Federal Court of Australia

Kazal v Thunder Studios Inc (California) [2023] FCAFC 174

ORDERS

THE COURT ORDERS THAT:

1.    The appeal is dismissed.

2.    Subject to paragraphs 3 and 4, the appellants pay the respondents’ costs of the appeal.

3.    Either the appellants or the respondents may seek a variation of the order in paragraph 2 by filing and serving by 4.00 pm on 13 November 2023 a written submission of no more than three pages, 1.5 spacing, 12 point font, in which event the other parties may by 4.00 pm on 20 November 2023 file and serve a responding written submission of no more than three pages, 1.5 spacing, 12 point font.

4.    Subject to further order, any application for variation of the order for costs will be determined on the papers.

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

REASONS FOR JUDGMENT

WIGNEY J:

1    I agree with the orders proposed by Wheelahan J. I also agree with his Honour’s reasons for concluding that the appeal should be dismissed.

Associate:

Dated:    3 November 2023

REASONS FOR JUDGMENT

WHEELAHAN J:

Introduction

2    This appeal concerns the publication by the appellants of four sets of matters on the internet. The primary judge characterised the publications as being part of conduct of the appellants from 2013 up to trial that resembled a concerted, continuous campaign that was conducted as a vendetta to vilify and denigrate the respondents.

3    The two appellants are brothers: Charif Kazal, and Adam Kazal. The respondents to the appeal, who were the successful applicants below, are Mr Rodric David, and a company incorporated under the laws of California, Thunder Studios Inc (Thunder Studios). At the times relevant to the proceeding Mr David was the chairman and chief executive officer of Thunder Studios and was responsible for its day-to-day business.

4    The trial of the proceeding took place over the course of seven days in October 2020. Due to the COVID-19 pandemic, the trial was conducted by video link on Microsoft Teams, with the judge, counsel, and witnesses, in different locations.

5    Following trial, judgment was given for the respondents against the appellants for damages, and orders in the nature of permanent injunctions were made. The primary judge’s reasons for judgment on liability issues and damages following the trial are published: Thunder Studios Inc (California) v Kazal (No 12) [2022] FCA 110; 403 ALR 698 (Judgment No 12, or J12). His Honour subsequently gave reasons for granting permanent injunctions, reasons in respect of the extent of joint liability of the appellants, and reasons in relation to costs, which were awarded to the respondents on an indemnity basis: Thunder Studios Inc (California) v Kazal (No 13) [2022] FCA 256 (Judgment No 13, or J13).

6    The first and second of the four matters were published on a website titled the Kazal Family Story to which the judge referred as the Kazal website. His Honour held that these matters were defamatory of the respondents. His Honour also held that these matters were published maliciously and conveyed imputations that were false, and which had caused actual financial damage, thereby also giving rise to liability for injurious falsehood.

7    Thunder Studios and Mr David also alleged that the publication of the first and second matters on the Kazal website constituted conduct in the course of trade or commerce that was misleading and deceptive in contravention of s 18 of the Australian Consumer Law (ACL), which is Sch 2 of the Competition and Consumer Act 2010 (Cth), and by operation of s 131 of the Act has effect in relation to the conduct of corporations. Section 18 of the ACL is given extended effect by operation of s 6(3) of the Act to persons who are not corporations where the conduct involves the use of postal, telegraphic or telephonic services. The respondents relied on the extended operation of s 18 of the ACL¸ and this did not appear to be in issue at trial, and it was not in issue on the appeal. The primary judge did not make any specific findings in relation to whether the website publications contravened s 18 of the ACL, but his Honour must be taken to have found that those representations that were found to have been conveyed by the first and second matters engaged s 18 of the ACL, because his Honour referred to contraventions of s 18 of the ACL when assessing damages, and granted a permanent injunction in relation to them pursuant to s 232 of the ACL in terms to which the parties agreed: see J12 [354], [360] and J13 [3]. No point was taken on appeal in relation to the adequacy of findings in relation to the first and second matters.

8    Each of the appellants also had Twitter accounts. The publications on the Twitter accounts comprised the third and the fourth matters. The primary judge held that from about May 2013 the appellants published thousands of tweets on their respective Twitter accounts that purported to include links to headlines and news stories, but which instead took anyone who clicked on the links to the Kazal website which contained matter that was defamatory of the respondents. The judge held that the effect of readers being taken to the Kazal website was to drive up traffic, and consequently to raise the search engine optimisation ranking of the Kazal website when persons searched the internet for information about Mr David. The judge held that these Twitter publications constituted conduct in trade or commerce that was misleading and deceptive in contravention of s 18 of the ACL.

9    The primary judge assessed damages against the appellants in substantial sums. The awards against Adam Kazal were assessed in higher amounts than those assessed against Charif Kazal as a reflection of the greater degree of aggravation of injury that was attributed to him. In summary, the awards, together with the assessments of pre-judgment interest, are set out in the following table –

10    As between Charif Kazal and Adam Kazal, the primary judge held at J13 [24] that Charif Kazal and Adam Kazal should be held jointly and severally liable for $350,000 of the awards in favour of Mr David and $45,000 of the awards in favour of Thunder Studios, with a similar proportion of pre-judgment interest in each case.

11    The substantial awards of damages in favour of Mr David were due in no small part to the extensive conduct of the appellants in pursuit of a campaign of intimidation and vendetta against the respondents that was held to be improper, unjustified, and lacking bona fides and which aggravated the injury to Mr David by causing him additional hurt. The primary judge also assessed compensatory damages that were awarded to Thunder Studios on the basis that aggravation by the appellants of its injury was to be taken into account: J12 [361].

12    In awarding damages to Thunder Studios and Mr David, the judge excluded damage to their reputations from publications in the United States on the ground that the laws of that country were substantively different to the laws of Australia: J12 [340], [357]-[358].

13    I will set out some more background before identifying the array of issues that arise out of the grounds of appeal.

Further background

14    The proceeding has a lengthy history. The matters the subject of the respondents’ claims were first published in June 2013. The proceeding was commenced in August 2014. Prior to trial there were a number of interlocutory decisions, and there were findings of contempt of court against Adam Kazal: Thunder Studios Inc (California) v Kazal [2016] FCA 1598 (Judgment No 1, or J1). These findings resulted in an order by the primary judge that Adam Kazal be sentenced to concurrent terms of imprisonment, the longest of which was 18 months: Thunder Studios Inc (California) v Kazal (No 2) [2017] FCA 202 (Judgment No 2, or J2). Four of six findings of contempt were upheld by the Full Court, which re-exercised the sentencing power, imposing a total effective sentence of 15 months’ imprisonment, which Adam Kazal served: Kazal v Thunder Studios Inc [2017] FCAFC 111; 256 FCR 90. The interlocutory background and the contempt proceedings were referred to by the primary judge at J12 [7]-[23]. Three interlocutory decisions of a procedural nature are also the subject of this appeal. In addition, the appellants challenge an interlocutory decision of the primary judge not to disqualify himself on the ground of apprehended bias which was said to arise from his Honour’s findings of contempt against Adam Kazal.

15    The course of this proceeding is set against the context of a wider field of disputation and acrimony between the appellants, the respondents, and corporations with which they have been associated leading to what his Honour described at one point as a “farrago of litigation across the world”. The wider disputation was referred to by the primary judge at J12 [109]-[150], and aspects of it are summarised below.

The Emergent joint venture and the initiation of a proceeding in the Cayman Islands

16    In 2006, Mr David was living in Sydney and working in property development and construction. It was about this time that he was introduced to Charif Kazal.

17    In early 2008, Mr David and Charif Kazal agreed to participate in a joint venture in the UAE. They incorporated Emergent Capital Limited (Emergent) in the Cayman Islands as a vehicle through which to pursue the joint venture. Emergent had two corporate shareholders, which were also incorporated in the Cayman Islands: RAAL Ltd, controlled by Mr David, and KTC, which was controlled by Charif Kazal and at least one of his brothers, Mr Tarek Kazal, known as “Tony” Kazal. The share capital of Emergent was 50,000 shares of US$1 each. The issued capital comprised 100 shares, held in equal proportions by RAAL Ltd and KTC. I will refer to RAAL Ltd’s participation in the venture as the David side of the venture and to KTC’s participation as the Kazal side of the venture.

18    The relationship between the two sides disintegrated over time. Ultimately, there were disputes, inter alia, as to the nature of the joint venture and the obligations of the relevant parties, the performance or otherwise of those obligations, and allegations of shareholder oppression regarding Emergent. The David side of the venture claimed that the Kazal side had only provided about AU$600,000 of funding contra the approximately AU$5.8 million the David side asserted it had contributed. The Kazal side claimed that the David side was responsible for its oppression in the context of shareholding in Emergent. It was said that on 28 January 2010, Mr David convened a board meeting of Emergent. Another board member, Mr Nick Mavromanolakis, had provided the Kazal side notice of the meeting on 22 January 2010. Only Mr David and Mr Mavromanolakis attended the board meeting at which it was resolved that 49,000 shares in Emergent would be issued to RAAL Ltd at US$1 each, with a correlative reduction in RAAL Ltd’s loan to Emergent. This was said to have been a deliberate ploy by the David side to gain control of Emergent. These allegations led to the matter being litigated before the Grand Court of the Cayman Islands. A proceeding was commenced by the Kazal side in March 2010 in which the winding up of Emergent was sought on the just and equitable ground.

Events in the UAE

19    Mr David moved to the UAE for the purpose of pursuing the joint venture. In about April 2010, Tony Kazal made a complaint to the Department of Immigration in Dubai. He alleged that Mr David had absconded in breach of his visa. The primary judge found that this complaint was false.

20    On 6 May 2010, both a civil and a criminal complaint were lodged by Charif Kazal in the Court of First Instance of Abu Dhabi against Mr David. These complaints alleged embezzlement by Mr David in relation to the joint venture, and other financial misdeeds. The primary judge found that these allegations were false.

