been made. 8 Her Honour erred in finding that the plaintiff was unable sufficiently to ascertain the identity of the persons concerned despite her enquiries, for the reasons set out in the previous ground of appeal. 9 Her Honour erred in failing to draw the appropriate Jones v Dunkel inferences from the failure to adduce evidence of the information provided by Donald Junn to the plaintiff's senior counsel about the source or sources. In addition, the invitation to the Court to draw such inferences did not impute, implicitly or otherwise, misconduct on the part of senior counsel for the plaintiff, and no such imputation was made or intended to be made. 10 Her Honour erred in holding that the plaintiff had a 'demonstrable claim' against the sources for the republication by 'The Age' of the contents of the plaintiff's handwritten documents. 11 Her Honour erred in finding that the documents in question may well have been forged or falsely attributed to her. 12 Her Honour erred in considering, as a discretionary matter favouring the respondents, that the appellants had made use of the contents of the handwritten documents in the face of requests from one of the sources not to do so, and that 'the force of the considerations underlying the newspaper rule is substantially lessened in the present circumstances' (at [204])." 6At the hearing of the application grounds 10 and 12 were abandoned. It was also conceded that the success of ground 11 was dependent on leave being granted in respect of grounds 1 and 1A. It is convenient to deal with those grounds first. Grounds 1 and 1A 7During the course of the hearing before the primary judge, the applicants sought to tender pars [37]-[41] of the affidavit of Richard Joseph Baker, sworn on 1 December 2010, and pars [1]-[6] of the affidavit of Donald Martin Junn sworn on 22 February 2010. It was submitted that the evidence of Mr Baker was admissible as it contained certain representations made by Mr Junn which could constitute an admission by Ms Liu of the authenticity of the documents supplied by the sources to The Age newspaper. It was submitted that it was reasonably open to the Court to find that Mr Junn was a person who had authority to make statements on behalf of Ms Liu in relation to the matter with respect to which the representations were made and that the evidence was, therefore, admissible under s 87(1) of the Evidence Act 1995 (NSW) ("the Evidence Act"). 8So far as Mr Junn's evidence was concerned, it was submitted it was admissible under s 87(2) of the Evidence Act as a previous representation tending to prove he had authority to make statements on behalf of Ms Liu in relation to the matter. 9In a judgment delivered on 11 February 2011 the primary judge declined to admit the evidence. In relation to the representations contained in par [37] of the affidavit of Mr Baker, she stated that "it is quite plain from the terms of the conversation that Mr Junn can have had no authority to say anything on behalf of Ms Liu as to the substantive matters raised by Mr Baker during that conversation" (judgment [42]). In relation to the balance of the material in pars [37]-[41] of Mr Baker's affidavit, her Honour reached the following conclusions: "[46] I do not think it is reasonably open to conclude that any of the representations made following those prefatory statements was an admission made on behalf of Ms Liu with her authority. Mr Blackburn submitted that it could be concluded from that exchange that Mr Junn had by then spoken directly to Ms Liu and that, in that context, his failure to resile from anything she had previously said demonstrated that retrospective authority had been given by Ms Liu to make the representations he made. I do not accept that submission. That Mr Junn made full disclosure to Ms Liu as to all that he had said to Mr Baker is barely open as an inference. Leaving aside the temporal problem (that s 87 required authority at the time the representation was made), I am not prepared to speculate as to what was said between Mr Junn and Ms Liu." 10The primary judge also stated that she rejected the tender of pars [1]-[6] of the affidavit of Mr Junn for the same reason. 11The applicants submitted that the primary judge erred in both her construction of s 87(1) and in her application of that section to the facts before her. The applicants contended that her Honour erred as a matter of law, as she concluded that s 87(1) of the Evidence Act required the person making the representations to have authority to make the admissions as distinct from authority to make statements in relation to the matters in respect of which the representations were made. 12The applicants accepted that Mr Junn had no authority to make statements on behalf of Ms Liu at the time of the meeting referred to in par [37] of the affidavit of Mr Baker or at the first subsequent telephone conversation referred to in par [40] of his affidavit. However, they submitted that by the time of the second telephone conversation referred to in par [40] of Mr Baker's affidavit and at the time of the conversation in par [41] Mr Junn had authority from her to make statements in relation to the relevant matter. The relevant matter was identified by the applicants in an aide memoire submitted to the Court during the course of the hearing as follows: "The nature of the relationship between Helen Liu and the Fitzgibbon family and, in particular, whether she had made the payments to Joel Fitzgibbon recorded in the list of 22 names (the translation of which was handed to Mr Junn at the face-to-face meeting with Richard Baker on 2 February 2012)." 13Leave to appeal on this ground should be refused. The principles governing the grant of leave are well established. They were summarised by Basten JA in Be Financial Pty Limited as Trustee for Be Financial Operations Trust v DAS [2012] NSWCA 164 at [32]-[38]. Generally speaking, it is only appropriate to grant leave in matters that involve issues of principle, questions of public importance or in circumstances where it is reasonably clear that an injustice has occurred by reason of error in the judgment, going beyond what is merely arguable. 14In the present case there is no issue of principle involved, nor could it be said in my opinion that the primary judge was incorrect, much less clearly incorrect, in rejecting the paragraphs of the affidavit of Mr Baker. In dealing with par [37] of Mr Baker's affidavit, her Honour identified the issue as whether Mr Junn had authority to say anything on behalf of Ms Liu as to the substantive matters raised by Mr Baker (judgment par [42]). This was consistent with the requirement imposed by s 87(1) of the Evidence Act. Although when dealing with the subsequent communications she dealt with the issue in terms of whether Mr Junn had authority to make admissions, there is no reason to suppose, having regard to her earlier comments, that she misconstrued the requirements for admissibility in the section. Further, she expressly rejected the submission that by the time of the last conversation Mr Junn had spoken to Ms Liu and that Mr Junn's failure to resile from anything he had previously said demonstrated that retrospective authority to make admissions had been granted. 15Her Honour in my respectful opinion was correct. It was conceded Mr Junn did not have authority to make any statement on behalf of Ms Liu at the time of the meeting with Mr Baker referred to in par [37] of his affidavit. In the first of the two telephone conversations deposed to by Mr Baker in par [40] of his affidavit, Mr Baker said he was trying to contact Ms Liu and did not expect her to authorise him to say anything. That would indicate he had no authority to make statements on her behalf at that time. 16In the second conversation Mr Baker deposed to in par [40] of his affidavit he stated that Mr Junn told him that he did not have a response from Ms Liu and that she (Ms Liu) wanted him to fly over to see her. That indicates want of authority. In the final conversation deposed to in par [41] of Mr Baker's affidavit, Mr Junn was said to have stated that the decision was made not to admit or deny anything in relation to a document she (Ms Liu) has not seen. That would indicate that whatever authority Mr Junn had at that time did not extend to making statements on the authenticity of the documents shown to him at the meeting with Mr Baker referred to in par [37] of Mr Baker's affidavit, or the truth of the contents of those documents. 