Supreme Court New South Wales Medium Neutral Citation: Carolan v Fairfax Media Publications Pty Ltd (No 2) [2015] NSWSC 1010 Hearing dates: 10 July 2015 Date of orders: 27 July 2015 Decision date: 27 July 2015 Jurisdiction: Common Law Before: McCallum J Decision: Defendants, not later than 21 September 2015, to notify the plaintiff in writing whether they maintain any defence under s 30 of the Defamation Act and, if so, the identity of any confidential sources relied upon by them in the preparation of the matters complained of or, alternatively, a statement that they do not propose to disclose those identities; plaintiff to give notice within a further seven days whether he intends to make any application under s 126K(2) of the Evidence Act in relation to the sources or any other application in relation to the defence of statutory qualified privilege; defendants' application for orders to allow a notice of election for a jury trial to be filed dismissed; defendants to pay the plaintiff's costs of the matters determined in this judgment. Catchwords: DEFAMATION – procedure – mode of trial – where defendants omitted to file notice of election for a jury trial within the time allowed under the rules – whether Court has power to allow notice to be filed after that time – whether power should be exercised – where omission due to inadvertence in the context of a practice of not incurring fees until necessary DEFAMATION – defences – defence of statutory qualified privilege – where information relied upon in publishing the matters complained of included sources to whom promises of confidentiality were made by journalists – whether appropriate to make order directing defendants to confirm reliance upon defence in advance of trial Legislation Cited: Civil Procedure Act 2005 (NSW), ss 14, 56, 57, 58 59, 61, 63 Defamation Act 2005 (NSW), ss 21, 30 Evidence Act 1995 (NSW), s 126K Supreme Court Act 1970 (NSW), s 85 Uniform Civil Procedure Rules 2005 (NSW), rr 1.12, 2.1, 29.2A Cases Cited: Liu v The Age Company Ltd [2012] NSWSC 12; 285 ALR 386 R v Christov [2009] NSWCCA 168 Seven Sydney Pty Ltd v Fierravanti-Wells [2011] NSWCA 246 Sims v Wran [1984] 1 NSWLR 317 Category: Procedural and other rulings Parties: Sean Carolan (plaintiff) Fairfax Media Publications Pty Ltd (first defendant) Peter Fitzsimmons (second defendant) Representation: Counsel: K Smark SC with S Chrysanthou (plaintiff) ATS Dawson (defendants) Solicitors: Kalantzis Lawyers (plaintiff) Banki Haddock Fiora (defendants) File Number(s): 2014/245957 Publication restriction: None Judgment 1. HER HONOUR: These are proceedings for defamation which are listed for hearing on 19 October 2015. This judgment determines two interlocutory applications. The first is the plaintiff's application for directions concerning the defence of statutory qualified privilege. The second is the defendants' application for orders to permit them to file a notice of election for a trial by jury in circumstances where no notice was filed within the time allowed under the rules. Plaintiff's application 1. The plaintiff seeks the following order: That the defendants, not later than 21 September 2015, notify the plaintiff in writing: (a) whether the defendants maintain any defence under s 30 of the Defamation Act; and (b) if so, the identity of any confidential sources relied upon by the defendants in the preparation of the matters complained of or, alternatively, a statement that the defendants do not propose to disclose those identities. 1. On its face, the application seeks to compel the defendants to do little more than to confirm an existing position. In order to explain the perceived utility of such an order, it is necessary to explain the perceived vice to which it is directed. 2. The matters complained of are four articles published on the Sydney Morning Herald website on 26 September 2013. The defences relied upon by the defendants include the defence of qualified privilege under s 30 of the Defamation Act 2005 (NSW). One of the elements of that defence is that the conduct of the defendant in publishing the matter complained of is reasonable in the circumstances. In order to prove that element (on which they bear the onus), the defendants will have to establish their belief in the truth of what was published and to disclose both the nature and the source of the information they possessed: Sims v Wran [1984] 1 NSWLR 317 at 327F. 3. The plaintiff was permitted to interrogate the defendants on that issue. In its answers to interrogatories, the first defendant, Fairfax, stated that its sources included "confidential source A" and "confidential source B". The answers identified the information provided by confidential source A by reference to specified paragraphs of the matter complained of. Those paragraphs are in the following terms (paragraphs 36, 37, 51, 71 and 99 of schedule A to the amended statement of claim): 36. Details of the blood tests results for six players showing elevated levels of HGH were found on the phone of an organised crime figure which was seized by law enforcement officers. 37. The information has since been referred to the Australian Sport Anti-Doping Authority. 51. The Herald understands that ASADA is interested in Ben Darcy, a former employee of Mr Carolan's, who is currently in Thailand. 