21    As a result of Tony Kazal’s complaint, Mr David was summoned to a police station in Abu Dhabi in May 2010. Upon his attendance, he was detained so that he could be transported to the Dubai authorities. He was detained for two nights by the Abu Dhabi authorities before being released while they investigated the criminal complaint. The primary judge drew the inference that “the purpose of Tony’s complaint was to humiliate Mr David and make it difficult for him to conduct any defence of the winding up petition in the Cayman Islands while he was detained in custody in the UAE falsely accused of conduct that contravened his visa conditions”: J12 [119]. While travelling back to Abu Dhabi after his release by the Dubai authorities, Mr David was telephoned by a journalist, Mr Linton Besser. This was their first contact. Mr David and Mr Besser spoke with one another sporadically thereafter. In 2013, Mr Besser published an article in The Sydney Morning Herald which detailed Mr David’s detention. I will address that article in more detail below.

22    On about 3 May 2012, the UAE Court acquitted Mr David of all criminal charges and rejected the civil proceeding brought against him by Charif Kazal. On 9 January 2013, the Court of Appeal of the UAE dismissed Charif Kazal’s appeal against the first instance court’s decision – in respect of both the criminal aspect and the civil aspect.

The decision in the Cayman Islands proceeding

23    The Cayman Islands proceeding came before Jones J in the second half of 2010, which ultimately resulted in the decision in Re Emergent 2011 (2) CILR 329. Jones J held, inter alia, that the issue of the new shares amounted to a breach of fiduciary duty by Mr David in effecting a transaction with the dominant purpose of protecting his own position vis-à-vis Emergent by diluting the shareholding of the Kazal side. Mr Mavromanolakis was also found to have breached his fiduciary duty. In consequence, Jones J ordered that Emergent’s register of members be rectified to reflect the original distribution between the two sides, in equal proportions, of 100 shares at US$1.

24    In the Cayman Islands Grand Court, Jones J further found that Charif Kazal’s denial, in evidence, that the Kazal side had an obligation to fund Emergent equally with the David side, was not credible. The primary judge in this Court accepted evidence from Mr David that the two sides had agreed to fund equally the joint venture run through Emergent. His Honour further accepted that the Kazal side “did not contribute [its] share of that funding to Emergent”. The primary judge noted at J12 [112] –

Importantly, s 91 of the Evidence Act 1995 (Cth) precludes evidence of the decision, or a finding of fact, of Jones J or any other court, from being admissible here to prove the existence of a fact that was in issue in such a proceeding. However, Jones J’s findings are relevant, not to establish the truth of those findings in this proceeding, but as evidence simply of what his Honour said about the dispute that he resolved and his reasoning process to arrive at those findings. The matters complained of purport to give a significantly distorted account of his Honour’s finding that Mr David breached his fiduciary duty. The findings are thus admissible to prove what Jones J found, but not to prove the correctness or otherwise of those findings, save as to the extent that they may create issue estoppels as between Mr David and his privies on the one hand and, on the other hand, Charif and his privies.

The ICAC investigation

25    Another axis to the wider disputation between the parties involves the Independent Commission Against Corruption (ICAC) of New South Wales. Mr David was subpoenaed in early 2011 to give evidence at a private hearing, and he and his lawyers provided documents and evidence to ICAC. The subject of ICAC’s inquiry was an allegation that there was an undisclosed conflict of interest between a Mr Andrew Kelly, a senior executive of the Sydney Harbour Foreshore Authority, and Charif Kazal, in relation to their discussions, from 2007 onwards, regarding the establishment of a joint venture in the UAE.

26    The primary judge found that during the period of the ICAC inquiry, Mr David was confronted by two members of the Kazal family at a bar in Sydney on 12 May 2011. They threatened Mr David, by saying “We’re going to get you” and by following Mr David and his companions out of the bar, yelling and swinging a bag that appeared to contain heavy cans or jars of protein powder. The primary judge further found that on 20 May 2011, a person whom the police said was a private investigator engaged by Tony Kazal, had been following Mr David’s wife in a car as she drove in the vicinity of Bondi Junction, Sydney. Mrs David alerted the police and she and her husband went to pick their children up from their school. Upon arriving at the school, Mrs David noticed the presence of the same car which had been tailing her. Mr David followed the car on foot, in an attempt to capture a photograph of the driver on his mobile phone. When Mr David got close, the driver lunged through the window of the car and snatched Mr David’s phone. As the car began to drive off, Mr David jumped onto the bonnet and held onto the windscreen wipers as the car accelerated away. Mr David eventually jumped off the bonnet and sustained head injuries.

27    The police and the ICAC organised surveillance security for Mr David and his family and Mr David employed a private security firm to provide him and his family physical protection.

28    During the public hearings conducted by the ICAC in July 2011 a friend of Mr David, a Mr Mike Hammond, who was giving evidence, was accosted in the hearing room by Charif Kazal.

29    As a result of fears for his and his family’s safety as a result of the matters just described, Mr David and his family left Australia towards the end of 2011. The primary judge accepted Mr David’s evidence that he and his family “were terrified”.

The “Bad Company” article

30    Mr Besser used the information imparted to him by Mr David over the course of his interviews in relation to Mr David’s detention in the UAE in 2010 and related matters, to publish an article in The Sydney Morning Herald on 16 March 2013. That article was titled “Bad Company”. The article commenced as follows –

The stench - a gagging foulness of human sweat and faeces from filthy squat toilets - overwhelms Rodric David as he’s led, handcuffed, into a dank cell block crammed with 300 unwashed men. The Australian business tycoon - son of former grocery magnate John David, of IGA fame - tries his best to remain calm, but under his label shirt beads of sweat are trickling down his back. The shortish, stocky 40-year-old is the only Westerner in the cell at Abu Dhabi’s Port Zayed police station. And certainly the only one wearing a Zegna suit.

Knowing that any sign of weakness could be perilous, David keeps his eyes fixed firmly on the concrete floor. He spots a spare little table, sits down, and pulls out a notebook and pen from his jacket. He starts writing- and writing. When he runs out of pages, he starts scribbling over the writing between the lines.

“The chairman will see you now,” a fellow prisoner in a kendora, a traditional cream-coloured Arab gown, announces to him in English. David, at a loss as to what else to do, follows the man into a separate cell. Sitting on the bed is a fresh-shaven Arab, who looks David up and down and, in a plummy British accent, pronounces: “You are under my protection.” He issues David with a series of instructions. Don’t go to the showers. Don’t go to the toilet. Don’t leave your cell.

31    Amongst other things, the article proceeded to give an account of –

(a)    the germination, and structure, of the Emergent joint venture;

(b)    the falling out between the David side and the Kazal side;

(c)    the 28 January 2010 board meeting;

(d)    the complaint lodged by Tony Kazal with the UAE authorities;

(e)    Mr David’s detention by the UAE authorities;

(f)    the history of the Kazal family, presenting a narrative which in the words of the primary judge, “asserted numerous less than flattering accounts of their personal and business ethics and dealings”, including an allegation tying Tony Kazal to dealings with Hezbollah;

(g)    the judgment of Jones J in the Cayman Islands proceeding;

(h)    the ruling of the UAE Court at first instance;

(i)    the ICAC hearings, including the incident involving Mr Hammond; and

(j)    the incidents of 12 May 2011 and 20 May 2011, as outlined above.

32    In cross-examination, Mr David said that he had been interviewed from time-to-time by Mr Besser, but had not provided all the information contained in the article. He also gave evidence, accepted by the primary judge, that there was a difference between the conditions of his detention on his first night of detention with the Abu Dhabi authorities and his second night of detention with those authorities, which was at a different location to the first.

Proceedings in California

33    There were further proceedings brought by Thunder Studios and Mr David against Charif Kazal, Adam Kazal, and their brother Tony Kazal in the United States District Court for the Central District of California at Los Angeles in February 2017. In that proceeding, Thunder Studios and Mr David made claims against the Kazals for the tort of stalking under California Civil Code § 1708.7. I will refer to the circumstances that gave rise to this claim later in these reasons. The proceeding was tried by a jury in December 2018, which found that Adam Kazal and Tony Kazal were liable to Mr David for US$100,000 in compensatory damages, and US$1,000,000 in punitive damages. The jury also awarded US$2,600 against Charif Kazal in favour of Thunder Studios for copyright infringement.

34    Adam and Tony Kazal appealed the judgment to the United States Court of Appeals for the Ninth Circuit. On 15 September 2021, and following the conclusion of the hearing before the primary judge, the Court of Appeals allowed the appeal: Thunder Studios Inc v Kazal 13 F.4th (9th Cir, 2021). The appeal was allowed on the ground that the Californian stalking statute excluded “constitutionally protected activity”, which included speech, protest, and assembly protected by the First Amendment to the United States Constitution. One of the issues that was determined was whether the conduct fell outside First Amendment protection on the ground that it constituted a “true threat”. I will return to the decision of the Court of Appeals for the Ninth Circuit later in these reasons.

Other proceedings in this Court

35    At the time the proceeding below was being prepared for trial, there were two other proceedings on foot in this Court involving parties to this appeal and which were in the docket of Perram J. The first proceeding (the Re.Group proceeding) was NSD 2080 of 2016 in which the applicants were Re.Group Pty Ltd and Naveen David Singh, and the respondents were Adam Kazal, Charif Kazal, and Tawfik Elgazzar. Neither Mr David nor Thunders Studios was a party to this proceeding. The second proceeding (the KTC proceeding) was NSD 555 of 2019 in which KTC, the company incorporated in the Cayman Islands and controlled by at least Charif Kazal and Tarek Kazal to which I referred at [17] above, was applicant, and Mr David together with other parties were respondents.

36    The immediate relevance of the existence of the other two proceedings is that prior to trial the primary judge refused an interlocutory application by the appellants to transfer the proceeding below to the docket of Perram J, or to stay the proceeding until the other two proceedings had been determined: Thunder Studios Inc (California) v Kazal (No 9) [2020] FCA 846 (Judgment No 9, or J9). That decision is challenged on this appeal.

