FEDERAL COURT OF AUSTRALIA

Thunder Studios Inc (California) v Kazal (No 4) [2017] FCA 1571

ORDERS

THE COURT ORDERS THAT:

1.    Each of the subpoenas addressed to:

(a)    the Proper Officer, Fairfax Media Publications Pty Limited; and

(b)    Linton Besser

be set aside.

2.    The first respondent bear the costs of Fairfax Media Publications Pty Limited and Linton Besser of their interlocutory application dated 3 October 2017 on a party and party basis.

3.    The applicants be granted leave to file their amended reply on or before 5 December 2017.

4.    The solicitors for the second respondent be granted leave to open packet S13 and marked privileged by the Registrar on 29 November 2017 and inspect the documents over which privilege has been claimed by him or on his behalf.

5.    On or before 4.00pm on 5 December 2017, the second respondent produce to the solicitors for the applicants copies of the documents the subject of the claim for legal professional privilege that he made to the Registrar placed in packet S13 and marked privileged by the Registrar on 29 November 2017 redacted so as to protect from disclosure any passage or passages containing material the subject of legal professional privilege.

6.    The second respondent pay the applicants’ costs in relation to the claim for legal professional privilege in respect of the documents in packet S13 and marked privileged by the Registrar on 29 November 2017 and today.

7.    The interlocutory application dated 27 October 2017 filed by the second respondent be fixed for hearing on 15 December 2017.

UPON THE SOLICITOR FOR THE FIRST RESPONDENT, BY HIS COUNSEL, UNDERTAKING TO PAY FORTHWITH ALL NECESSARY FILING FEES FOR THE INTERLOCUTORY APPLICATION DATED 3 DECEMBER 2017, THE COURT ORDERS THAT:

8.    Leave be granted to the first respondent to file the interlocutory application in court returnable instanter.

UPON THE FIRST RESPONDENT, BY HIS COUNSEL, UNDERTAKING TO THE COURT TO PAY ON AN INDEMNITY BASIS THE APPLICANTS' COSTS OCCASIONED BY THE ADJOURNMENT OF THE HEARING TODAY OF THE INTERLOCUTORY APPLICATION DATED 3 DECEMBER 2017 AND THE FURTHER HEARING OF IT TO BE HELD ON FRIDAY, 8 DECEMBER 2017, THE COURT ORDERS THAT:

9.    On or before noon on 6 December 2017, the first respondent file and serve any further affidavits on which he proposes to rely in support of his interlocutory application dated 3 December 2017 and filed in Court today, together with any written submissions, limited to 5 pages, in support.

10.    On or before 4.00pm on 7 December 2017, the applicants file and serve any further affidavits on which they propose to rely, together with any written submissions, limited to 5 pages.

11.    The hearing of the interlocutory application dated 3 December 2017 be stood over to 9.30am on Friday, 8 December 2017.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT (REVISED FROM THE TRANSCRIPT)

RARES J:

1    This proceeding commenced in 2014 and has had a number of interlocutory stages. The applicants, Thunder Studios Inc (California) and Rodric David, complain that the respondents, Charif Kazal and his brother, Adam Kazal, published four matters complained of between May and August 2013. Adam is not a party to the present application. I refused him leave to file a defence out of time for the reasons that I gave in Thunder Studios Inc (California) v Kazal (No 3) [2017] FCA 1170.

2    Thunder Studios and Mr David allege that the matters complained of conveyed several imputations that are defamatory of them, and that also amounted to representations made in trade or commerce that contravene s 18 of the Australian Consumer Law in Sch 2 of the Competition and Consumer Act 2010 (Cth), and statutory analogues, in that they were misleading or deceptive, or likely to mislead or deceive. It is only necessary to refer to some of the imputations in these reasons.

3    This is an application dated 3 October 2017 by a journalist, Linton Besser, and his then employer, Fairfax Media Publications Pty Ltd, to set aside subpoenas for production that Charif has caused to be issued to each of them.