17Further, even if at the time of the comments identified in par [41] of Mr Baker's affidavit Mr Junn had authority to make statements in respect of the matters identified by the applicants, there was nothing said in that conversation which could constitute an admission. I do not agree that a failure by Mr Junn to correct or disavow statements made by him at the first meeting between him and Mr Baker, when he had no authority from Ms Liu, could be construed as an admission of the truth of those statements. 18The paragraphs of the affidavit of Mr Junn sought to be tendered do not alter the position. Those paragraphs indicated Mr Junn had acted for Ms Liu in a piece of litigation from 1996 until 2000 during the course of which he inspected documents produced on subpoena and discovery. The paragraphs of the affidavit also stated that since that time he had continued to act as Ms Liu's legal advisor. 19The evidence at that level of generality does not establish Mr Junn was retained by Ms Liu in relation to the particular matters that were subject of the discussion between him and Mr Baker, such that he could make statements constituting admissions for the purpose of s 87(1) of the Evidence Act. Even if he had a general retainer to act as her legal advisor the discussion he had did not fall within the ordinary course of a solicitor's business such as to give him implied authority to make representations for the purpose of s 87(1): Polkinghorne v Holland (1934) 51 CLR 143 at 158-159; National Commercial Banking Company of Australia v Batty [1986] HCA 21; (1986) 160 CLR 251 at 298; Seiwa Australia Pty Limited v Beard [2009] NSWCA 240; (2009) 75 NSWLR 74 at [249]-[260]. 20In these circumstances, leave to appeal on grounds 1 and 1A should be refused. It follows that leave to appeal on ground 11 should also be refused. Grounds 7, 8 and 9 Background 21To understand these grounds of appeal it is necessary to have regard to the somewhat unusual course of these proceedings in the Court below. 22For the purpose of this section of the judgment I have used pseudonyms in respect of certain persons as it is not clear to me whether their names are subject to a continuing suppression order made by the trial judge. 23The hearing of Ms Liu's motion commenced on 11 October 2010. After two days of hearing it was adjourned to 1 February 2011. 24On 1 December 2010 Mr Baker swore his affidavit. That affidavit inadvertently exhibited certain material which was said to be confidential. It is not necessary to go further than to say the information contained material which may have led to the identification of one of the sources of the information the subject of the defamation proceedings. 25On 21 January 2011 the applicants filed a Notice of Motion seeking orders that Ms Liu and her advisors be restrained from making use of the material. The motion contained the following prayers for relief: "1. This notice of motion be returnable instanter. 2. That the plaintiff's legal representatives (Kennedys) and counsel (Bruce McClintock SC and Gabriella Rubagotti) be restrained until further order from disclosing to any person, including the plaintiff, the contents of the following exhibits to the affidavit of Richard Baker sworn in this proceeding and served on the plaintiff's legal representatives on 2 December 2010: (a) Exhibit RJB-21; (b) Exhibit RJB-38; (c) the email dated 29 January 2010 from Richard Baker that forms part of Exhibit RJB-41; and (d) the email dated 4 February 2010 from Richard Baker that forms part of Exhibit RJB-41. 3. That the plaintiff's legal representatives (Kennedys) and counsel (Bruce McClintock SC and Gabriella Rubagotti) deliver up to the defendants all copies of the documents referred to in Order 1 in their possession or provided to any third party. 4. That the plaintiff's legal representatives (Kennedys) provide the defendant with a list of all persons who have been provided or who have seen copies of the documents referred to in Order 1, or to whom the contents of those documents have been disclosed by the plaintiff's legal representatives and/or counsel. 5. That the plaintiff's legal representatives (Kennedys) and counsel (Bruce McClintock SC and Gabriella Rubagotti) be restrained until further order from contacting or approaching the person referred to in paragraph 2 of the letter from Kennedys to Minter Ellison, dated 13 December 2010, which comprises Tab 6 of Confidential Exhibit PLB-1." 26Prior to that time, the solicitors for Ms Liu, by letter dated 13 January 2011, had proffered undertakings in the following terms: "Without any admission as to whether it would involve a misuse of the said confidential information (as we believe it would not, that information having been provided independently to us by our client's witness) we agree not to communicate with our client or further communicate with the witness in relation to 'X' until the hearing of this issue before Justice McCallum on 1 February 2011. By such agreement we will necessarily not be in a position to make any approach to X prior to that date for the reasons set out above." The witness in question was Mr Junn. 27The hearing of the applicants' motion commenced on 1 February 2011. Early in the hearing of the motion prayer 5 was abandoned. In that context the following interchange occurred: "MCCLINTOCK: Certainly. Can I raise this, it concerns the obligation by which my learned junior Mr George and Ms Quinn are bound. In so far as it is now the relief sought in paragraph 5 not pressed, I want to obtain instructions from Ms Liu as to whether we ought to contact the person in question. The person in question as referred to in paragraph 2 of the letter from Minter Ellisons in the first name and second name, not merely the first name. HER HONOUR: Does it follow from your case, Mr Blackburn, that there would be nothing to prevent Mr McClintock doing that? MCCLINTOCK: Approaching that? No. HER HONOUR: Mr McClintock can do that? BLACKBURN: Yes. What they can't do, at least pro tem until this issue is resolved, is use the information that is otherwise obtained in these documents. HER HONOUR: It will need to be done very carefully. MCCLINTOCK: This is what I said in my affidavit, me feeling I can't disclose material Mr Junn told me to my client. BLACKBURN: We are not saying that." 28Thereafter, on 2 February 2011 Ms Quinn, the solicitor for Ms Liu, emailed an HX asking whether X had provided the documents to The Age and whether HX knew the whereabouts of X. She received a reply from an LF, which oddly enough was copied to the solicitors for the applicants, stating that HX was travelling and could not respond and making certain allegations against Ms Liu. On 4 February 2011 Ms Quinn made a further inquiry repeating her question but again received no response. 29In response to the applicants' Notice of Motion, senior counsel for Ms Liu swore an affidavit on 1 February 2011. That affidavit, so far as relevant, was in the following terms: "2 On 7 December 2010 at approximately 11.30am I had a telephone conversation with Donald Junn, whom I know to be a solicitor who acted for Ms Helen Liu, the plaintiff in these proceedings, in particular, in proceedings between Ms Liu and one HX in the late 1990s, in this Court and the Federal Court. 3 I am not prepared to disclose the substance of my conversation with Mr Junn without my client's specific instructions to waive privilege in respect of the contents of that conversation. I am unable to obtain such instructions at the present time because I have not disclosed, nor has any other person so far as I am aware, disclosed to Ms Liu the contents of the exhibits to the affidavit of Richard Baker filed herein. Such disclosure will be necessary for Ms Liu to make an informed decision as to any such waiver and for me to advise her in regard thereto. 4 At the time of the conversation with Mr Junn, I was aware that the name 'D' appeared in Exhibit 42 in circumstances that suggested that that was the first name of the supposed confidential source of The Age articles. 5 I did not disclose that fact to Mr Junn, nor did I disclose the fact that I have such information, nor any other matter which might suggest to Mr Junn that I had such information or that such information suggested the source's name was 'D'. 