71. Police have expressed concerns about the blood tests being found on a crime figure's phone as it raised the prospect of blackmail or possible attempts to use information to pressure footballers to fix matches. There is no suggestion that any of the Roosters were involved in any of these activities. 99. Six Roosters players including Boyd Cordner, Sam Moa and Roger Tuivasa-Sheck had unusually elevated levels of HGH in their blood, according to records of their bloodwork retrieved from the mobile phone of an organised crime figure. 1. Part of that information is relied upon to support the plaintiff's contention that the matter complained of conveyed the following imputation: The plaintiff gave the results of blood tests he conducted on Sydney Roosters football players to an organised crime figure. 1. It is clear in those circumstances that the identity of confidential source A and the content of the information he or she provided to Fairfax is material to the qualified privilege defence. 2. The plaintiff accepts that Fairfax cannot be compelled at this stage of the proceedings to disclose the identity of the two confidential sources, for two reasons, each stemming from the fact that Fairfax journalists have promised the sources that they will not disclose their identities. The first is the application of the "newspaper rule", which I summarised in Liu v The Age Company Ltd [2012] NSWSC 12; 285 ALR 386 at [42] as follows: The newspaper rule operates as a judicial practice of refusing to compel discovery by a journalist of his or her confidential sources. It does not amount to a privilege or immunity, and it has always been the case that disclosure of a source will be compelled when it is necessary in the interests of justice. 1. The plaintiff does not contend that disclosure is necessary in the interests of justice at this point. 2. The second reason Fairfax cannot be compelled to disclose the identity of the sources at this stage is the existence of a statutory privilege ("the journalist privilege") provided for in s 126K of the Evidence Act 1995 (NSW). 3. Fairfax is accordingly both obliged (by the promises made to the sources) and entitled to refuse to disclose information material to the statutory qualified privilege defence which, but for those promises, it would otherwise have to disclose. 4. That circumstance creates an obvious tension in the interests of justice. The tension might be resolved in any one of a number of ways, each to the detriment of one party or the other. Fairfax might, if it forms the view that disclosure of the identity of the sources is critical to the establishment of the defence, abandon the defence. Alternatively, it might seek to be released from the promises made by the journalists and, if so released, provide that information to the plaintiff by way of further (late) particulars of the defence. In theory there is a third possibility (to disclose the identity of the sources in breach of those promises) but I apprehend that would be unthinkable to Fairfax and the journalists. Alternatively, if the view is formed that the defence might reasonably succeed even if the identity of the sources is not disclosed, Fairfax might choose to run the defence on that basis. 5. The existence of that range of possibilities creates an obvious risk of prejudice of one kind or another to the plaintiff. He might incur unnecessary legal costs (and distraction to his lawyers) preparing to meet a defence that is ultimately abandoned shortly before the trial. If the identity of the sources is revealed late, he will have lost the opportunity to prepare to meet the defence with the benefit of the information he ought to have received in accordance with the principle stated in Sims v Wran. He would also in that circumstance have lost the opportunity to take other steps in preparation for the trial such as contacting the sources himself or taking other steps to learn more of the apparent reasonableness of any reliance by the journalists on the information they provided. 6. On any view, the plaintiff's present ability to assess the strength of the defence is, to a degree, impaired by the fact that the case is one involving the provision of information to journalists by confidential sources. The uncertainty as to whether the plaintiff will ever know the identity of the sources (including not knowing whether he will at any point succeed in compelling the disclosure of their identity by application under s 126K(2)) puts him at a disadvantage in the assessment of the strength of the defence in the period leading up to the trial. If there is any prospect of his learning the identity of the sources, there is an obvious risk that that will occur late, to his detriment. 7. To a degree, each of those risks and disadvantages is a necessary corollary of the several common law and statutory protections of the identity of sources, the importance of which cannot be gainsaid. The critical question is whether those risks and disadvantages can and should be ameliorated by making the order sought by the plaintiff. 8. Mr Dawson, who appears for the defendants, submitted that the order sought will not serve to tell the plaintiff anything he does not already know and that it is not necessary. 