The four matters

37    It is against the above background of disputation that, as the primary judge held, the appellants published matter on the Kazal website and by thousands of Twitter posts that contained hyperlinks directing readers to the Kazal website all of which comprised the four matters. Save for one imputation that I will identify, the meanings held to have been conveyed by the first and second matters and the misleading representations conveyed by the third and the fourth matters were not the subject of challenge on appeal. I will identify the four matters, the meanings held to have been conveyed, and the primary judge’s findings as to publication.

The first matter

38    The first matter was a page on the Kazal website to which the primary judge referred as the “landing page”.

The content of the first matter

39    There were seven screenshots which comprised the first matter. The primary judge referred to the first screenshot as “shot A1”. The words “Kazal Family Story” appear at the top of the screenshot as they do for the next three screenshots relevant to the first matter. Underneath those words appear the words “Know the truth”, which are not clearly visible from the screenshot. The further words “RipOff 101 with the Corporate Thief John David” appear in the screenshot. Those words include an unexplained reference to Mr David’s father.

40    Handwritten numerical annotations were added to the copies of the screenshots for reference purposes. The primary judge referred to each annotation as “par X”, and I adopt that terminology.

41    Shot A1 is as follows –

42    The individual in the three photographs in shot A1 is Mr David. The far-left photograph is captioned “Rodric David Biography – ‘The Great Pretender’”. That text is hyperlinked to par 11 in shot A5, which is referred to below.

43    Shot A2 is as follows –

44    Par 6 reads “In business with Rodric David, an Australian living in the USA” and is a hyperlink to par 16 in shot A5, which is referred to below.

45    Shot A3 is as follows, and depicts a masked man reaching out with his hand –

46    Par 10 reads “Rodric David is a deft hand at character assassination, especially when he has so much corporate …” and contains a hyperlink to par 19 in shot A5, referred to below.

47    Shot A4 is as follows –

48    Shot A4 depicts a graphic device entitled “Failure Types”. Par 8 is a caption which reads “Another hopeless act by the corporate thief Rodric David” and is a hyperlink to par 22 in shot A5, referred to below. At the high-end of the “Perm[anent]” axis of the graph is a picture of Mr David. Arrows depict an upwards progression from “Harmless” to “Catastrophic” to the picture of Mr David next to a caption “Rodric David The Corporate Thief”.

49    Shot A5 is as follows –

50    Pars 11, 16, 19, and 22 are the places to which hyperlinks from the pars in shots A1, A2, A3, and A4 lead.

51    There are further hyperlinks on the right-hand side of shot A5. Par 26 links to par 11; par 27 to par 16; and par 28 to par 19. The primary judge noted at J12 [37] –

Each of the passages of text below the hyperlinked headings in pars 11, 16, 19 and 22 is introductory to another, presumably longer, passage of text on a subsequent webpage not in evidence. However, the passages have a common theme that disparages Mr David. For example, par 15 begins by referring to Mr David’s biography on his blog and tells the reader that this glossed “adroitly… over the truth behind his alleged successes Con artists exist because the world is full of gullible people who believe everything they hear or read because it is very, very…” and is followed by a hyperlink box entitled “read more”.

52    Par 16 has the heading “In business with Rodric David, an Australian now living in the USA?” and introduces the following text in par 18 –

If you are currently doing business with Rodric David, or even thinking about it, you need to visit our website – http://kazalfamilystory.com – to learn just how Mr David conducts business. Our so-called partnership experience with Mr David ended in court proceedings that found him guilty of a Breach of Fiduciary Duty exposing his

read more

53    The photograph at par 25 is of Charif Kazal.

54    The text of par 21 purports to explain the purpose of the website, being “to provide the public with the other side of the story so that they can come to an understanding of what was actually behind the smear campaign conducted in the Sydney Morning Herald. It explains how the journalist, Linton Besser, aided and abetted Rodric David in his mission to destroy the reputations …”.

55    Shot A6 is as follows –

56    The person depicted in the image to the right of par 30 is Mr David.

57    The text above par 31 refers, and provides a link to a letter written by Mr David’s lawyer, which sought that the website’s publisher “Cease and Desist and to Retract Libel”.

58    The headline to par 32 states, “Will Sydney Morning Herald correct the record as they promised?”.

59    Par 34 replicates the opening text of an email sent by Charif Kazal on 16 July 2013 alleging that Mr Besser had “written a complete fiction …”.

60    Pars 35-37 relate to an email sent by Charif Kazal to Mr Besser on 5 July 2013. The opening text of that email is above par 37. To the right of par 36 is an image captioned “TRUTH OR DARE”.

61    Shot A7 is as follows –

62    It was accepted by the parties before the primary judge that elements of the above screenshots which appear orange were actually red.

63    To the right of par 40 is a red box containing the words “WARNING” and a picture of Mr David captioned “The Corporate Thief Rodric David”.

64    The text above par 41 reads –

If you are currently involved in a business venture with Rodric David or are contemplating doing business with him, it can be injurious to your health.

Based on Experience, our advice is to RUN the other way … and fast!

65    Par 42 is linked to the narrative comprised of pars 21, 32-34, and 35-7 and to the “Intro” article which is linked to pars 42-44. The full title of that article is “Intro – How the Mercenary Journalist Linton Besser Aided & Abetted the Corporate Thief Rodric David” and appears to the right of par 42. The text above par 44 reads –

The story you are about to read is one of deliberate character assassination and how members of my family were, and currently are, portrayed in Sydney Morning Herald (SMH) newspaper on its digital website. Both the newspaper and digital website are owned by Fairfax Media Limited, the leading multi-platform media company in Australasia. It…

READ MORE

66    Pars 45-47 are related and introduce an article. To the right of par 45 is the heading “Chapter 1 – a brief history about the Kazal’s business endeavours”. To the right of par 46 is a picture of Charif Kazal. Above par 47 is the introductory text to the article.

The imputations conveyed by the first matter

67    The primary judge held that the first matter conveyed the following defamatory imputations concerning Mr David. For convenience, the judge’s own numbering of the imputations used at J12 [48] is noted in square brackets –

(1)    Mr David is a corporate thief [6(b)];

(2)    Mr David was convicted of breach of fiduciary duty as a result of not fulfilling his partnership obligations to the Kazal family [6(c)];

(3)    Mr David is so lacking in integrity that he paid the journalist Linton Besser to publish deliberately invented lies in The Sydney Morning Herald about the Kazal family and their business dealings [6(d)];

(4)    anyone doing business with Mr David runs the risk of physical injury if they do not go along with him [6(e)]; and

(5)    Mr David paid the journalist Linton Besser to smear the Kazal family in an attempt to cover up his own criminal theft [6(f)].

68    The primary judge also held that the first matter conveyed the following defamatory imputations concerning Thunder Studios, again noting the primary judge’s numbering used at J12 [49] –

(1)    Thunder Studios is run by a corporate thief [7(b)];

(2)    Thunder Studios is run by Mr David, who was convicted of breach of fiduciary duty as a result of not fulfilling his partnership obligations to the Kazal family [7(c)];

(3)    Thunder Studios is run by Mr David, who is so lacking in integrity that he paid the journalist Linton Besser to publish deliberately invented lies in The Sydney Morning Herald about the Kazal family and their business dealings [7(d)];

(4)    anyone doing business with Thunder Studios runs the risk of physical injury [7(e)]; and

(5)    Thunder Studios is run by a person who paid the journalist Linton Besser to smear the Kazal family in an attempt to cover up his own criminal theft [7(f)].

69    As to imputations 7(d), (e), and (f) concerning Thunder Studios, there were no express findings by the primary judge at J12 [69], [71], or [72] as to whether they were conveyed when the primary judge was considering those imputations together with the corresponding imputations 6(d), (e), and (f) concerning Mr David. However, a fair reading of the reasons for judgment as a whole shows that his Honour did find that imputations 7(d), (e), and (f) were conveyed because his Honour’s consideration of the question of identification of Thunder Studios at J12 [56], and his consideration of the falsity of the imputations at J12 [303]-[305], proceed on the premise that the imputations were conveyed.

The second matter

70    The second matter was referred to by the primary judge as the “Intro article”. Like the first matter, it was published on the Kazal website.

The content of the second matter

71    The Intro article is reproduced as “Annexure A” to these reasons. The Intro article was featured on the landing page and pars 5-6 in shot A2, and pars 16-18 and 25 in shot A5 relate to that article. At the top of the article is a photograph of a City of Los Angeles street sign captioned with the words “In business with Rodric David, an Australian now living in the USA?”. The headline reads “How the Mercenary Journalist Linton Besser Aided & Abetted the Corporate Thief Rodric David”. The words “Charif Kazal” appear to the bottom-right of par 1. Below those words appears a photograph of Charif Kazal and brief biographical notes appear adjacent to par 24.

72    The opening paragraph, par 2, begins “The story you are about to read is one of deliberate character assassination” in the portrayal of members of the Kazal family in The Sydney Morning Herald. Par 3 states that since 1 September 2010, that newspaper and Fairfax’s website had published over 24 “well-constructed articles” that Mr Besser and Fairfax “carried out [as] this prolonged smear campaign… purely to assist Rodric David, the David family and their business interests”. According to par 4, the reader “will finally discover the truth” on the Kazal website. Charif Kazal, in par 5, tells the reader that Mr Besser initially set out to denigrate three members of his family, namely himself and his brothers, Tony and Karl, but the targets expanded to include his parents and, later, his pregnant wife. At par 6, the reader is given a definition of “defame” and then told that Mr Besser “clearly worked directly for and with Rodric David to frame the distorted content of his articles defaming my family to apply inordinate pressure on us during legal proceedings we had commenced” against Mr David in May 2010 in the UAE and later in the Cayman Islands. At par 8, the reader is told that the articles were planned to coincide with and influence steps in those two proceedings. At par 8, Mr Besser’s photograph is captioned “The Mercenary Journalist”.