Background

4    The background of this proceeding is complicated, and it is not necessary for me to set it out in great detail. Mr David is the principal of Thunder Studios. He and Charif appear to have been involved in a commercial relationship that broke down. The matters complained of referred to that relationship and conveyed what appeared to be Charif’s and Adam’s view that Mr David had been responsible for various activities that gave rise to the imputations complained of. Those imputations included those contained in pars 6(e), (h), 7(e), (i), 9(f), (j) and 10(f) and (j) of the amended statement of claim (the payment imputations).

5    The payment imputations were, in substance, that, relevantly, each of Mr David and Thunder Studios had paid Mr Besser to publish in his then-employer’s newspaper, The Sydney Morning Herald, stories that, first, included invented lies about the Kazal family and their business dealings, and, secondly, smeared the Kazal family in an attempt to cover up Mr David’s alleged criminal conduct. In his most recently filed defence, Charif sought to justify a number of the imputations, but not the payment imputations, being those that involve Mr David’s supposed relationship with Mr Besser and Fairfax. (I should note that at the time I delivered these ex tempore reasons, I did not have my attention drawn to the fact that Charif’s defence had been struck out, as his counsel informed me had occurred when he sought leave to file in Court an interlocutory application seeking its restoration immediately after I finished dealing with this application following delivery of my ex tempore reasons. I later rejected the reinstatement application: see Thunder Studios Inc (California) v Kazal (No 5) [2017] FCA 1572.)

6    However, in response to the payment imputations Charif’s defence pleads that each of the two matters complained of was published on an occasion of qualified privilege in which he was responding to an attack contained in 21 identified newspaper articles published by Mr Besser and Fairfax in The Sydney Morning Herald (the 21 articles) between 2010 and 2013, prior to the publication, in about June 2013, of the first matter complained of. In contrast, Charif pleaded defences of justification and contextual truth to other imputations that Thunder Studios and Mr David alleged were conveyed in the matters complained of.

7    Thunder Studios and Mr David agreed with Charif categories of discovery that Thunder Studios and Mr David would give, one of which included text messages passing between Mr David and Mr Besser in the period between 1 August 2010 and 16 March 2013. Thunder Studios’ and Mr David’s list of documents recorded that text messages stored and retained by Mr David on his BlackBerry hand-held device or mobile phone were no longer in his possession or in the control of Thunder Studios, because that BlackBerry had been stolen by a private investigator in May 2011.

8    In July 2017, I granted Charif leave to issue two subpoenas, one to Fairfax, the other to Mr Besser, that, after narrowing in the course of submissions, are now in substantively identical terms. The subpoenas sought production of “all written correspondence, including emails, between [Mr David] on the one hand, and [Fairfax and/or Mr Besser] on the other relating to” the 21 articles.

9    The 21 articles included one said to be entitled “Andrew Kelly’s Double Life” dated 4 September 2010, but Fairfax’ solicitor has not been able to identify that article, and Charif was not able to produce a copy of it for the purposes of the argument today.

10    Charif’s written submissions conceded that a phrase included in the subpoena to Mr Besser overreached and was not pressed, being “… or concerning the events behind” the articles. At this stage, I have not required Fairfax or Mr Besser to comply with the subpoenas by producing the documents to the Court.

Charif’s submissions

11    Each of Fairfax and Mr Besser, on the one hand, and Charif, on the other, filed written submissions on the interlocutory application to set the subpoenas aside. In essence, Charif sought to justify the issue of the subpoenas on the basis that, although he had not pleaded anything to support this contention, he was entitled to seek the documents referred to in the subpoenas to support his defence of qualified privilege based on a reply to an attack on the basis that Mr David, so Charif asserted, had been responsible for the attack in one or more or all of the 21 articles. In doing so, Charif relied on what McColl JA had said in the passages emphasised below in Abou-Lokmeh v Harbour Radio Pty Limited [2016] NSWCA 228 at [81].

12    In that case the Court of Appeal of the Supreme Court of New South Wales considered whether a defence of qualified privilege based on a reply to an attack should have been struck out by the District Court of New South Wales at an interlocutory stage. The defence of qualified privilege arose because the broadcast complained of contained a reply to a public attack on the plaintiff by a third party. The plaintiff alleged that the defence of qualified privilege should have been struck out because the attack had been made by the brother (Mr Issa) of a woman who was the plaintiff’s former wife, and not by the plaintiff himself. The circumstances of the publication were that, in the broadcast complained of, the brother had said that the woman had remarried while she was still married to the plaintiff, and she responded by giving her version of the events ([2016] NSWCA 228 at [4], [11]).