9. Mr Smark SC, who appears with Ms Chrysanthou for the plaintiff, submitted that the order is within the power under r 2.1 of the Uniform Civil Procedure Rules 2005 (NSW) to give such directions for the conduct of the proceedings as appear convenient for the just, quick and cheap disposal of the proceedings. Implicit in the plaintiff's reliance upon that power is the contention that, so long as the plaintiff is left to rely upon the defendants' timely resolution of the tensions to which I have referred, without the benefit of a timetable imposed by the Court, the overriding purpose may not be ideally served. In other words, upon analysis, the plaintiff's application transparently invokes the common wisdom that the decisions the defendants will have to make in the period leading up to the trial are inherently likely to be left until the last minute, to the detriment of the plaintiff. 10. The plaintiff's concern in that respect is not without foundation. The prospect of conducting a statutory qualified privilege defence in circumstances where the information relied upon in publishing the matter complained of included information obtained from confidential sources will raise difficult tactical and forensic issues. Few lawyers would deny the performance-enhancing effect of an impending trial date on such judgments. 11. The test for exercising the power under r 2.1 is not one of necessity. In my view, the direction sought is a sensible one which is convenient for the just, quick and cheap disposal of the proceedings. 12. The direction will be made as sought, together with a direction sought by Mr Dawson that the plaintiff give notice within a further seven days whether he intends to make any application under s 126K(2) in relation to the sources or any other application in relation to the defence of statutory qualified privilege. Defendants' application in respect of the requisition of a jury 1. The defendants' application raises an interesting question of power. The defendants intended to elect for the proceedings to be tried by jury, as allowed under s 21 of the Defamation Act. However, they omitted to file a notice of election for a jury trial within the time allowed under the Rules. In particular, the relevant rule provides that a notice may not be filed or served if a date has been fixed for the hearing of the proceedings: r 29.2A(6) of the UCPR. The hearing date for the present proceedings was fixed at a directions hearing on 27 February 2015. No notice of election for a jury trial had been filed or served as at that date. 2. The defendants submit that the Court has power to extend the time within which the election may be made. The plaintiff submits that the right under the Defamation Act to make such an election ceases to exist once a hearing date has been fixed and that there is no power to extend the term within which that right may be exercised or otherwise to order a jury trial. 3. I have concluded that the position is as contended by the plaintiff, for the following reasons. 4. All civil proceedings in this Court other than proceedings for defamation "are to be tried without a jury, unless the Court orders otherwise": s 85(1) of the Supreme Court Act 1970 (NSW). The Court has an express power under s 85(2) to make an order that proceedings are to be tried with a jury but that section does not apply to proceedings for defamation: s 85(6). That provision is annotated with a statement that s 21 of the Defamation Act makes provision for jury trials in defamation proceedings. Accordingly, in all proceedings other than proceedings for defamation, trial without a jury is the mode of trial mandated by the statute, subject to a constrained power of the Court to order trial with a jury. 5. Section 21 of the Defamation Act provides: (1) Unless the court orders otherwise, a plaintiff or defendant in defamation proceedings may elect for the proceedings to be tried by jury. (2) An election must be: (a) made at the time and in the manner prescribed by the rules of court for the court in which the proceedings are to be tried, and (b) accompanied by the fee (if any) prescribed by the regulations made under the Civil Procedure Act 2005 for the requisition of a jury in that court. (3) Without limiting subsection (1), a court may order that defamation proceedings are not to be tried by jury if: (a) the trial requires a prolonged examination of records, or (b) the trial involves any technical, scientific or other issue that cannot be conveniently considered and resolved by a jury. 1. That section lacks the neatness of s 85(1) of the Supreme Court Act. It does not expressly mandate but assumes (I think by necessary implication) that, absent an election, proceedings for defamation are to be tried without a jury. However, in contrast to s 85 of the Supreme Court Act, the mechanism for displacing that default position is less clear, since it is complicated by a statutory entitlement of a party to elect trial by jury. The power of the Court to "order otherwise" attaches specifically to the making of such an election rather than to the determination of the mode of trial. In my view, the proper analysis of that provision is that the Court's power to control the mode of trial is constrained to, in effect, a guided power of veto in a case where an election has been made. I do not think the Court has power under s 21 or otherwise to order trial by jury in the absence of an election. 