73    The Intro article provides some biographical details about Mr David, and his father John, at par 9. At par 10, the article tells the reader of John David “openly advising us to drop our court cases against Rodric and he [John David] would ensure that all the adverse media and attention towards the Kazal family would cease” and, at par 12 –

We did not take up Mr David’s offer and the overall consequences of us seeking justice through the courts have been severe. My brothers and I have been threatened, our business have been threatened, bullying of our children in school and sporting activities has occurred and continual stress is caused to all other family members awaiting the next unwarranted attack to be published in the Sydney Morning Herald against the family.

74    At par 12, the Intro article described the UAE proceeding as being based on Mr David’s corporate fraud as well as his breach of fiduciary duty as a director of a company in which the Kazal family had a financial interest.

75    At par 14, the article tells the reader that Mr David “designed the media smear campaign” to destroy the Kazals’ credibility during critical stages of the two foreign legal proceedings. It stated that he had annexed to his affidavit of 27 September 2010 in the Cayman Islands proceeding nine articles published between 1 and 17 September 2010 and referred in the affidavit to negative publicity about the Kazals. The article asserts that if that proceeding were dismissed swiftly, Mr David would benefit from “a much more rewarding business deal” of which the Kazal family was then ignorant.

76    At par 15, the article tells the reader that Mr David worked “closely” with Mr Besser to time the publications to “disguise secret financial deals of significant benefit to him”. It also asserts that Mr David used his training as an actor, the media, and other proceedings, including in the New South Wales Independent Commission Against Corruption (ICAC), to shift the focus away from his corporate fraud.

77    The Intro article informs the reader, at par 16, that the “deceptive attacking front page” publicity was “excruciating” and distracted the Kazal family’s focus from other important business matters. In par 17 under the sub-heading “Power of the news media” the reader is told, at par 17a, 17b, and 18, about how news media can influence and manipulate public perception and how the adverse publicity affected the Kazals.

78    The par 19 sub-heading, “Truth will prevail”, introduces the reader to the purpose of the Kazal website, outlined at par 20, being to present “the other side of the story” so that the public will understand “what was actually behind the smear campaign conducted in the Sydney Morning Herald”. The reader is told that the Kazal website would explain how Mr Besser aided and abetted Mr David “in his mission to destroy our family for financial gain” in the multi-million dollar range.

79    The Intro article asserts that Mr Besser only contacted the Kazal family for their responses as “impartiality pretences”, but, even then, nothing that they said was included in any of Mr Besser’s articles. It tells the reader that every attempt that the Kazal family made to get The Sydney Morning Herald to report the story fairly “was summarily rebuffed” and at par 21 states –

[t]hat is why my preference for a title for our heretofore unknown side of the story is “The Corporate Thief and The Mercenary Journalist” but then, that is just my opinion of a very appropriate headline.

80    The Intro article concludes with the promise that the Kazal family will continue to challenge openly “the abominable treatment” they had received from Mr David, Mr Besser, the newspaper, and Fairfax “until we obtain justice”: pars 20-23. The Intro article web page also contains links to other pages on the Kazal website.

The imputations conveyed by the second matter

81    The primary judge held that the second matter conveyed the following defamatory imputations concerning Mr David –

(1)    Mr David was responsible for the children of Charif Kazal and each of his brothers being bullied at school and at sporting activities, because he paid Linton Besser to publish unwarranted attacks upon members of the Kazal family for having sought justice against him through the courts [9(f)];

(2)    Mr David attempted to pervert the course of justice, by threatening Charif Kazal and each of his brothers and their business, because the Kazal family sought justice through the courts [9(g)];

(3)    Mr David committed corporate fraud in the United Arab Emirates [9(h)];

(4)    Mr David paid the reporter Linton Besser to lie about the Kazal family and their business dealings [9(i)]; and

(5)    Mr David paid the journalist Linton Besser to smear the Kazal family, in an attempt to cover up his own corporate fraud and theft [9(j)].

82    The primary judge also held that the second matter conveyed the following defamatory imputations concerning Thunder Studios –

(1)    Thunder is run by a corporate criminal who was responsible for the children of Charif Kazal and each of his brothers being bullied targeted at school and at sporting activities, because he paid Linton Besser to publish unwarranted attacks upon members of the Kazal family for having sought justice against him through the courts [10(f)];

(2)    Thunder is run by a corporate criminal who attempted to pervert the course of justice, by threatening Charif Kazal and each of his brothers and their business, because the Kazal family sought justice through the courts [10(g)];

(3)    Thunder is run by a person who committed corporate fraud in the United Arab Emirates [10(h)];

(4)    Thunder is run by a corporate criminal who paid the reporter Linton Besser to lie about the Kazal family and their business dealings [10(i)]; and

(5)    Thunder is run by a corporate criminal, Rodric David, who paid the reporter Linton Besser to smear the Kazal family in an attempt to cover up his own corporate fraud and theft [10(j)].

83    Although there was no express finding that imputation 10(h) was conveyed, the judge stated at J12 [82] that the respondents accepted that imputation 9(h) concerning Mr David was conveyed by the second matter. As with three of the imputations concerning Thunder conveyed by the first matter, fairly read, his Honour relied on the admission of imputation 9(h), and is to be understood as finding that Thunder Studios was identified by the second matter, thereby supporting a finding that 10(h) was conveyed. There is a further point, which is that there were no specific findings by the primary judge as to the falsity of imputations 9(h) or 10(h): see J12 [307]-[308]. This was likely an oversight, because the judge found at J12 [299] that each of the imputations that was found to have been conveyed was false. No party took any point about these issues on appeal, and they need not be pursued any further.

The falsity of the first and second matters

84    Mr David gave evidence, and was cross-examined. The appellants did not give evidence, and otherwise did not call any witnesses at trial, but did tender some documentary evidence. The primary judge found that each of the imputations conveyed by the matters was false on the ground that he accepted Mr David’s evidence: J12 [299]. Further, the primary judge made the following specific findings as to falsity at J12 [300]-[309] –

300    Imputations 6(a) and 7(a): Mr David was not “convicted” of any crime. Moreover, he did not run away to California because of any conviction. There is no evidence or basis to say that Mr David’s conduct that Jones J found to be a breach of his fiduciary duty as a director in causing the diluting share allotment was a crime. Imputations 6(a) and 7(a) are false.

301    Imputations 6(b) and 7(b): Mr David is not a corporate thief and, accordingly, imputations 6(b) and 7(b) are false.

302    Imputations 6(c) and 7(c): For the reasons I have given in respect of imputations 6(a) and 7(a), Mr David was not convicted of anything. Moreover, there is no evidence that he did not fulfil any of his partnership obligations to the Kazal family. Jones J’s finding (which is not in evidence in this proceeding of the true position) was that Mr David had breached his fiduciary duty as a director owed to Emergent in exercising the power to make the allotment of shares that his Honour set aside. Imputations 6(c) and 7(c) are also false.

303    Imputation 6(d) and 7(d): Mr David did not pay Mr Besser to write his articles. Moreover, there is no evidence that anything in those articles for which Mr David was responsible was “deliberately invented” or other kind of lie. Accordingly, imputations 6(d) and 7(d) are false.

304    Imputation 6(e) and 7(e): There was no evidence to support any suggestion that Mr David posed any risk to anyone or that he caused or threatened, or even would cause or would threaten, physical injury to anyone at all, including anyone doing business with him. Imputations 6(e) and 7(e) are false.

305    Imputations 6(f) and 7(f): There is no evidence that Mr David paid Mr Besser anything or that Mr David had committed any criminal theft. Accordingly, imputations 6(f) and 7(f) are false.

306    Imputations 9(f) and 10(f): As I have found above, there is no evidence that Mr David paid Mr Besser anything. Nor is there any basis to suggest that Mr David was a corporate criminal or responsible for any conduct affecting Charif’s or his brothers’ children, or that any involvement of Mr David with Mr Besser’s articles had a purpose that had anything to do with members of the Kazal family seeking justice through the courts. Thus, imputations 9(f) and 10(f) are false.

307    Imputations 9(g) and 10(g): There was no evidence to suggest that Mr David had threatened Charif or any of his brothers or their businesses at all, let alone as an attempt to pervert the course of justice. Imputations 9(g) and 10(g) are false.

308    Imputations 9(i) and 10(i): These imputations are false for the same reasons as imputations 6(d) and 7(d) are.

309    Imputations 9(j) and 10(j): These imputations are false for the same reasons as imputations 6(f) and 7(f) are.

85    The primary judge found that for the purposes of the action for injurious falsehood the publication of the matters was malicious, and that Mr David and Thunder Studios had suffered special, or actual damage in the sense discussed by Bowen LJ in Ratcliffe v Evans [1892] 2 QB 524 at 527-533 as the intended and reasonably probable result of the publication of the matters.

The third and fourth matters

86    The third and fourth matters comprised some thousands of publications made on the Twitter accounts maintained by Charif Kazal and Adam Kazal respectively. The causes of action that were alleged were misleading and deceptive conduct in contravention of s 18 of the ACL. There were no claims in defamation or injurious falsehood in relation to the matters published by the appellants on their Twitter accounts. As I have indicated, the third and fourth matters comprised entries on the appellants’ Twitter accounts that had the appearance of links to ordinary commercial newsfeeds, but which in fact contained shortened hyperlinks in the form of bitlinks that took a reader to the Kazal website, including to the landing page. “Annexure B” and “Annexure C” to these reasons provide some indicative examples by way of screenshots. Those examples are the same as those which the primary judge reproduced in his Honour’s reasons in J12.

87    The primary judge found at J12 [102] that once a reader was taken to the Kazal website, he or she could, and some did, move to the Intro article. The primary judge found at J12 [103] that the purpose of each of the appellants in posting large numbers of tweets with these characteristics was to mislead and deceive anyone who took such a tweet at face value into being presented with the landing page, as the home page of the Kazal Family Story, and its attacks on Mr David.