6 As a result of my conversation with Mr Junn, I concluded: (a) That a person named X was probably the source of The Age articles; (b) That X had a vendetta against Helen Liu; (c) That X was capable of resorting to deliberate deceit to harm Ms Liu and that possibly he is capable of violence against her and those associated with her." 30On the sixth day of the adjourned hearing the applicants sought to tender the affidavit of Mr McClintock. Objection to the tender was taken and the following exchanges occurred: "McCLINTOCK: But for it to have any sense the conversation I would have to. I took the view then and I take the view now that if did that I would be transgressing the rules made. It may be an abundance of caution but if that is the case if I am not constrained from telling her that and putting on evidence of it, I would tell her and find out what her response to it is now and if necessary I would recall her for that purpose but. This is going a long way away from the admissibility of this affidavit. It is tendered as a admission. It plainly says in terms it is not on instructions. It was sworn for a limited purpose which was the confidentiality point which we lost. I am now in the invidious position of not being able to tell my client what is in those documents or any of them in fact in circumstances where that is obviously a consequence of the nature of this kind of application but, it is a fairly harsh approach to suggest that in circumstances where I cannot tell her that she's somehow lumped with something, with a conclusion that I came to. If I told her this material she might say 'I do not know what you are talking about, I have never heard of such a person' or whatever. I simply do not know what would happen if I was able to." "HER HONOUR: He couldn't file a statement of claim against this person without obtaining instructions. The critical question is whether perhaps he is correct in thinking that he is constrained. BLACKBURN: He is not as far as we are concerned. HER HONOUR: At the moment as the evidence stands he hasn't communicated that information to his clients. BLACKBURN: He was free to do so. We expressly withdrew prayer 5 in the notice of motion and I am astounded that Mr McClintock now says that he considers he cannot pass the information he got from Mr Junn from which he independently concluded that X was probably the source of the Age articles that he says he cannot pass that on. I am astounded to hear Mr McClintock says that he thinks he is somewhat constrained in passing on the evidence he got in conversation with Mr Junn when he said as a result of that conversation in respect of which we haven't sought any relief he has reached this conclusion." 31Thereafter Mc McClintock sought and was granted a short adjournment to obtain instructions from his client. Following the adjournment he made the following comments: "McCLINTOCK: Perhaps, I should say one thing, so there is no mistake about this. I have not, and have not now, said to Ms Liu the contents of the conversation had with Mr Junn referred to in the affidavit. However, I asked her about the name, which I can't say here. I have asked her about the name in question. I have certain instructions about that name. But for my present purport [sic] this is dealt with sufficiently by what Ms Quinn says in the affidavit and the correspondence that she has had with HX and one other person who is referred to there." 32Subsequently, Mr McClintock read that part of the affidavit of Ms Quinn of 2 February 2011 which contained the information referred to in par [28] above. 33There are a number of other matters which should be noted. First, Mr Baker, in his affidavit of 1 December 2010, deposed to the fact that there were three sources of the relevant information. It is clear that such information that was obtained as a result of inquiries made on behalf of Ms Liu only related to one potential source, namely X. Second, par [37] of the affidavit of Mr Baker was tendered on a limited basis, namely as evidence of "what was said". In par [37.3] of that affidavit Mr Baker stated that at the meeting of 2 February 2010 Mr Junn asked him where he (Mr Baker) obtained the information. Mr Baker declined to inform him. In the second telephone conversation of 2 February 2010 Mr Baker records Mr Junn inquiring whether the source was HX or BC and Mr Baker told him no. That would tend to indicate that at least at that time Mr Junn was not aware of the identity of the sources. Third, senior counsel for the applicants made it clear during the course of argument in the application for leave to appeal that he did not concede that X was one of the sources. The reasoning of the primary judge 34The primary judge dealt with the issue of whether the discretion to grant preliminary discovery was enlivened under two headings. She first dealt with the question of whether reasonable inquiries had been made. She recorded the inquiries made following the refusal of the applicants to supply the information prior to the commencement of the hearing. She pointed to the fact that the reasonableness of the inquiries had to be measured by the cost, delay and uncertainty of alternatives. She stated that an important factor was the indisputable fact that whatever information was available from other sources, the applicants knew with certainty the identity of the persons who provided the material to them. In these circumstances she accepted that the inquiries, although limited, were reasonable. 35Her Honour then dealt with the issue of whether Ms Liu was unable sufficiently to ascertain the identity of the persons concerned despite her inquiries. She referred in particular to the discussions with Mr Junn, the circumstances surrounding the tender of the affidavit of Mr McClintock and his statements at the hearing referred to above. She concluded that the failure to recall Mr Junn was due to a forensic decision, but declined to draw an inference that the evidence of Mr Junn would not have assisted Ms Liu on the issue of reasonable inquiries. She reasoned that it could readily be concluded that the failure to call Mr Junn resulted from the damning statements which had been made by him to Mr Baker, which only emerged after the affidavit of Mr Baker was filed. She stated she regarded the forensic decision as prudent. 36Her Honour rejected the contention that Mr McClintock was seeking to mislead the Court or withhold information in stating that he did not need to recall his client. She stated the more likely inference was that Mr McClintock and his client had formed the view that Mr McClintock's opinion did not form a sufficient basis for commencing proceedings against X. 37In these circumstances the primary judge concluded that no adverse inference should be drawn from the failure to call Mr Junn. She pointed out that Mr Baker did not say he told Mr Junn who the sources were and it was extremely unlikely that he would have. 38In those circumstances the primary judge was satisfied that the plaintiff was unable sufficiently to ascertain the identity of the intended defendants for the purpose of commencing proceedings against them. 39Two matters should be noted. First, her Honour did not directly deal with the submission made by the applicants that the discretion to order preliminary discovery was not enlivened because Ms Liu had not brought forward all the information in her possession concerning the identity of the sources. Second, at the hearing of the appeal senior counsel for the applicants expressly stated that the Court could accept what Mr McClintock said about his conversations with Ms Liu at face value. The submissions of the parties on appeal 40The applicants submitted that the information obtained from Mr Junn was significant because of the conclusion Mr McClintock was able to draw from it. They submitted that the refusal of the primary judge to draw a Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 inference was "infected" by her view that it would impugn Mr McClintock's conduct. They stated that view was incorrect and was not suggested by them, as the decision not to recall Mr Junn was a forensic decision which legitimately could be taken. 41Further, the applicants submitted that there was no evidence to support the conclusion drawn by the primary judge that the more likely explanation was that those advising Ms Liu or Ms Liu herself had formed the view that they did not have sufficient material to commence proceedings against X. 42At the hearing of the application, senior counsel for the applicants submitted that a court could not make an objective determination of whether the respondent was able to sufficiently identify the identity or whereabouts of a person without being appraised of what information the respondent in fact had and that in those circumstances the failure to call Mr Junn or Ms Liu on the issues arising out of Mr McClintock's affidavit was fatal to the application. Put another way, any evaluation of the sufficiency of inquiries could only be made by a court if it was aware of the inquiries which had been made and their results. 