2. More importantly, an election made in accordance with the requirements of the section is effective to alter the mode of trial, with no occasion for any determination by the Court. But, like the power under s 85(2) of the Supreme Court Act to order trial by jury, the right to make such an election is constrained. One of the constraints is temporal. The section states, in terms, that an election must be made "at the time and in the manner prescribed by the rules". The section also provides that an election must be accompanied by the prescribed fee. I think it is tolerably clear that any power under the rules to waive payment of prescribed fees could not be exercised so as to subvert that mandatory fiscal requirement. 3. Mr Dawson submitted that s 21 should not be construed so as to exclude the Court's "general power" to control the mode of trial. I am not persuaded that the Court has any such general power. In my view, the only power the Court has to control the mode of trial in proceedings for defamation is that conferred by s 21 of the Defamation Act. 4. It is not in dispute that the defendants have not made an election "at the time and in the manner prescribed by the rules". Rule 29.2A of the UCPR provides: (1) An election under section 21 of the Defamation Act 2005 for defamation proceedings to be tried by jury must be made by filing a notice of election for a jury trial and serving the notice on each other active party in the proceedings. Section 21 (2) (b) of the Defamation Act 2005 requires an election to be accompanied by the fee prescribed by the regulations under the Civil Procedure Act 2005 for the requisition of a jury in the court concerned. (2) A party may file and serve a notice of election for a jury trial only if: (a) the party has served a notice of intention to file the notice of election on each other active party before a date has been fixed for the hearing of the defamation proceedings, and (b) a notice of motion has not been filed under subrule (4) or, if such a notice of motion has been filed and served, the court has refused to make the order sought in the notice of motion. (3) A party who serves a notice of intention to file a notice of election for a jury trial must, before a date has been fixed for the hearing of the defamation proceedings, inform the court that the notice of intention has been served. (4) A party on whom a notice of intention to file a notice of election for a jury trial is served may, within 21 days of being served with the notice, file a notice of motion seeking an order under section 21 of the Defamation Act 2005 that the proceedings not be tried by jury. (5) If a notice of motion is filed under subrule (4), a date may not be fixed for the hearing of the defamation proceedings until the court has disposed of the motion. (6) Without limiting subrule (2), a notice of election for a jury trial may not be filed or served if: (a) the court makes an order under section 21 of the Defamation Act 2005 (whether or not of its own motion) that the defamation proceedings not be tried by jury, or (b) a date has been fixed for the hearing of the defamation proceedings. 1. A date having been fixed for the hearing of the proceedings, the defendants are prohibited by r 29.2A(6) from filing a notice of election for a jury trial. The other prohibition in that subrule (a notice of election for a jury trial may not be filed if the court has ordered that the proceedings not be tried by jury) could scarcely be thought to be amenable to dispensation. It is clear that there is no further right to elect once the Court has determined an application for an order under s 21 by ordering that the proceedings not be tried by jury. Why, then, should the temporal constraint be amenable to dispensation? I am not persuaded that it is. 2. With his customary ingenuity, Mr Dawson identified five sources of power to permit the filing of a notice at this point. However, the premise of each contention was that nothing in s 21 of the Defamation Act confines "the Court's power, independently of a party's election, to order a trial by jury in defamation proceedings". Indeed, it was submitted that s 21 itself is a source of power to grant the relief sought by the defendants. It was submitted that the words "unless the court orders otherwise" should be construed as conferring power, not only to make an order that defamation proceedings are not to be tried by jury but also to make an order that they are to be tried with a jury. I do not accept that submission. Further, for reasons I hope are adequately explained above, I do not accept the premise that the Court has any power independent of s 21 to order that defamation proceedings be tried with a jury. 3. Leaving aside that submission, the sources of power identified were: 1. the power under s 14 of the Civil Procedure Act 2005 (NSW) to dispense with any requirement of the rules "if satisfied that it is appropriate to do so in the circumstances of the case". It was submitted that the Court could make an order that "the requirement to file and serve a notice of election for a jury trial provided for in r 29.2A(2) and (6) before the date has been fixed for the hearing of these proceedings be dispensed with"; 2. the power under r 1.12 to "extend or abridge any time fixed by these rules"; 3. the power under s 63 of the Civil Procedure Act to make directions with respect to irregularities; 4. the power under s 61 of the Civil Procedure Act to make directions as to practice and procedure. 