The appellants’ defences at trial

88    At trial, the appellants were represented by senior and junior counsel. The trial proceeded without the appellants having any pleaded defences before the Court. In the case of Charif Kazal, he had filed a defence and then an amended defence, but his defence was struck out in consequence of his failure to comply with a self-executing, or “guillotine” order directed to the provision of verified answers to interrogatories. A subsequent application for an extension of time nunc pro tunc within which to comply with the order was dismissed: Thunder Studios Inc (California) v Kazal (No 5) [2017] FCA 1572 (Judgment No 5, or J5). An application for leave to appeal was dismissed: Thunder Studios Inc (California) v Kazal [2018] FCA 593 (Bromwich J). On this appeal, Charif Kazal seeks to challenge the primary judge’s decision to refuse the extension of time within which to comply with the self-executing order.

89    In the case of Adam Kazal, he did not file a defence, and an application to file a defence out of time was dismissed: Thunder Studios Inc (California) v Kazal (No 3) [2017] FCA 1170 (Judgment No 3, or J3). There was no application for leave to appeal the dismissal of that application and the correctness of that decision is not in issue on this appeal.

90    The consequences for the appellants of having no defences on foot, and whether the absence of defences gave rise to deemed admissions as a result of the operation of r 16.07(2) of the Federal Court Rules 2011 (Cth) is a question in issue on this appeal. Although the appellants had no defences on foot, the primary judge permitted the appellants to cross-examine, to tender evidence, to make submissions in opposition to the respondents’ claims for relief, including as to mitigation of damage, and to put the respondents to their proof. Charif Kazal also had the ability to lead evidence in support of a cross-claim that he brought against Mr David. During the course of the trial the cross-claim was dismissed with costs on an indemnity basis upon Charif Kazal electing to call no evidence: Thunder Studios Inc (California) v Kazal (No 11) [2020] FCA 1656.

The decisions the subject of this appeal

91    Before going to the grounds of appeal and the issues in more detail, I will identify the subject matter of the appeal. There are five decisions of the primary judge that are challenged by the appellants –

(1)    In Thunder Studios Inc (California) v Kazal (No 5) [2017] FCA 1572 (to which I have referred as Judgment No 5, or J5), the primary judge dismissed an application by Charif Kazal for an extension of time within which to comply with the self-executing order that resulted in his defence being struck out. As I mentioned above, the application prior to trial for leave to appeal that decision was dismissed. On the leave application it was held that none of the errors that was asserted was viable and that any appeal was doomed to fail: Thunder Studios Inc (California) v Kazal [2018] FCA 593 at [21] (Bromwich J). Charif Kazal challenges on this appeal the primary judge’s exercise of discretion to refuse his application for an extension of time on the ground that the claimed errors affected the final orders.

(2)    In Thunder Studios Inc (California) v Kazal (No 7) [2018] FCA 996 (Judgment No 7, or J7), the primary judge dismissed an application that he disqualify himself from hearing the proceeding on the ground of apprehended bias. No application for leave to appeal Judgment No 7 was made prior to trial. The claimed errors attending that decision are now relied on by the appellants in order to challenge the final orders.

(3)    In Thunder Studios Inc (California) v Kazal (No 9) [2020] FCA 846 (to which I have referred as Judgment No 9, or J9), the primary judge refused an application by the appellants for orders that the proceeding be stayed pending the hearing and determination of two other proceedings in the docket of Perram J. Alternatively, the appellants sought orders that the proceeding be transferred to the docket of Perram J. No application was made prior to trial to appeal that decision. The appellants now seek to challenge that decision as affecting the final orders.

(4)    In Thunder Studios Inc (California) v Kazal (No 10) [2020] FCA 1636 (Judgment No 10, or J10), the primary judge ruled in the course of the trial that some particulars of mitigation of damage that had been relied on by the appellants be struck out, and that in consequence a particular line of cross-examination of Mr David that was said to go to the assessment of damages be disallowed.

(5)    Thunder Studios Inc (California) v Kazal (No 12) [2022] FCA 110; 403 ALR 698 (to which I have referred as Judgment No 12, or J12) is the principal judgment following trial. In addition to the challenges to the interlocutory decisions to which I referred above, the appellants challenge the final orders on the following grounds –

(a)    that there was a reasonable apprehension of bias having regard to the conduct of the proceeding and to various features of the principal reasons for judgment on which the appellants relied;

(b)    that the primary judge was in error in holding that the first matter conveyed imputations 6(e) and 7(e);

(c)    that the primary judge was in error in holding that the impugned conduct occurred in trade or commerce for the purposes of s 18 of the ACL;

(d)    that the primary judge erred in finding that Thunder Studios was an excluded corporation for the purposes of s 9(2)(b) of the Defamation Act 2005 (NSW); and

(e)    that for several specific reasons the assessments of damages were excessive.

92    I will address the grounds of appeal by reference to the decisions to which they are directed, although noting that in an omnibus way the amended notice of appeal embraces an appeal against the final orders relying on all of the grounds of appeal.

(1)    Judgment No 5 – default in answering interrogatories

93    On 7 September 2017, the primary judge made the following interlocutory orders which were of a self-executing nature –

4.    [Charif Kazal] provide sufficient answers, verified by affidavit, to the Applicants’ interrogatories 13, 15, 36(b), 38 and 44 on or before 4.00 pm on 15 September 2017.

5.    In the absence of compliance with Order 4 above, [Charif Kazal’s] Defence (including any amended pleadings) be struck out.

94    The background to the making of these orders was set out clearly and in detail by the primary judge at J5 [9] to [15]. Of particular note is that the orders were made against a background where Charif Kazal had defaulted in complying with earlier orders of the Court that he make verified answers to interrogatories.

95    Charif Kazal did not comply with the orders of 7 September 2017, as a result of which by operation of those orders his defence was struck out. Mr Kazal then made an application to the primary judge on 4 December 2017 that the time for compliance with the orders be extended to 22 September 2017, by which time he had filed his verified answers to interrogatories. That application was dismissed, with the primary judge giving ex tempore reasons for his decision which were subsequently revised and published on 31 January 2018. Charif Kazal then sought leave to appeal the dismissal of his application for an enlargement of time within which to comply with the orders of 7 September 2017. As I mentioned above, the application for leave to appeal was dismissed. One of the issues that arises is whether, in consequence of the refusal of leave to appeal the primary judge’s interlocutory decision in Judgment No 5, the Court’s appellate jurisdiction has been exhausted.

Judgment No 5 – is an appeal precluded by the refusal of leave to appeal?

96    The first issue to address is whether it is open to this Court to entertain a challenge to the orders made in Judgment No 5 in circumstances where the application by Charif Kazal for leave to appeal those orders was refused.

97    There is a separation embedded in the text and architecture of the Federal Court of Australia Act 1976 (Cth) between the Court’s original jurisdiction and its appellate jurisdiction. The Court’s appellate jurisdiction is conferred by s 24. Under s 24(1A), an appeal cannot be brought from an interlocutory judgment of a court unless the Court or a Judge gives leave. Under s 25(2), applications for leave to appeal to the Court must be heard and determined by a single Judge unless a Judge directs that it be heard and determined by a Full Court, or the application is made in a proceeding that has already been assigned to a Full Court and the Full Court considers that it is appropriate to hear and determine the application. Applications for leave to appeal are heard in the Court’s appellate jurisdiction, and not its original jurisdiction. A party may apply to a single judge or a Full Court for leave once and only once, and no appeal lies to a Full Court from a refusal of leave by a single judge: see, Thomas Borthwick & Sons (Pacific Holdings) Ltd v Trade Practices Commission (1988) 18 FCR 424 at 431-433 (Bowen CJ, Lockhart and Sheppard JJ).

98    A decision to give or refuse leave to appeal involves the exercise of an unfettered discretion in s 24(1A) of the Act: see, Décor Corporation Pty Ltd v Dart Industries Pty Ltd [1991] FCA 844; 33 FCR 397 at 399 (Sheppard, Burchett and Heerey JJ). The legal effect of a decision refusing leave to appeal is to deny permission to appeal the interlocutory order. In this case, the reasons of Bromwich J for refusing leave to appeal the orders made in Judgment No 5 were that his Honour held that the proposed grounds of appeal had no serious prospect of success, and that the appeal was doomed to fail. However, while the merits of a proposed appeal from an interlocutory order are usually relevant to the question of leave, a refusal of leave is not an adjudication on an appeal itself. Leave might be refused for a range of discretionary reasons including, for instance, that an appeal from an interlocutory decision made during the course of a trial would interfere with the proper conduct of the trial and hamper the proper administration of justice.

99    By their notice of appeal, the appellants challenge the primary judge’s final orders made on 21 March 2022 and a number of interlocutory orders made during the course of the proceeding, including those consequent upon Judgment No 5. The Court’s appellate jurisdiction in relation to an appeal directly from those interlocutory orders has been spent, because leave to appeal was refused. However, no leave is required to appeal the final orders, and on an appeal from final orders an appellate court can correct any interlocutory order that affected the final result, at least where it is shown that the error resulted in a miscarriage of justice: see, Gerlach v Clifton Bricks Pty Ltd [2002] HCA 22; 209 CLR 478 at [4]-[8] (Gaudron, McHugh and Hayne JJ). Indeed, as long ago as 1859 the Judicial Committee of the Privy Council, in a judgment delivered by Dr Lushington in Maharaja Moheshur Sing v The Bengal Government (1859) VII Moore Ind App 283 at 302-303, stated –

We believe there have been very many cases before this Tribunal in which their Lordships have deemed it to be their duty to correct erroneous interlocutory Orders, though not brought under their consideration until the whole cause had been decided, and brought hither by appeal for adjudication.