13    This was the context in which McColl JA (with whom Gleeson JA at [109]-[111] and Payne JA at [129]-[130] agreed on this point) held in Abou-Lokmeh [2016] NSWCA 228 at [81]-[82] that, at the particular interlocutory stage of that proceeding, the publishers’ defence of qualified privilege based on a reply to an attack ought not be struck out. This aspect of qualified privilege included a situation in which the plaintiff had not expressly made the attack. Her Honour said (at [81]-[82]):

it may be sufficient if it can be found that an attack ostensibly in another’s name was authorised by the plaintiff or, to use the language of counsel in this case, if it can be found that the plaintiff was complicit in the attack. In such circumstances the plaintiff can also be seen to have been responsible for the attack. [cf Webb v Bloch [1928] HCA 50; (1928) 41 CLR 331 (at 347) per Knox CJ; (at 364) per Isaacs J]. I deal with Loveday [v Sun Newspapers Ltd [1938] HCA 28; (1938) 59 CLR 503] in more detail below. However, in this respect, there is force in Mr Dibb’s complaint that the respondents have not pleaded that Mr Abou-Lokmeh was complicit in the attack on Ms Issa. Rather, the particulars of the reply to attack defence set out the substance of the interview in which the attack was made. They conclude by asserting the matter complained of was a “reply to the attack by Mr Issa.”

Accordingly, at this stage, the submission that the respondents may establish Mr Abou-Lokmeh was complicit in the attack appears to be a matter of speculation. It cannot be dismissed however as groundless. Mr Abou-Lokmeh and Ms Issa were married for many years before the events which led to publication of the matter complained of. It cannot be said that there is “no possibility” of circumstances emerging demonstrating Mr Abou-Lokmeh’s involvement in Mr Issa’s attack [Bayne v Bailleu [1908] HCA 39; (1908) 6 CLR 382 (at 397) per Griffiths CJ; (at 399) per O’Connor J]. (emphasis added)

14    Charif contended that the subpoenas were not a fishing expedition. Earlier today, I rejected the tender of a document on which Charif had intended to rely in support of the subpoenas. That document purported to be a summary of SMS messages between Mr Besser and Mr David that Charif asserted he had received from an anonymous source on 29 July 2011 while a court hearing between Mr David and Charif was being conducted in the United Arab Emirates. The documents that were allegedly delivered to Charif were not annexed to the summary document, nor did Charif put in evidence the circumstances of their receipt from the anonymous source. I was of opinion that the basis on which the summary had been prepared had not been established to a sufficient degree for the purposes of its being received into evidence on an interlocutory application such as this. Charif also sought to argue that he wished to give evidence at the trial to suggest that, in some unspecified manner, the timing of the relevant publications was intended to “affect the proceedings” in the United Arab Emirates, and that Mr David had been researching and feeding material to Mr Besser for publication so as to give rise to an inference for believing (for the purpose of this application) that Mr David was behind the attack, and that Charif was entitled to investigate that issue.

15    In the course of argument, Charif’s counsel asserted that it was not necessary for Charif to plead that Mr David had any complicity in the attack to which his defence referred in order to justify issuing subpoenas to elicit material that might support such a case. He argued, based on Abou-Lokmeh [2016] NSWCA 228, that his client believed that Mr David had been complicit and asserted that the subpoenas sought documents for the purposes of evidence about which Charif, and his lawyers, had some knowledge. Charif contended that the question of whether Mr David had encouraged or sought the publication of the 21 articles was a matter that was legitimately in issue so as to justify requiring Fairfax and Mr Besser to produce the documents in answer to the subpoenas.