43It was further submitted that the fact that Ms Liu had no information as to the identity of the other sources was immaterial. Senior counsel for the applicants submitted that the appropriate course was to make X a respondent in a motion for preliminary discovery for the identity of the other sources. 44In supplementary submissions filed after the conclusion of the hearing the applicants pointed to a letter written by the solicitors for Ms Liu stating that X had a long history of antagonism to Ms Liu and Mr McClintock's conclusion that X had a vendetta against Ms Liu. They stated that despite those facts no further inquiries were made to ascertain the whereabouts of X including electoral roll searches, telephone book searches, google searches, social media searches, further inquiries of Mr Junn and of former associates of X. The applicants submitted that once X's location was ascertained it would have been reasonable for Ms Liu to join him in the proceedings. 45Junior counsel for Ms Liu submitted that it was not necessary to put before the Court every detail or every inquiry to determine whether reasonable inquiries had been made. She pointed to the inquiries which had been made on 2 February 2011 after the applicants had indicated they would not press par [5] of the motion. She said there was nothing to suggest Ms Liu or her advisors were aware of the whereabouts of X. She submitted that Mr McClintock's conclusion that X was the source was simply speculation and would not be enough for a solicitor to sign a certificate stating there were reasonable grounds to commence proceedings against him. She finally submitted that reasonable inquiries depended on the circumstance of each case and that in the particular circumstances of the present case the inquiries made were reasonable. 46In relation to the failure to draw an adverse inference from the failure to call Mr Junn or recall Ms Liu, she pointed to the fact that it was not obligatory to draw such an inference and the primary judge was justified in concluding that the reason Mr Junn was not called was because of the remarks he was alleged to have made to Mr Baker. She pointed out that the affidavit of Mr Junn was sworn before that of Mr Baker and that in the circumstances which existed after the service of Mr Baker's affidavit, Mr Junn could not be said to be in Ms Liu's camp. 47In supplementary submissions filed after the conclusion of the hearing Ms Liu submitted that the effect of the undertaking given on 13 January 2011 precluded any further inquiries of Mr Junn and Ms Liu in relation to X at least up to 1 February 2011. She pointed to the fact that thereafter inquiries were made. 48Ms Liu in these submissions also pointed out that the confidential emails exhibited to the affidavit of Mr Baker indicated HX was not a source and the sources required that there be no disclosure to Ms Liu, Mr Junn, Mr Fitzgibbon or BC. She also pointed out that an email of 8 February 2010 contained a statement by the applicants that they had not disclosed the identity of the sources to Mr Junn. 49Ms Liu submitted that reasonable inquiries did not mean a requirement to make every inquiry and that, when regard was had to the cost, delay and uncertainty of the outcome of any further inquiries, then the failure to conduct the additional searches suggested by the applicants was reasonable. They also emphasised that the applicants had not conceded that X was one of the sources. Consideration 50In Roads & Traffic Authority of NSW v Australian National Car Parks Pty Ltd [2007] NSWCA 114, Mason P with whom McColl and Bell JJA agreed, stated the threshold requirements for an order under r 5.2 of the Uniform Civil Procedure Rules in the following terms: "[14] Rule 5.2(1) effectively states two threshold requirements. First, the applicant must be unable sufficiently to ascertain the identity or whereabouts of the intended defendant despite having made reasonable inquiries. What is reasonable is a question of fact in all the circumstances. The availability of other means of ascertainment (eg resort to the FOI Act) does not in itself make it unreasonable to claim an alternative remedy under the rule (see Hughes Aircraft Systems International v Civil Aviation Authority (1995) 217 ALR 303 at 307). The cost, delay and uncertainty of alternative measures is relevant to the rule's 'reasonable inquiries' component." 51The inquiry is an objective one and is not determined by the applicant's belief that the inquiries which were made were reasonable: St George Bank Ltd v Rabo Bank Ltd [2004] FCA 1360; (2004) 211 ALR 147 at [26]. 52To enable such an objective assessment to be made it is necessary, in my opinion, for an applicant for preliminary discovery to disclose to the court the substance of the inquiries which have been made and the result of those inquiries. This is consistent with authorities which have considered the related rule, UCPR r 5.3 and its Federal Court equivalent: Morton v Nylex Ltd [2007] NSWSC 562 at [33]; Glencore International AG v Selwyn Mines Ltd [2005] FCA 801; (2005) 223 ALR 238 at [16]. Indeed, it is self-evident that a court cannot make an assessment of reasonableness without knowing what inquiries have been made and their result. 53However, that does not mean in my opinion that every detail of each inquiry has to be revealed. It is enough if the parties disclose what inquiries have been made and their results. That, in most cases, will indicate whether the inquiries were adequate and what further inquiries could or should have been made. If the evidence means that the court is unable to conclude that reasonable inquiries have been made, then the applicant will fail. Similarly, if the court is unable to conclude that the applicant for preliminary discovery does not in fact know the identity or whereabouts of the putative defendant, the application will also fail. 54Once these principles are applied, the present case can be dealt with relatively shortly. There does not seem to be any dispute as to the adequacy of the inquiries, at least up to the time of the commencement of the hearing. Nor could there be. There is nothing to suggest that further inquiries could be made until Mr McClintock obtained the information from Mr Junn. 55It was reasonable in my opinion for those acting for Ms Liu to proceed on the assumption that the undertaking given on 13 January 2011 prevented them from contacting either Mr Junn or Ms Liu concerning the matters disclosed in the confidential emails and in particular information relating to X. 56The applicants in my opinion were correct in stating that at least from 1 February 2011 Ms Liu and her advisors were relieved of any prohibition against contacting Mr Junn and Ms Liu concerning the possibility that X was a source, subject to their continuing obligation not to make use of the emails (see transcript extracts referred to in par [27] above). In that context Ms Quinn made her inquiries (see par [28] above). Whilst undoubtedly further inquiries could have been made, the question is whether in circumstances when the information became available in the midst of a contested interlocutory hearing, the obligation to make reasonable inquiries required those further steps to be taken. In my opinion it did not. Pursuing further steps would presumably have involved an application to adjourn the proceedings, which may or may not have been granted and a series of further inquiries, the result of which was uncertain. It does not seem to me that such further steps were necessary: cf Roads & Traffic Authority of NSW v Australian National Car Parks supra at [14]; Hughes Aircraft Systems International v Civil Aviation Authority (1995) 217 ALR 303 at 307. 57In this regard the position of the applicants is instructive. They submitted that X should be joined as a party to the preliminary discovery proceedings. It is by no means clear why this would have avoided an order being made against the applicants. Further, it would have prolonged proceedings which had already continued for too long. In this regard the rules must be construed having regard to the overriding purpose contained in s 56 of the Civil Procedure Act 2005 that the rules are intended to facilitate the cheap, just and quick resolution of the real issues in dispute. A further adjournment of the proceedings to enable an application to be brought against X would be contrary to that objective. 