1. I do not think any of those sources of power can assist the defendants in the present case. On the analysis contended for by Mr Smark (which I accept), there is no requirement of the rules to do anything before a hearing date is fixed; it is simply a matter of there existing a right to do something until that time, after which, according to the statute, the right ceases to exist. 2. For those reasons, I am not persuaded that I have power to grant the relief sought by the defendants. 3. In case that conclusion is wrong, I should record that, had I been persuaded as to the existence of any power to grant the relief sought, I would not have exercised that power in favour of the defendants. The explanation for the failure to file a notice was inadvertence. It was explained by the solicitor having conduct of the proceedings on behalf of the defendants that his firm's usual practice in proceedings involving Fairfax is not to file and serve a requisition for trial by jury immediately after the expiration of the 21-day period after the notice of intention has been served (see r 29.2A(4)) because the fee required to be paid at that time (currently $2,122) may prove to be an unnecessary cost if the proceedings are settled before being fixed for hearing. 4. The defendants submitted that it was relevant to the exercise of the Court's discretion to have regard to that "commendable practice", which was said to be consistent with the obligations imposed on parties under ss 56 to 59 Civil Procedure Act. That characterisation may not be uncontroversial. The potential saving of $2,122 otherwise payable to the State's revenue has certainly been outweighed in the present case by the cost and court time incurred in entertaining the defendants' application. 5. It is also relevant to consider the respective prejudice to the parties. I accept that there is a large body of jurisprudence to support the view that defamation proceedings have a peculiar claim to trial by jury. The lengthy history of jurisprudence recognising the importance of trial by jury in defamation actions is set out in the judgment of McColl JA (with whom Giles JA and Handley A-JA agreed at [1] and [137]) in Seven Sydney Pty Ltd v Fierravanti-Wells [2011] NSWCA 246 at [69] and following. However, that was a case in which the defendant had made a "timely election". The defendants relied upon the Court's statement at [50] that "once the appellants exercised the s 21 entitlement to elect for the proceedings to be tried by a jury, they had a vested or accrued substantive right". It was submitted that the defendants in the present case, having given notice of their intention to elect for trial by jury, had instead a "contingent or prospective right" to trial by that mode. With great respect to Mr Dawson, I do not think that is a helpful analysis. However the right might be characterised in the period leading up to the critical date, at that date in my view it either accrues or ceases to exist. But even if that is wrong, whatever the virtues of either mode of trial, I do not think it can be said that there is any substantive prejudice in having to proceed to trial without a jury. 6. The parties were granted leave to make supplementary submissions in relation to the decision of the Court of Criminal Appeal in R v Christov [2009] NSWCCA 168. The only matter raised in those submissions to which it is necessary to refer is the defendants' contention that the decision sanctions the approach, in the case of an irregularly filed election for trial by judge alone in a criminal case, of vacating the trial date and re-arraigning the accused the following day so as to resolve the irregularity: at [65]. It is not necessary to decide whether that would be a permissible device in the different context of the present case; it is not a course I would be prepared to adopt. 7. For those reasons, the orders are: 1. That the defendants, not later than 21 September 2015, notify the plaintiff in writing: 1. whether the defendants maintain any defence under s 30 of the Defamation Act; and 2. if so, the identity of any confidential sources relied upon by the defendants in the preparation of the matters complained of or, alternatively, a statement that the defendants do not propose to disclose those identities. 1. That the plaintiff give notice within a further seven days whether he intends to make any application under s 126K(2) of the Evidence Act in relation to the sources or any other application in relation to the defence of statutory qualified privilege. 2. That the defendants' application for orders to allow a notice of election for a jury trial to be filed be dismissed. 3. That the defendants pay the plaintiff's costs of the matters determined in this judgment. ********** Amendments 14 September 2015 - Formatting issue rectified 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: 14 September 2015