Consideration

16    In Commissioner for Railways v Small (1938) 38 SR(NSW) 564 at 573-575, Jordan CJ discussed the principles governing challenges to the validity of subpoenas for production of documents. The Chief Justice’s reasons have been followed repeatedly. He said of a subpoena for production (duces tecum) addressed to a non-party (38 SR(NSW) at 573):

If it be addressed to a stranger, it must specify with reasonable particularity the documents which are required to be produced. A subpoena duces tecum ought not to be issued to such a person requiring him to search for and produce all such documents as he may have in his possession or power relating to a particular subject matter. It is not legitimate to use a subpoena for the purpose of endeavouring to obtain what would be in effect discovery of documents against a person who, being a stranger, is not liable to make discovery. A stranger to the cause ought not to be required to go to trouble and perhaps to expense in ransacking his records and endeavouring to form a judgment as to whether any of his papers throw light on a dispute which is to be litigated upon issues of which he is presumably ignorant: Lee v Angas [LR 2 Eq 59]; Burchard v Macfarlane [[1891] 2 QB 241 at 247]; A-G v Wilson [9 Sim 526]; Newland v Steer [13 LT 111; 13 WR 1014]. (emphasis added)

17    In Australian Competition and Consumer Commission v Shell Co of Australia Limited (1999) 161 ALR 686 at 696 [53]-[55], Cooper J distilled the following principles:

[53]    A subpoena is oppressive if it requires the recipient to make fine judgments regarding the relevance of documents (Finnie v Dalglish [1982] 1 NSWLR 400; Southern Pacific Hotel Services Inc (at 718)), or if it requires a recipient to undertake a search of an excessively large amount of documents (Commissioner for Railways v Small (at 574)), or does not specify the documents with reasonable particularity: National Employers’ Mutual General Association Ltd v Waind and Hill [1978] 1 NSWLR 372; Commissioner for Railways v Small (at 574).

[54]    The primary consideration is the due administration of justice and in particular this consideration manifests itself as a requirement that the parties have available to them all material relevant to the issues to be decided in the case: Southern Pacific Hotel Services Inc (at 720).

[55]    In a practical sense this test was expressed by Beaumont J in Trade Practices Commission v Arnotts Ltd (1989) 88 ALR 90 at 103, asking two questions:

1.    Do the documents requested have “apparent relevance” to the issues in the proceeding? That is, does the subpoena have a legitimate forensic purpose?

2.    Is the subpoena seriously and unfairly burdensome or prejudicial?

See also Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd [1998] FCA 1599 at 7–8. (emphasis added)

18    In Harbour Radio Pty Limited v Trad (2012) 247 CLR 31 at 48 [33], Gummow, Hayne and Bell JJ approved (with their own emphasis, italicised in the passage below) what Dixon J held in Penton v Caldwell (1945) 70 CLR 219 at 233-234, concerning the defence of qualified privilege based on a reply to an attack, namely:

The foundation of the privilege is the necessity of allowing the party attacked free scope to place his case before the body whose judgment the attacking party has sought to affect. In this instance, it is assumed to be the entire public. The purpose is to prevent the charges operating to his prejudice. It may be conceded that to impugn the truth of the charges contained in the attack and even the general veracity of the attacker may be a proper exercise of the privilege, if it be commensurate with the occasion. If that is a question submitted to or an argument used before the body to whom the attacker has appealed and it is done bona fide for the purpose of vindication, the law will not allow the liability of the party attacked to depend on the truth or otherwise of defamatory statements he so makes by way of defence. (bold emphasis added)

19    Here, Charif’s defence pleaded that the occasions of qualified privilege arose because he was “responding to an attack contained in the following series of articles published by Linton Besser and his principal or employer, the proprietors of The Sydney Morning Herald” and then listed the 21 articles. In the second last listed article, published on 19 March 2013, Mr David appeared to have given an interview to Mr Besser and was, no doubt, the source of much of the material contained in it. In some of the earlier listed articles, Mr David’s name is not mentioned. In others, Charif’s name is not mentioned, but that of his family is. Thunder Studios and Mr David have not sought to strike out the defence of qualified privilege based on the matters complained of being a reply to an attack perceived to have been made by them on Charif by the 21 articles.