100    But this principle is qualified. One qualification, which is relevant to another ground of appeal in this case, is that a failure to seek leave to appeal against the refusal of an application that a judge not try a case on account of a reasonable apprehension of bias might, upon an examination of all the relevant circumstances, preclude the maintenance of the complaint in an appeal against the final orders: Michael Wilson & Partners Ltd v Nicholls [2011] HCA 48; 244 CLR 427 (Michael Wilson & Partners) at [78]-[79], [84]-[85] (Gummow A-CJ, Hayne, Crennan and Bell JJ). The reasons for such a preclusion might include that a decision by a judge to refuse an application for disqualification is final in relation to the subject matter of that decision, and that a party that does not seek to challenge the decision by seeking leave to appeal is to be regarded as having given up the point: Michael Wilson & Partners at [79]. There may be other circumstances where a failure to challenge an interlocutory order may preclude a challenge to the order on appeal against final orders. It is unnecessary to explore those circumstances.

101    This is not a case where Charif Kazal gave up on his challenge to the orders refusing an extension of time to comply with the self-executing orders. The question here, as I have said, is whether the refusal of leave to appeal precludes the appellants from challenging the final orders on the ground that the interlocutory orders made as a result of Judgment No 5 were attended by error. In my view, there is no preclusion. In Marlin Brands Australia Ltd v Brando Aus Holdco Pty Ltd [2022] NSWCA 59 (Marlin Brands) the New South Wales Court of Appeal, by majority, dismissed an application for leave to appeal an interlocutory decision that backdated to the commencement of the proceeding the joinder as a defendant of the applicant for leave to appeal. The Court of Appeal heard argument as if on appeal, because the President directed pursuant to UCPR r 51.12(1)(b) that there be a concurrent hearing of the application for leave to appeal and the appeal itself. Leeming JA, with whom Meagher JA agreed, refused leave to appeal, but without expressing a concluded view on the principal points going to the merits that were agitated. In refusing leave, Leeming JA held that the refusal did not shut the applicant out from vindicating its contention that the backdating of its joinder was in error, stating at [40] –

To the contrary, this is a case where in the event that the litigation proceeds to trial and judgment in one of the permutations in which the timing of the joinder of the Sellers matters becomes significant, then the decision of the primary judge will be an interlocutory decision which will directly bear upon the ultimate outcome, and thus the Sellers will have an appeal as of right on that point: Gerlach v Clifton Bricks Pty Ltd (2002) 209 CLR 478; [2002] HCA 22 at [6]-[8]; Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427; [2011] HCA 48 at [78]. Brando properly acknowledged as much. It is overwhelmingly likely that if that eventuality materialises, there will be other grounds of appeal or cross appeal or notices of contention which the parties wish to agitate in this Court.

102    Another illustration is Durolek v Pier (WA) Pty Ltd (No 2) [2019] WASCA 138, where the Western Australian Court of Appeal allowed an appeal from a final judgment after an assessment of damages on the ground that an interlocutory self-executing order that had operated to strike out the defence of the appellant and to enter judgment against her for damages to be assessed was made in error, and that this order had thereby affected the final result.

103    In this case, Bromwich J did not hear an appeal from the orders in Judgment No 5. To the extent that his Honour considered the merits of the proposed appeal, that was for the purpose of informing the exercise of the unfettered discretion whether to grant leave to appeal. The legal effect of his Honour’s refusal of the application for leave to appeal was that no appeal lay from those interlocutory orders. But as with Marlin Brands, it remains open to Charif Kazal to challenge the final orders as of right on the ground that the refusal of the extension of time within which to comply with the self-executing order affected the final result. That follows not just as a matter of general principle, but also from the express terms of s 24(1E) of the Federal Court of Australia Act, which provides –

(1E)    The fact that there has been, or can be, no appeal from an interlocutory judgment of the Court in a proceeding does not prevent:

(a)    a party from founding an appeal from a final judgment in the proceeding on the interlocutory judgment; or

(b)    the Court from taking account of the interlocutory judgment in determining an appeal from a final judgment in the proceeding.

104    Subsection 24(1E) is engaged because, by reason of the refusal of leave to appeal, there has been no appeal from the interlocutory orders the subject of Judgment No 5.

Judgment No 5 – consideration of the grounds of appeal

105    I turn now to the grounds of appeal in relation to the refusal of an extension of time within which to comply with the self-executing order that was the subject of Judgment No 5. At one level, it might be said that the refusal of the extension of time concerned a question of practice and procedure, thereby attracting appellate restraint. However, one of the factors that must be considered is whether, on the hypothesis that the decision was wrong, there has been a substantial injustice. That is generally a relevant and necessary consideration: Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; 148 CLR 170 (Adam P Brown Male Fashions) at 177 (Gibbs CJ, Aickin, Wilson and Brennan JJ). That issue need not turn on whether the exercise of power resulting in the orders is characterised as procedural or substantive: see Australian Broadcasting Corporation v O'Neill [2006] HCA 46; 227 CLR 57 at [55] (Gummow and Hayne JJ). On the appellants’ case the refusal of the extension of time affected substantive rights in a practical sense, because the primary judge held at J5 [14] that the absence of a defence gave rise to deemed admissions as a result of the operation of r 16.07(2) of the Federal Court Rules, and Charif Kazal was precluded from advancing positive defences at trial. In relation to the causes of action in defamation, the positive defences included substantial truth, contextual truth, and qualified privilege in the nature of a response to attack qualified privilege. It remains, however, that the decision was discretionary thereby attracting the principles concerning appellate review of discretionary decisions essayed in House v The King [1936] HCA 40; 55 CLR 499.

106    By the amended notice of appeal the primary judge’s refusal of the application to extend time for compliance with the orders of 7 September 2017 is challenged on the following grounds –

1.    The primary judge erred in the exercise of his discretion in refusing the First Appellant (Charif Kazal) an extension of time (from 15 September 2017 until 22 September 2017) in which to file and serve verified answers to interrogatories, because:

(1)    such exercise of discretion was founded upon the following incorrect findings of fact:

(a)    at [34], that Charif Kazal had made no attempt to comply with the order that he file and serve his verified answers to interrogatories by 15 September 2017;

(b)    at [40], that Charif Kazal’s lawyers did not bring his problems to the attention of the Respondents’ lawyers; and

(c)    at [47], that Charif Kazal did not intend to verify his answers until it suited him after his return to Australia,

and failed to take into consideration the material fact that Charif Kazal’s unverified answers were provided to the Respondents on 15 September 2017 in a form that was the same as the form in which they were subsequently verified on 21 September 2017;

(2)    such decision was unreasonable and plainly unjust in all the circumstances, including having regard to the matters identified in paragraph 1(1).

107    Although this is an appeal by way of rehearing, the powers of the Court will be enlivened for the purpose of correcting error. In the case of the discretionary decision to refuse the extension of time within which to comply with the self-executing order, it is not for this Court to substitute its own discretionary decision. Rather, the primary judge’s decision must be shown to be wrong in accordance with established principles governing appellate review of discretionary decisions. The appellants’ claim that there were incorrect findings of fact invokes the third limb identified in House v The King at 505, namely that a discretionary decision may be reviewed by an appellate court if the primary judge mistakes the facts. See also, Cranssen v The King [1936] HCA 42; 55 CLR 509 at 519-520 (Dixon, Evatt and McTiernan JJ), and Harris v The Queen [1954] HCA 51; 90 CLR 652 at 655 (Dixon CJ, Fullagar, Kitto and Taylor JJ). In order to establish that a discretionary decision was in error because the primary judge was mistaken as to the facts, the burden on the appellants is to persuade this Court that one or more of the findings under challenge was wrong and that it was material to the exercise of the discretion such that the Court comes to the view that the discretion was wrongfully exercised. The claim that the judge’s decision was unreasonable or plainly unjust invokes the fifth limb identified in House v The King at 505, and is a circumstance in which an appellate court may infer some error and review the decision of the court below on the ground that a substantial wrong has occurred. I will consider first the challenges to findings of fact, before addressing the appellants’ claim that the decision was plainly unreasonable and unjust.

108    There were three affidavits before the primary judge that were relied on by Charif Kazal: an affidavit of Mr Kazal sworn 3 December 2017, and two affidavits of his solicitor Mr Mitry sworn, respectively, on 4 and 6 December 2017. There was also before the primary judge an affidavit of the solicitor for Thunder Studios and Mr David, Ms Sambrook, sworn 1 December 2017.

109    The background to Mr Kazal’s application to extend time within which to file and serve verified answers to interrogatories in accordance with the self-executing order of 7 September 2017 was set out by the primary judge in some detail in Judgment No 5. The following summary of the background draws on the primary judge’s reasons, together with some details relating to the hearing of the application that are evident from the transcript: see, Cruse v Multiplex Ltd [2008] FCAFC 179; 172 FCR 279 at [63] (Goldberg and Jessup JJ).

110    On 19 May 2017, the primary judge made orders by consent that Charif Kazal file and serve verified answers to interrogatories by 30 May 2017. The terms of the interrogatories had been the subject of discussion and agreement between the parties. Mr Kazal did not comply with the order. Mr Kazal stated that his solicitors served unverified answers on 15 June 2017, “...as I was away at the time”. Mr Kazal’s solicitors later served verified answers on 30 June 2017, being the date on which he verified them. At [10], the primary judge noted the absence of explanation by Charif Kazal for his failure to comply with the order of 19 May 2017.

111    On 6 July 2017, Thunder Studios and Mr David complained of the adequacy of Charif Kazal’s answers, and on 7 July 2017 the primary judge ordered Mr Kazal to file and serve sufficient verified answers by 21 July 2017, particularly interrogatories 44 and 45 which were held to relate to Mr Kazal’s defence of qualified privilege. Mr Kazal failed to comply with this order. His solicitors wrote to the solicitors for Thunder Studios and Mr David on 21 July 2021 stating that Mr Kazal had been unable properly to review all documents in his possession to effect discovery and sufficient answers to interrogatories “due to personal matters”. The personal matters were not explained. Mr Kazal’s solicitors subsequently served unverified answers on 28 July 2017, and verified answers on 31 July 2017.