58It follows that subject to the issue concerning Mr McClintock's discussion with Mr Junn, the primary judge was correct in concluding that reasonable inquiries had been made. 59So far as Mr McClintock's discussions with Mr Junn were concerned, it was said first that the failure to call Ms Liu and Mr Junn in relation to the matters recorded by Mr McClintock in his affidavit meant that the court was not fully informed of the scope of the inquiries made by or on behalf of Ms Liu or of the information in the possession of Ms Liu or her advisers. It was said that as a consequence of this the application should fail. I do not believe that this is correct. Mr McClintock deposed to a conversation with Mr Junn, as a result of which he drew certain conclusions. That indicated the inquiry he made and the result of it. Whilst the evidence may not have been admissible in that form if tendered by Ms Liu, the applicants having tendered it cannot complain of its form. 60In considering whether further evidence of Ms Liu or Mr Junn was necessary for Ms Liu to discharge the onus that she had made reasonable inquiries and that she could not sufficiently identify the sources, the following matters should be noted. First, there is nothing to suggest either Ms Liu or Mr Junn had any knowledge, as distinct from suspicion, as to the identity of the sources. It was not put to Ms Liu that she knew who the sources were and the evidence to which I have referred in pars [33] and [48] tend to suggest that Mr Junn had no such information. Further, there was absolutely no evidence to suggest that Ms Liu or Mr Junn had any knowledge of any potential sources other than X, or that any further inquiries, apart perhaps from an application for preliminary discovery against X, would reveal the identity of the other sources. In those circumstances the primary judge, in my opinion, was entitled to be satisfied that all information relating to the identity of the sources in the possession of Ms Liu or her advisers was disclosed and that Ms Liu was not aware of the identity of the sources. 61Nor do I think that the primary judge was required to draw an inference that the evidence of Ms Liu and Mr Junn would not have assisted Ms Liu on this issue. First, there is nothing to suggest that they had any information apart from that disclosed by Mr McClintock. Second, having regard to the contents of the conversations between Mr Junn and Mr Baker deposed to in the affidavit of Mr Baker, it was open to the primary judge to infer that Mr Junn was not in Ms Liu's camp: cf Payne v Parker (1976) 1 NSWLR 191 at 201-202. Third, there is no compulsion on a judge to draw a Jones v Dunkel inference: Manly Council v Byrne [2004] NSWCA 123 at [52]. The primary judge gave her reasons for not drawing such an inference in the present case (judgment par [98]-[99]). In my opinion, for the reasons given by her and for the other reasons contained in this paragraph she was justified in not doing so. 62It follows, in my opinion, that the primary judge was correct in concluding that the applicants had made reasonable inquiries and was unable to sufficiently ascertain the identity of the source. 63In those circumstances, although it is appropriate to grant leave to appeal on these grounds, the appeal so far as it is based on these grounds fails. Grounds 2 to 4 64By these grounds the applicants contended that the primary judge erred in various respects in failing to hold that r 5.2 was invalid as being contrary to the implied freedom of communication on government and political matters. In the alternative they contended that the rule had to be read down so as to be consistent with this implied freedom and that in those circumstances the orders made by the primary judge were orders which she was not empowered to make. The respondents sought to uphold the primary judge's reasoning but by a Draft Notice of Contention filed by the first respondent, contended that the rule did not effectively burden freedom of communication about government or political matters either in its terms, operations or effect. The reasoning of the primary judge 65The primary judge noted that each party accepted that the articles discussed matters of government and politics. However, she concluded that the rule was not invalid and should not be read down in the manner contended for by the applicants. 66In reaching this conclusion the primary judge sought to apply the two limb test in Lange v Australian Broadcasting Corporation [1997] HCA 25; (1997) 189 CLR 520 as modified in Coleman v Power [2004] HCA 39; (2004) 220 CLR 1. The test as modified has recently been stated by the plurality in the High Court in Wotton v Queensland [2012] HCA 2; (2012) 86 ALJR 246 in the following terms (at [25], citations omitted): "Two questions ('the Lange questions') arise with respect to each statutory provision which the plaintiff puts in contention. The terms of the questions are settled. They were recently stated, and applied, by the whole Court in Hogan v Hinch as follows. The first question asks whether in its terms, operation or effect, the law effectively burdens freedom of communication about government or political matters. If this is answered affirmatively, the second question asks whether the law nevertheless is reasonably appropriate and adapted to serve a legitimate end in a manner compatible with the maintenance of the constitutionally prescribed system of government described in the passage from Aid/Watch set out above." 67The reference to Aid/Watch is a reference to the following passage of the joint reasons of the High Court in Aid/Watch Inc v Federal Commissioner of Taxation [2010] HCA 42; (2010) 241 CLR 539 at [44]: "The provisions of the Constitution mandate a system of representative and responsible government with a universal adult franchise, and s 128 establishes a system for amendment of the Constitution in which the proposed law to effect the amendment is to be submitted to the electors. Communication between electors and legislators and the officers of the executive, and between electors themselves, on matters of government and politics is 'an indispensable incident' of that constitutional system." 68The primary judge concluded that the first question posed by the test should be answered in the affirmative. She took the view (judgment [32]) that the first limb of Lange poses a relatively low threshold. She stated that the fact that a court has the power to compel journalists to disclose their sources was a significant consideration. She equated it to the threat to political discussion posed by the law of defamation as discussed in Lange (judgment [36]). 69However, the primary judge found that the law was reasonably appropriate and adapted to serve a legitimate end, in a manner compatible with the maintenance of the constitutionally prescribed system of government. She took the view that the system would be adequately protected by substantial rather than absolute protection of its incidents, concluding that the maintenance of the constitutional system of government should not be regarded as the sole or paramount determinant of legislative power. She pointed to the fact that the newspaper rule operated as a judicial practice of refusing to compel discovery by a journalist of his or her confidential sources: McGuinness v Attorney-General (Vic) [1940] HCA 6; (1940) 63 CLR 73; John Fairfax & Sons Pty Ltd v Cojuangco [1988] HCA 54; (1988) 165 CLR 346. 70Her Honour accepted that an order for disclosure of a confidential source would only be made pursuant to r 5.2 when the interests of justice so required. She concluded that the obligation to consider the policies underlying the newspaper rule in that assessment ensured that the rule was adapted to serving its object in a manner compatible with the implied constitutional freedom (judgment [49]). 