20    The first two of the 21 articles were published on 1 September 2010. One headlined, “Secret favours greased Rocks deal” and the other headlined, “Macdonald defied cabinet to appoint his man for Middle East”, were published under Mr Besser’s byline. Each article contained allegations that a senior public servant had had an improper relationship with members of the Kazal family and that one of Charif’s brothers, Karl Kazal, had been appointed as an honorary trade counsel to the Middle East by a former minister in the New South Wales Government, Ian Macdonald, without the authority of the then State Cabinet. While it may be possible to see these articles as constituting an attack on Mr Kazal’s family and possibly him, they contain no, and there is no pleaded, connection between Mr David and anything said in either article as to how Mr David somehow might conceivably have had any involvement in its publication. The articles included references to an earlier report of the State’s Independent Commission Against Corruption (ICAC) into certain dealings by members of the Kazal family with the New South Wales Government that had made findings that were not adverse to them.

21    Subsequent articles in the 21 articles developed what it is possible to infer could be understood, for the purposes of this argument at this stage of the proceeding, as an attack upon both Charif himself and, more generally, members of his family that may have included him. Indeed, in some of the articles he was named, and in others, Mr David’s role in the relationship between the Kazal family, including Charif and their respective business ventures is discussed. Some of the articles appear on their face to be reports of public ICAC proceedings. For example, one article, published on 26 July 2011, was headlined “Secret trip was for job interview, inquiry told”. It dealt with the senior public servant who was alleged to have had an improper relationship with the Kazal family. The article reported that that person had given evidence to ICAC about Mr David, in which he had sought to implicate Mr David in paying that witness $11,000 in cash. Ultimately, subsequent articles in the 21 articles reported that ICAC had found that cash payment originated with persons in the Kazal family.

22    The subpoenas seek all correspondence “relating to” each of the 21 articles that passed between Mr David and either of the two publishers, Fairfax or Mr Besser. There is nothing contained in Charif’s pleaded defence that entitles him to issue subpoenas in such wide and imprecise terms. In effect, the addressee of each subpoena must make a judgment as to what “relates to” each of the publications in terms of any communications that he or it may have had with Mr David. The articles, in evidence, largely speak for themselves, so that in their terms they will either justify or not justify that the two publishers (Fairfax and Mr Besser) made the alleged but unspecified attack.

23    Here, Charif has sought to justify some of the imputations that Mr David complains of and also to plead other imputations of contextual truth that raise allegations of dishonesty by Mr David and Thunder Studios, which he controls. I am of opinion that the terms of each subpoena are really fishing for evidence to support an allegation that Charif has not sought to justify in his defence to the payment imputations (because, I infer, he has no basis to do so). Charif’s defence pleaded that Fairfax and Mr Besser published “an attack” in the 21 articles, without specifying or suggesting anything about what the attack was or that anyone else had, or may have had, any involvement in it in order to support the making of the serious allegations in the payment imputations.

24    There is no issue raised on the pleadings or in the particulars which warrants Charif being given access to documents produced under compulsion that may or may not assist him in developing what now is merely his speculative belief that Mr David had some unspecified role to play in Fairfax’ and Mr Besser’s publication of the attack in all or each of the 21 articles, whatever that attack may be. No doubt, Mr David may have been a source of statements attributed in particular articles to him, some of which occurred in interviews, but other statements appear, from the terms of the articles, to have been made when Mr David was giving evidence in public during the ICAC inquiry.

25    I do not consider it to be a legitimate forensic purpose for these subpoenas to be allowed to stand, in order to explore whatever correspondence Fairfax and Mr Besser may have had with Mr David that “relates to” each of the 21 articles. As the pleading stands, including the particulars that it contains, the defence simply asserts that the 21 articles constituted a single “attack”, in publications by Mr Besser and Fairfax, to which the matters complained of replied under qualified privilege. In a broad sense, reading each of the 21 articles in evidence together, one can see that Fairfax and Mr Besser were calling into question the business conduct and ethics of the Kazal family, including Charif, in their dealings with, among others, but not limited to, Mr David. However, the attack, as revealed in the articles read as a whole, involved a subject matter that became exposed in hearings before, and findings by, the ICAC, and courts in the United Arab Emirates and the Cayman Islands. The ICAC inquiry, its findings and those two court proceedings were also referred to in the matters complained of themselves.