112    The primary judge stated that Mr Kazal’s verified answer to interrogatory 44 did not comply with the obligation of a publisher alleging qualified privilege to provide a detailed list of information in the possession of the publisher at the time of publication, citing Palmer v John Fairfax & Sons Ltd (1986) 5 NSWLR 727 (Palmer) at 732B-733G (Hunt J). On this appeal, counsel for the appellants submitted that the decision in Palmer was distinguishable because it concerned a statutory defence of qualified privilege, and not the common law defence that had been alleged by Mr Kazal. That submission is beside the point, because interrogatory 44 sought the identification of documents and information, the lawyers acting for Mr Kazal at the relevant time appear to have accepted that it should be answered, and it was the subject of orders by the primary judge that it should be answered.

113    On 15 August 2017, the solicitors for Thunder Studios and Mr David complained to the solicitors for Charif Kazal about the adequacy of the answers, and foreshadowed an application for a self-executing order for further answers. An interlocutory application to that effect was filed on 16 August 2017 and was heard on 18 August 2017. On that occasion, experienced counsel appearing for Mr Kazal accepted that the 31 July 2017 answers to interrogatories “...suffered from the vice in Palmer”, and that the second attempt was no better. Counsel for Mr Kazal sought 28 days within which to make further answers, but opposed a self-executing order. At the hearing the primary judge ruled that Mr Kazal should have 28 days, that is until 15 September 2017, to provide further answers to five interrogatories and that in default his defence would be struck out. It took some time for the parties to prepare orders to reflect the primary judge’s rulings on 18 August 2017. Ultimately, orders were made on 7 September 2017, which included the self-executing order that I have set out at [93] above.

114    Following the hearing on 18 August 2017, Charif Kazal’s solicitor sent him an email reporting that a self-executing order had been made, and that if within 28 days it was not complied with, the defence would be struck out. The affidavits of Charif Kazal’s solicitor, Mr Mitry, deposed to the steps taken between 18 August 2017 and 15 September 2017 to prepare further verified answers to interrogatories. Significantly, on 4 September 2017 Mr Kazal left Australia for New York. A receipt for the airline ticket that was produced by Mr Mitry showed that it had been purchased on 3 September 2017, and that the return flight would arrive in Sydney on 19 September 2017. There was no evidence of the purpose of the trip or its circumstances. Counsel were briefed to assist with the preparation of the answers on 5 September 2017, after Mr Kazal had left for overseas.

115    I will set out [20] and [21] of the primary judge’s reasons, because they are material to the grounds of appeal that are raised –

20    On 6 September 2017 Charif emailed Mr Mitry [his then solicitor] saying that he wanted the draft “asap as with my travelling it’s a juggle when I will be uncontactable so as much notice as possible please”. Mr Mitry immediately replied that he expected the draft to be ready early in the following week, noting “deadline next Friday”. Mr Mitry said that in the afternoon of 11 September 2017, counsel provided a first draft of the answers that Mr Mitry immediately sent to Charif in New York who gave responsive instructions about two hours later.

21    Mr Mitry had to travel to Melbourne on 12 September 2017 to do work for another client, and remained there until 7.00pm on 15 September 2017. He said he worked on revisions of the draft while there with the assistance of his solicitor and counsel. Charif was asked to provide further instructions on some matters on 12 September 2017, which he did so [sic] early on 13 September 2017. Counsel forwarded a further revision to Mr Mitry and his solicitor at 2.16pm on 14 September 2017, that was sent promptly to Charif who responded by just before 5.00pm that night.

116    Mr Mitry’s employed solicitor, and counsel who were briefed, dealt with other amendments to the draft, and at 3.36 pm on 15 September 2017 counsel emailed what Mr Mitry understood to be the final form of the answers that were then emailed to Charif Kazal at 3.55 pm Sydney time, being 1.55 am on 15 September 2017 in New York. Mr Mitry said that his employed solicitor understood, “in communication with [Mr Kazal’s] office that afternoon”, that it was very late at night where Mr Kazal was. Shortly afterwards, counsel for Mr Kazal communicated to junior counsel for Thunder Studios and Mr David the “difficulty in providing verified answers” and told him that unsworn draft answers would be forwarded to his solicitors to comply “at least in spirit” with the order. Mr Kazal’s counsel, in his email to Mr Mitry, correctly anticipated that Thunder Studios and Mr David would require Mr Kazal to apply to the Court for an order extending the time for his answers to be filed in light of his default.

117    Mr Mitry said that until 15 September 2017, he was “hopeful” that the final form of the answers “would be completed before that time and [Charif Kazal] would be able to attend to verification from overseas and return them to me”. Mr Mitry said he did not advise Mr Kazal that, regardless of the time at the place where he was present, he should stay awake and locate a person qualified to take his oath, who should remain with him so that he could verify the interrogatories by 4.00 pm.

118    On 15 September 2017 at 4.55 pm, Charif Kazal’s solicitors wrote to the solicitors for Thunder Studios and Mr David attaching unverified answers and stating that Mr Kazal had “not been able to swear the affidavit required … as he is overseas, and where it is now late evening”. The solicitors apologised for “not being in a position to file the sworn answers this afternoon”. The email said that they were attending to this as a matter of urgency and had attached the answers “in draft to comply with the orders in spirit”. Mr Kazal’s solicitors said in the email that they did not believe that there would be any significant changes as “we have been liaising with our client on the draft answers during the week”.

119    The primary judge inferred from the airline ticket that Charif Kazal arrived in Sydney on the morning of 19 September 2017. At some point on 21 September 2017, Mr Kazal verified the answers to the interrogatories which his solicitors filed at 4.07 pm that day. Thereafter, there was silence from Mr Kazal’s side until 11 October 2017 when his solicitors sent a letter by email to the solicitors for the Thunder Studios and Mr David referring to the self-executing order and seeking consent to an extension of time for the filing and service of the verified answers to 21 September 2017 pursuant to rr 1.39 and 39.04 of the Federal Court Rules in order “to regularise the proceedings”. The solicitors sought a response by noon the following day, 12 October 2017.

120    The solicitors for Thunder Studios and Mr David responded early on 12 October 2017 but noted, as Charif Kazal’s solicitors were aware, that their clients were overseas and could not respond in the timeframe sought. Later on 12 October 2017, the solicitors emailed Mr Kazal’s solicitors stating that they had been instructed to seek substantiation of the reason for the non-compliance and as to why Mr Kazal could not have verified his answers, wherever he had been, at the time at which the verified answers should have been filed. They requested a copy of Mr Kazal’s passport for the period of September 2017 certified by Mr Mitry as solicitor on the record. From then until 28 November 2017, Mr Kazal’s solicitors made no response to those requests. There was no explanation in evidence for that seven-week delay.

121    On 28 November 2017, Mr Mitry sent an email to the solicitors for Thunder Studios and Mr David with a copy of the relevant pages of Mr Kazal’s passport that he had certified. The solicitor explained that because Mr Kazal had been in New York “we were unable to meet our client in person to physically verify the interrogatories until after his return to the country”.

122    The proceeding was listed for an interlocutory hearing before the primary judge on Monday 4 December 2017 for purposes that included the hearing of an application by non-parties to set aside a subpoena, which was granted: Thunder Studios Inc (California) v Kazal (No 4) [2017] FCA 1571. At the conclusion of the hearing of that application counsel for Charif Kazal filed in court, without objection from counsel for Thunder Studios and Mr David, an interlocutory application seeking an extension of time until 4.00 pm on 22 September 2017 for compliance with the self-executing order made on 7 September 2017. The primary judge gave leave to file the application in court returnable instanter, and the hearing of the application occupied the balance of the day on 4 December 2017. During the course of the hearing on 4 December 2017, his Honour raised with counsel appearing for Mr Kazal whether there had been an adequate explanation for the failure to comply with the self-executing order, and the further delay that had occurred before the application for the extension of time was made. Towards the conclusion of the day his Honour expressed an inclination not to make the order because of the inadequacy of the explanations. However, his Honour stated that given the drastic consequences that would ensue from the dismissal of the application, he would give Mr Kazal “one more opportunity to put on a proper and full explanation, including why he had not made arrangements to swear his affidavit or affirm his affidavit of verification in New York, knowing of the order, what he had done about that, if anything, and why he took so long to bring it back before the Court, and that goes for any solicitors as well ...”. Orders were then made allowing for the filing of further affidavits, and the application was stood over part-heard until Friday 8 December 2017. At the adjourned hearing the second affidavit of Mr Mitry was read to the Court, and a small bundle of emails and an itinerary of Mr Kazal relating to his absence from Australia on the day of the adjourned hearing were tendered. Further argument on the application proceeded. After the luncheon adjournment, the primary judge gave ex tempore reasons for refusing the application, which were later revised from the transcript and published.

123    Relevant to the grounds of appeal that are advanced, his Honour made findings, as follows –

33    ... from 18 August 2017 Charif personally was aware that, if he failed to file and serve verified answers to the five interrogatories by 15 September 2017, his defence would be struck out.

34    Despite that knowledge, the evidence of Charif and Mr Mitry established that Charif made no attempt to comply with the requirement in order 4 that his answers be verified and filed by 15 September 2017. In order to verify his answers, Charif had to swear them before an Australian lawyer with a current practicing certificate or, because he was in New York, a notary public or Australian consular officer or person authorised to take oaths in that jurisdiction: see s 45(2) of the Federal Court Act; see too: STX Pan Ocean Co Ltd v Bowen Basin Coal Group Pty Ltd (2010) 188 FCR 528. He knew that when he was in New York on 14, and the early hours of 15, September 2017 New York time, it would be the afternoon of 15 September 2017 in Sydney. He knew that if he failed to verify his answers in accordance with order 4, the very consequence from which he now seeks relief and seeks to characterise as an “injustice” to him would occur automatically. He acted on 14 and 15 September 2016 [sic] in the context where he had breached two earlier orders to file verified answers to the interrogatories, on each occasion filing his answers substantially later than the time limited in each order and, at least in the case of the verified answers due to be filed on 21 July 2017, in breach of his obligation to answer interrogatory 44 in compliance the requirements identified in Palmer 5 NSWLR 727.