71Her Honour rejected the submission that the existence of a discretion in r 5.2 could not be taken into account in considering the second question posed in Lange. She concluded that the exercise of a discretion which requires the court to take the freedom of political communication into account is capable of informing the conclusion of whether or not a particular law meets the compatibility test. 72The primary judge ultimately took the view that automatic exclusion of all confidential sources of political information from the reach of preliminary discovery would be likely to adversely affect the constitutionally prescribed system of government (judgment [58]-[59]). She concluded that in those circumstances it was not necessary to give absolute protection to such sources, considering that the newspaper rule would adequately protect sources unless disclosure was necessary in the interests of justice. As a corollary, she concluded that it was not necessary to extend the newspaper rule to require that the discretion to order preliminary discovery not be exercised in all cases where the source material related to communications of a government or political nature. The parties' submissions 73The applicants submitted that the primary judge was correct in concluding that the first question posed by Lange should be answered in the affirmative. Senior counsel for the applicants submitted that the chilling effect of such disclosure was recognised by the newspaper rule, which it submitted rested on the free flow of information: Cojuangco supra at 356. They submitted, however, that the newspaper rule was simply a rule of practice which was subordinate to the interests of the administration of justice. In these circumstances they submitted that the chilling effect of r 5.2 on free speech remained. 74The applicants further submitted that to the extent the remarks of Heydon J in Wotton supra at [42] led to a contrary conclusion, what was said by him was inconsistent with the approach of the majority in that case, who were content to approach the proceedings on the basis that the first question posed in Lange should be answered in the affirmative. 75So far as the second limb of Lange was concerned, the applicants submitted that the primary judge erred in holding that the operation of the newspaper rule led to the conclusion that the second question in Lange should be answered in the affirmative. They submitted that the policy underlying the newspaper rule was something quite different to the freedom of political communication derived from the Constitution. They submitted that the limited protection of free speech under the newspaper rule "cannot possibly be a complete answer to the question whether, or to what extent, the power to order the disclosure of the information in rule 5.2 is compatible with the maintenance of representative and responsible government and in particular the indispensable element of freedom of communication on political matters". 76The applicants submitted that the newspaper rule was inadequate to protect such communications, pointing to the fact that it was only effective at the interlocutory stage of the proceedings and yielded to the interests of justice. They submitted that it was not a decisive matter that r 5.2 may operate to provide a remedy in law to persons who might not be able to achieve a verdict against a known defendant. They submitted that since Lange, "an utterly untrue and highly pejorative reflection can be made on a person in the course of political speech with complete impunity, provided the mistaken defendant acted reasonably". 77As a fallback position the applicants submitted that to conform to the requirements of the constitutional freedom, disclosure pursuant to r 5.2 should be ordered only if the following three conditions were satisfied: "(a) the applicant demonstrates a strong case for a finding of falsity of the communication on a consideration of all the evidence on the application; (b) where the information provided by the putative source has been published by a newspaper or some other disseminator of political information, and the person sought to be examined or to provide documents is responsible for the publication, the applicant demonstrates a strong case for a finding of subjective bad faith on the part of that person; (c) the applicant demonstrates that there is no known party whom he or she can sue." During the course of argument senior counsel for the applicants proposed a further fallback to the effect that disclosure would be ordered only if the conditions in subpars (a) and (c) above were satisfied. 78Senior counsel for the applicants agreed that in any trial the source would have the defensive qualified privilege as stated in Lange but submitted that that did not lead to the conclusion that r 5.2 was compatible with the implied freedom, pointing to the potential limited resources the source would have to defend the claim. He submitted the sources were put in a special position being "the first point of contact with the [type of] information the High Court tells us in Cojuangco is good to expose and should be encouraged". 79Finally senior counsel for the applicants submitted that the question of whether the legislation was compatible invited the question of whether there was a more compatible and more appropriate way it could achieve the same end without doing violence to the maintenance of the implied freedom. 80In her submissions, Ms Liu pointed to the fact that r 5.2 conferred a judicial discretion, which she submitted was required to be exercised conformably with the constitutional limits imposed by the implied freedom. She submitted that r 5.2 does not operate as a direct restraint on political communication and any impact on freedom of communication was at best speculative. In those circumstance she submitted that the first question posed in Lange should be answered in the negative. 81So far as the second limb was concerned she submitted it involved two exercises. First, to determine the purpose or end of the statutory provision; second, to determine whether the law is reasonably appropriate and adapted to achieve that end. She submitted that the purpose of r 5.2 was to facilitate the enforcement of civil causes of actions by proceedings in a court where a person may not otherwise be able to do so, because of lack of information as to the identity or whereabouts of the prospective defendant. She submitted that the rule was reasonably appropriate, relying principally on the absence of any direct effect on political communication. At the hearing senior counsel for Ms Liu pointed to the conditions which had to be met prior to the grant of the order and the existence of the newspaper rule, in support of the proposition that the rule was compatible with the implied freedom. 82The second respondent, the Attorney General for NSW, who intervened pursuant to s 78A of the Judiciary Act 1903 (Cth), submitted that r 5.2 was valid and that there was no need for it to be read down. He submitted that the first question posed in Lange should be answered in the negative, pointing to the fact that orders for disclosure will not be made by a court unless the applicants demonstrate that it is necessary in the interests of justice and that the applicants will not have an effective remedy without the orders being made. In these circumstances he submitted the primary judge erred in concluding that the mere existence of a power to compel disclosure is sufficient to demonstrate a fetter on freedom of communication. This was because, he submitted, the power would only be exercised where the interests of justice outweighed the public interest in maintaining confidentiality of communication with journalists regarding government or political matters. 83So far as the second question was concerned, the Attorney General pointed to the distinction between laws which have the purpose of restricting or regulating discussion of government or political matters and those which affect such discussions incidentally, meaning that a law which has only an incidental effect is more likely to satisfy the second question in Lange than a law of the former type. He submitted that r 5.2 may, in certain circumstances, be essential to the proper enforcement of legal rights and in those circumstances it was not incompatible with the maintenance of the constitutionally protected system of responsible and representative government. 84The Attorney General further submitted that an order under r 5.2 would only be made when required by the interests of justice and once proper regard had been given to the countervailing public interest in maintaining the confidentiality of journalist sources, such interest being of particular weight where the communications were about government or political matters. He further submitted that the fallback positions proposed by the applicants were unnecessary to achieve constitutional validity. Consideration 85The starting point in considering the constitutional validity of r 5.2 is a construction of the rule itself: Coleman v Power supra at [3] [147]-[148]; Gypsy Jokers Motorcycle Club Inc v Commissioner of Police [2008] HCA 4; (2008) 234 CLR 532 at [11]; Sunol v Collier (No 2) [2012] NSWCA 44 at [25]. 