26    This is an application by strangers to set aside subpoenas. There is no present issue about, and it is not necessary to consider, the sustainability of Charif’s unchallenged pleading of reply to an attack. That issue as pleaded and particularised provides the basis for considering the justifiability of the subpoenas. The issue here is whether the subpoenas have a legitimate forensic purpose in seeking to obtain documentary evidence for use in this proceeding.

27    I accept that Mr David is not in a position to give discovery about contents of his mobile phone for the reasons set out in his affidavit of discovery, and that this circumstance may have disadvantaged Charif. However, I am of opinion that that circumstance does not provide a sufficient basis, alone or in combination with Charif’s other arguments, that would allow these subpoenas to stand.

28    Documents sought in the subpoenas that simply “relate to” one or more of each of the 21 articles or all of them taken as a whole, being communications between Mr David and Mr Besser and or Fairfax, do not have apparent relevance to the issues in the proceeding: Shell 161 ALR at 696 [55]. Moreover, I am satisfied that the terms of the subpoenas amount to fishing to see whether there is any document possibly available that falls within the wide and unqualified sphere of its being “related to” each article, that might support Charif’s speculative allegation that Mr David procured or was involved in the attack in the 21 articles or caused or paid for the attack to be published.

29    It is no more than mere speculation on the material before me for Charif to suggest that Mr David was responsible for any of the material that the first two of the 21 articles, dated 1 September 2010, contain. There is nothing on the face of the 21 articles, or identified by Charif in the pleaded defence or in evidence or argument, that suggests that Mr David had any connection to the procuring of their publication. Those two articles, for example, refer to press releases and the conduct of a public official that are said to have a connection to public activities of the Kazal family. Other articles involved, what appear to be, on their face, reports of proceedings in public of ICAC and other publicly available matter.

30    Counsel for Charif acknowledged that he was not able to formulate more narrowly terms for the subpoenas that would identify with precision the document or documents which he seeks that could relate to the issues in the proceeding.

31    To require Fairfax and Mr Besser now to have to review all of their documents, including if he has any, Mr Besser’s mobile phone records and email records, over a period of about three years for ones that “relate to” the 21 articles would be oppressive.

Conclusion

32    For these reasons, I am of opinion that each of these subpoenas should be set aside.

Costs

33    Fairfax and Mr Besser seek their costs on an indemnity basis. They contended that in correspondence from their solicitors dated 8 August 2017, they advised the solicitors for Charif of the objections to each of the subpoenas that I have, in substance, upheld. They argued that Charif maintained that the subpoenas were legitimate in a reply from his solicitors dated 18 September 2017, which rejected the argument that the subpoenas had no legitimate forensic purpose in seeking to discover Mr David’s role as being a person behind publication of the alleged attacks in the 21 articles. Charif’s solicitors referred to what McColl JA had said in Abou Lokmeh [2016] NSWCA 228 at [81] about how his defence of reply to an attack by one person could be supported in circumstances where the plaintiff (or applicant), namely Mr David, had been the real attacker or could be shown to have been complicit in the attack.

34    Fairfax and Mr Besser argued that their solicitors had explained why that argument was flawed immediately afterwards, on 19 September 2017. Their solicitors asserted that there was nothing in the defence that suggested Mr David’s authorisation of, or complicity in, the alleged attack. Fairfax and Mr Besser repeated the same arguments in their written submissions filed on 2 November 2017.

35    In my opinion, this is not a case in which I should order Charif to bear the costs on an indemnity basis. There was a real issue as to the way in which McColl JA’s reasons in Abou-Lokmeh [2016] NSWCA 228 might be applied. While I have found against Charif largely on the basis on which Fairfax and Mr Besser consistently opposed the subpoenas’ enforcement, they made no offer to answer any revised terms of the subpoenas or otherwise to compromise the dispute. This is not a case in which any misconduct or bad faith by Charif has been alleged or shown.

36    In all the circumstances, I consider that the ordinary order for costs should be made, namely that Charif should bear the costs of the interlocutory application on a party and party basis.

Associate:

Dated:    31 January 2018