86Rules 5.1 and 5.2, so far as relevant, are in the following terms: "5.1 Definitions In this Part: applicant means an applicant for an order under this Part. identity or whereabouts includes the name and (as applicable) the place of residence, registered office, place of business or other whereabouts, and the occupation and sex, of the person against whom the applicant desires to bring proceedings, and also whether that person is an individual or a corporation. 5.2 Discovery to ascertain prospective defendant's identity or whereabouts (1) This rule applies if it appears to the court that: (a) the applicant, having made reasonable inquiries, is unable to sufficiently ascertain the identity or whereabouts of a person (the person concerned) for the purpose of commencing proceedings against the person, and (b) some person other than the applicant (the other person) may have information, or may have or have had possession of a document or thing, that tends to assist in ascertaining the identity or whereabouts of the person concerned. (2) The court may make either or both of the following orders against the other person: (a) an order that the other person attend the court to be examined as to the identity or whereabouts of the person concerned, (b) an order that the other person must give discovery to the applicant of all documents that are or have been in the other person's possession and that relate to the identity or whereabouts of the person concerned. ... (7) Unless the court orders otherwise, an application for an order under this rule: (a) must be supported by an affidavit stating the facts on which the applicant relies and specifying the kinds of information, documents or things in respect of which the order is sought, and (b) must, together with a copy of the supporting affidavit, be served personally on the other person." 87Rule 5.2, coupled with the definition in r 5.1, imposes the following preconditions on the making of an order. The first arises from the definition in r 5.1, namely, that the applicant for preliminary discovery desires to commence proceedings against the person whose identity or whereabouts is sought. That desire, as Barrett JA stated in Roads and Traffic Authority of NSW v Care Park Pty Limited [2012] NSWCA 35 must be a genuinely held and objectively based desire (see at [106], Beazley and Campbell JJA agreeing). Thus applications which are capricious or lack an objective basis will be rejected. The second precondition is that the applicant for orders must have made reasonable inquiries. Although this does not mean that every avenue or inquiry must be exhausted, orders will not be made solely on the basis that the applicant is of the belief that an application under r 5.2 is the most convenient way of obtaining the information. 88Third, as Barrett JA pointed out in Roads and Traffic Authority of NSW v Care Park the "purpose of commencing proceedings" is the yardstick by which the sufficiency of the information in the applicant's possession is assessed (at [97]). Thus the information sought pursuant to r 5.2 must be necessary for the purpose of commencing the proceedings and will be limited to that information which is objectively necessary, having regard to the rules of court, to enable such proceedings to be commenced. 89Finally, even if those preconditions are satisfied, r 5.2(2) gives the court a discretion whether or not to make an order. It was common ground between the parties that the discretion would only be exercised in favour of the applicant when it is in the interests of justice to do so. The existence of a prima facie case against the proposed defendant is relevant to the exercise of the discretion: Stewart v Miller (1979) 2 NSWLR 128 at 139-140; Roads and Traffic Authority of NSW v Australian National Car Parks Pty Ltd supra at [13]. 90Two further matters should be noted in dealing with the construction of the rule. First, the rule does not in its terms limit the power or discretion of the Court in respect of the disclosure of sources where the information in question relates to government or political communications. If that limitation was there, there would be no issue as to the validity of the rule: Wotton supra at [10], [21]-[22], [31]. In the passages cited the plurality in Wotton applied the dicta of Brennan J in Miller v TCN Channel Nine Pty Limited [1986] HCA 60; (1986) 161 CLR 556 at 613-614 to the effect that a general discretion conferred on an administrative body can only be exercised in accordance with constitutional requirements and limitations and an exercise outside these requirements and limitations would be ultra vires. The Court did not conclude whether the same approach would be applied to a discretion conferred on a court. That question, together with a question of whether the rule can be read down to preserve its constitutional validity, (see Interpretation Act 1987 (NSW) s 31; Coleman v Power supra at [110]) only arises if the rule, to the extent it otherwise permits disclosures of sources of government and political matters, is invalid. 91The second matter is this. In considering r 5.2 I have not taken the newspaper rule into account. The newspaper rule has repeatedly been held to be a rule of practice: McGuinness supra at 104-105; Cojuangco supra at 356. It has no relevance to the construction of the provision. 92Turning to the first question posed by Lange, the principles guiding the question of whether the challenged legislation operates as a burden on government and political communications, so as to require an affirmative answer, have as Heydon J pointed out in Wotton at [41], been the subject of relatively little consideration. 93Notwithstanding this it is clear, contrary to the submissions of Ms Liu, that the fact that the burden is indirect does not mean that the first question must be answered in the negative. Although it has been stated on a number of occasions that laws which directly inhibit government or political communications will be much more difficult to justify than laws which do so indirectly (Mulholland v Australian Electoral Commission [2004] HCA 41; (2004) 220 CLR 181 at [40]; Australian Capital Television Pty Ltd v The Commonwealth [1992] HCA 45; (1992) 177 CLR 106 at 169; Levy v State of Victoria [1997] HCA 31; (1997) 189 CLR 579 at 618-619; Hogan v Hinch [2011] HCA 4; (2011) 243 CLR 506 at [95]-[96]), none of these cases provide support for the proposition that an indirect burden can never infringe the constitutional requirement. 94In Coleman v Power supra, Callinan J at [298] expressed the view that for the first question raised in Lange to be answered in the affirmative the legislation in question must pose a realistic threat to the implied freedom. In Wotton supra, Heydon J at [54]-[55], expressed the view that this formulation was correct. Heydon J also accepted the submissions of the Solicitor-General in Wotton to the effect that there must be a real or an actual burden upon relevant communications (at [54]). 95If that approach was accepted, there would be much to be said to support the proposition that a law which only requires disclosure in the limited circumstances provided for in r 5.2 and which is subject to a discretion to be exercised in the interests of justice, would not amount to such a real or actual burden on political or government communications so as to require the first question to be answered in the affirmative. However, as Heydon J pointed out, that approach is more limited than that of McHugh J in Coleman v Power, where his Honour said the question would be answered in the affirmative if the law "directly and not remotely restricts or limits the content of those communications or the time, place, manner or conditions of their occurrence" (Coleman v Power at [91]). Further, in its consideration of the newspaper rule, the High Court in each of McGuinness and Cojuangco stated that the rule rests on the public interest in the free flow of information, a conclusion which would suggest that r 5.2 can have the effect of limiting freedom of communication, including government and political communications. In those circumstances, on the present state of authority, it seems to me that the first question in Lange should be answered in the affirmative. 96In dealing with the second question posed in Lange as modified in Coleman v Power (see par [66] above) it is necessary to bear the following matters in mind: (a) Rule 5.2 secures a legislative end, namely, to facilitate civil causes of action where persons who legitimately wish to bring proceedings are frustrated or prevented from doing so by lack of information as to the identity or whereabouts of the proposed defendants: see Roads and Traffic Authority of NSW v Care Park supra at [8]. (b) The implied freedom of communication on government and political matters is not an absolute freedom: Lange at 561; Mulholland v Australian Electoral Commission supra at [40]. As Gleeson CJ pointed out in that paragraph, there are many laws, of which the defamation law considered in Lange is an example, which affect government or political communications but which are nonetheless valid. (c) The requirement that the restriction is reasonably appropriate and adapted articulated in Lange does not mean it must be unavoidable or essential. Rather it involves close scrutiny, congruent with a search for compelling justification: Mulholland at [40]; Roach v Electoral Commission [2007] HCA 43; (2007) 233 CLR 162 at [85]; Rowe v Electoral Commissioner [2010] HCA 46; (2010) 243 CLR 1 at [161]. (d) As I have stated above, laws which indirectly affect government and political communications are less likely to infringe the implied freedom than laws which have a direct impact on such freedoms. 97Importantly, in Lange, the High Court upheld a litigant's right to sue for defamation and the validity of s 22 of the Defamation Act 1974 (NSW) (the precursor to s 30 of the Defamation Act 2005 (NSW)). In that case the Court made the following comments (at 568, citations omitted): "The purpose of the law of defamation is to strike a balance between the right to reputation and freedom of speech. It is not to be supposed that the protection of reputation is a purpose that is incompatible with the requirement of freedom of communication imposed by the Constitution. The protection of the reputations of those who take part in the government and political life of this country from false and defamatory statements is conducive to the public good. The constitutionally prescribed system of government does not require - to the contrary, it would be adversely affected by - an unqualified freedom to publish defamatory matter damaging the reputations of individuals involved in government or politics. The question then is whether the common law of defamation, as it has traditionally been understood, and the statute law regulating the publication of defamatory matter are reasonably appropriate and adapted to the protection of reputation having regard to the requirement of freedom of communication about government and political matters required by the Constitution." 98The court held in those circumstances that if a defence of qualified privilege was generally available in relation to the publication of government and political matters, subject to a requirement of reasonableness, the common law of defamation and s 22 of the Defamation Act would be compatible with the implied freedom within the meaning of the second question in Lange. In that context the Court considered that, having regard to the necessity to protect reputation, the law went no further than what was reasonably appropriate for that purpose (at 575). 99Taking the matters to which I have referred above into account, it seems to me that a rule such as r 5.2 is appropriate and adapted to serve a legitimate end in a manner compatible with the maintenance of a constitutionally prescribed system of government. It achieves the objective of protecting persons from false and defamatory statements by unidentified persons when they may otherwise have no redress, having regard to the defence of qualified privilege available to the newspaper journalist or media outlet which transmits the information. The source will have the defence of qualified privilege available if he or she meets its requirements. In these circumstances, in my opinion, the rule achieves a legitimate end in a manner compatible with the maintenance of a constitutionally prescribed system of government. The maintenance of such a system of government does not, in my opinion, require that persons who provide information but decline to reveal their identity should be put in a better position than persons whose identity can be ascertained without resort to r 5.2 or its equivalent. This is all the more the case when, as I have indicated above, the threshold provisions of r 5.2 must be made out and the question of whether there is a prima facie case demonstrated will be a relevant matter in the exercise of the discretion. 100It follows from what I have said that there is no need to read down the rule or otherwise limit the discretion conferred on the Court to achieve its constitutional validity. 101In those circumstances the second question raised in Lange should be answered in the affirmative. The constitutional challenge to the rule therefore fails. Leave to appeal in respect of Grounds 2 to 4 inclusive should be granted, but the appeal dismissed. The conduct of the proceedings in the Court below 102I have set out the requirements for an order under r 5.2 above and indicated that the existence of a prima facie case may be relevant in the exercise of discretion. However, that does not mean that litigants, and in particular defendants, are entitled to treat an application for preliminary discovery as a dress rehearsal for the proceedings and to seek findings on matters which will ultimately depend on an assessment of the whole of the evidence by a judge or a jury at the trial of the action. 103In the present case the hearing took 10 days due largely, it would appear, to the defendants seeking to embark on an examination of the merits of the plaintiff's claim on the basis it was a relevant matter for discretion. This is not an appropriate course to adopt in relation to an interlocutory matter of the nature of that in question here and is contrary to the objectives in s 56 of the Civil Procedure Act 2005 and to the obligations on litigants and their advisers to conduct litigation in accordance with the overriding objective in that section. 104Although I would have thought it abundantly clear, let me emphasise that applications for preliminary discovery are interlocutory applications, where it is quite inappropriate for contested issues of fact between the parties to be litigated, much less decided upon. That is not to say that the person against whom discovery is sought is not entitled to challenge the proposition that the applicant has met the threshold requirements or to point to deficiencies in the factual allegations deposed to, or the legal basis of the claim proposed to be made, to demonstrate the absence of any viable claim. However, any cross-examination on these issues should be conducted on the basis that the proceedings are of an interlocutory nature at which it is inappropriate to litigate contested questions of fact. There is certainly no justification for applications for preliminary discovery to be conducted in the way which occurred in this case. 105In making these remarks I do not intend to suggest that the applicants' advisers were acting other than in a manner which they believed to be in the best interests of their clients. However, the fact remains that the proceedings should not have been conducted in the fashion in which they were and it is something which should not occur in the future. Orders 106In the circumstances I would make the following orders: 1 Grant the applicants leave to appeal in respect of Grounds 2 to 9 of the document headed "Second Further Amended Draft Notice of Appeal" which appears behind Tab 3 of the Application Book filed in connection with these proceedings. 2 Direct the applicants to file a Notice of Appeal incorporating these grounds within 7 days of the date hereof. 3 Order that the appeal be dismissed. 4 Order that leave to appeal otherwise be refused. 5 Order that the applicants pay the respondents' costs of the application for leave to appeal and the appeal. 107BEAZLEY JA: I agree with the reasons of and orders proposed by the Chief Justice. 108McCOLL JA: I agree with Bathurst CJ's reasons and the orders his Honour proposes. ********** 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. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 21 February 2013