35    Charif’s evidence explaining his breach of order 4 was simply that, although he knew of the order to verify and file the answers by 15 September 2017, on that day:

I was still in the United States … out of the country and unavailable to verify the Answers. (emphasis added)

36    That evidence was not correct. He would have been able to verify the answers, had he made arrangements in New York to do so. He chose not to make any arrangements there either in advance of the time specified in order 4 or later. It is not an explanation of his default for him to assert that, by the time he and his lawyers finalised the drafting of his answers, it was in the early morning, around 2.00am, in New York, which he knew was about 4.00pm on 15 September 2017 in Sydney. Both Charif and his lawyers knew that his answers had to be verified and filed by that time. First, they did not seek an extension before 15 September 2017, despite their awareness of the consequence of non-compliance under order 5, and the difficulties that his conduct in being in New York on 14 and 15 September 2017 caused (the reason for which he did explain) in having his answers verified while he was there, particularly having regard to the then state of preparation of his draft answers. Secondly, Charif made no attempt to verify his answers subsequently while in New York. As his evidence made clear, he never intended to do so because, in his words, he was “out of the country and unavailable to verify the Answers”.

37    He chose to be out of the country and his “unavailability” consisted in his failure to arrange to be with someone before whom he could verify his answers in New York, before the expiry of the time in order 4. He did not make arrangements to attend upon such a person then, or even after the expiry of the time in order 4. Indeed, he chose to wait, as I infer he always intended, until it suited him to verify his answers after his subsequent return to Australia, when he would no longer be “unavailable”. In fact, he only did so, again for reasons he did not explain, two days after his return on 19 September 2017.

38    So the question that arises is: what is the injustice against which Charif is seeking relief? In my opinion, it is the consequence of his deliberate, unexplained and conscious choice to be “unavailable” in New York as a result of which he made no arrangements to comply for the third time with an order that he file and serve verified answers to the interrogatories on or before the date ordered by the Court, in this instance, 15 September 2017.

39    I am unable to see, in those circumstances, why the orders of 7 September 2017, or their operation, have created injustice to Charif. No doubt the consequence of his wilful and deliberate flouting of the Court’s orders is harsh on him in this litigation, for he has presently lost his defence to the current statement of claim. But he lost that defence because he did not intend to, and did not, comply with the order to verify his answers until it suited him on his subsequent return to Australia. Nothing prevented him from putting himself into the position to verify his answers with, if need be, his own amendments to the draft he then had in New York during 14 or early on 15 September 2017 New York time, or seeking to do so, after receiving the final version, later during the day on 15 September 2017 after, perhaps, the time had passed in Sydney and then returning the verified answers promptly.

40    While he might still have been in breach (because of the time difference in filing and serving his answers), had he taken the latter course he would at least have been able to demonstrate that he was trying his best to comply while counsel was redrafting his answers here on 14 and 15 September 2017. The looming non-compliance did not spur Charif or his lawyers into seeking an extension of time, bringing his problem to the Court or to the attention of Thunder Studios or Mr David prior to order 5 taking effect. Nor did he explain why he chose to be in New York and so to disable himself from being in a position to comply, if the difficulty for him were his inability to arrange for someone before whom he could swear his answers so that he could file and serve verified answers as order 4 required.

41    Charif took this course, conscious of orders 4 and 5 and the consequences to him of failing to comply with order 4. His solicitor had warned him that there was a guillotine order. He acted in circumstances where, on two previous occasions, he had not complied with orders within time and, when he did, filed answers that were not proper answers to the interrogatories themselves.

42    I do not see how there is injustice to Charif, in those circumstances, in allowing order 5 to operate as he knew, from 18 August 2017, it would operate if he failed to obey order 4 in accordance with its terms on or before 4.00pm on 15 September 2017.

    (Emphasis of primary judge.)

124    The primary judge then referred at J5 [46] to the circumstances of the adjournment of the hearing on 4 December 2017, and the concerns that his Honour had expressed about gaps in the evidence, including the absence of any evidence about any steps that had been taken to arrange for Mr Kazal to verify his answers in New York at any time while he was there, knowing, as he did, of the self-executing order for the striking out of the defence if he did not comply with the order in time. His Honour then stated –

47    In the circumstances, I find that Charif made no arrangements or inquiries while he was in New York about how he could verify his answers while he was there (even after the time in order 4 had expired) and he did not intend to do so until it suited him after his return to Australia: Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361 at 384-385 [62]-[64] per Heydon, Crennan and Bell JJ.

125    The primary judge referred again to the absence of explanation at J5 [53]-[54] –

53    In this case, Charif has chosen not to give any explanation as to why he was in New York or why he could not find, and had not arranged, someone before whom he could swear his answers within the time limited by order 4 or later on 15 September or at any time before 21 September 2017. Accepting that his counsel and solicitors were taking longer than anticipated to finalise the draft answers, Charif was aware of that problem on 14 September 2017 while in New York and of its consequences if order 5 came into effect. There is no evidence that, as the deadline approached in the week of 11-15 September 2017, he raised any concern about possible default. Rather, as he said, he was in the United States and “unavailable” to verify his answers.

54    One factor relevant to the exercise of the discretion in this case is the need to have due regard to public policy of finality in litigation brought about by a self-executing order: FAI General 165 CLR at 283. Another factor is that Charif ought give an explanation why he ought be excused from his non-compliance.

126    Later, the primary judge referred again at J5 [59] to the opportunity which had been afforded to Mr Kazal to give further evidence, stating –

59    When I offered Charif the opportunity to supplement what I saw as being deficiencies in his case, Charif chose, once again, not to devote his attention to explaining to the Court and the applicants why he had not been able to deal with matters in New York, but instead left for overseas. That was indicative of his lack of commitment to his duty to comply with his obligations under s 37N.

127    The primary judge concluded at J5 [63] –

63    I am not satisfied that Charif has explained why he failed to comply with what he appreciated fully at the time was his third opportunity to give verified answers to interrogatories. For reasons that he has chosen not to explain at all, he was out of the jurisdiction and in a place where it was difficult for him to achieve compliance. But he knew of those difficulties (or their potential to arise because of his choice to be out of Australia) and he knew what needed to be done to comply. I am not satisfied that Charif has shown any injustice to him or any other basis for me to extend the time for his compliance with order 4. His interlocutory application must be dismissed with costs.

Judgment No 5 – first factual challenge

128    In relation to the first finding that is challenged, namely the finding at J5 [34] that Charif Kazal had made no attempt to comply with the order, the appellants submitted that the finding was contrary to and could not withstand other factual findings made by the primary judge. In this respect, the appellants relied on the following findings, with the corresponding paragraphs said to contain the finding noted –

(a)    on 6 September 2017, Charif Kazal emailed his then solicitor asking for the draft of his answers to interrogatories “asap” as with his travelling commitments he required “as much notice as possible” – J5 [20];

(b)    Charif Kazal was provided with a first draft on 11 September 2017, and he responded within two hours – J5 [20];

(c)    on 12 September 2017, Charif Kazal was asked to provide further instructions, and he did so early on 13 September 2017 – J5 [21]; and

(d)    on 14 September 2017, Charif Kazal was provided with a further draft, and again he responded within several hours – J5 [21].

129    It was submitted that the above findings demonstrated that Charif Kazal worked assiduously to finalise his answers to interrogatories. In oral argument, counsel submitted that the evidence was to be assessed in the context that the verified answers that had been ordered were further answers that had been held to be relevant to the defence of common law qualified privilege. It had been accepted by counsel for Charif Kazal upon the application for further answers that the previous answers were inadequate. In oral argument on appeal, counsel for the appellants submitted that Charif Kazal relied on his lawyers to draft the further answers, and that the evidence showed that he responded in a timely way to requests for instructions.

130    I do not accept that the primary judge was mistaken as to the facts in relation to his finding at J5 [34] that Charif Kazal made no attempt to comply with the requirement in order 4 that his answers be verified and filed by 15 September 2017. As I have demonstrated, his Honour set out the primary facts with care, and in considerable detail. The first sentence of J5 [34] which is the subject of challenge is an evaluative conclusion that must be read in context. When read in context, and in particular with the balance of J5 [34], its focus is on the failure by Mr Kazal to make any attempt to verify his answers while overseas when he knew before leaving Australia that verified answers had to be filed and served by 15 September 2017 or else his defence would be struck out. The primary judge’s conclusion was well supported by the evidence, including that by his affidavit sworn 3 December 2017 Mr Kazal did not explain his failure to have plans in place to verify the answers when overseas, and the fact that Mr Kazal did not verify his answers until 21 September 2017 after he returned to Australia. There was therefore no error in the primary judge’s conclusion that Mr Kazal made no attempt to comply with the requirement that verified answers be filed by 15 September 2017.

Judgment No 5 – second factual challenge

131    In relation to the second finding that is challenged, namely the finding at [40] that Charif Kazal did not bring the problem to the attention of Thunder Studios or Mr David prior to the order taking effect, the appellants submitted that on the evidence recounted by his Honour, Mr Kazal did so on at least two occasions. It was submitted first, that counsel for Mr Kazal communicated the difficulty in verifying the answers to the respondents’ junior counsel, and informed him that the unsworn answers would be provided to the respondents’ solicitor to comply “at least in spirit” with the orders. Second, it was submitted that Mr Kazal’s then solicitors wrote to the solicitors for Thunder Studios and Mr David attaching the unverified answers, and apologised for the inability to file sworn answers and foreshadowed that there were unlikely to be any significant changes in the answers when verified. In the event, the answers were verified in exactly the same form.

132    I do not accept that the primary judge’s findings at [40] show that his Honour was mistaken as to the facts. Again, regard must be had to the care with which the primary judge made his findings of primary fact throughout the whole of his reasons, and regard must be had to the real focus of the impugned passage in J5 [40], and to context. At J5 [22] of the reasons his Honour referred to counsel for Mr Kazal communicating to junior counsel for Thunder Studios and Mr David the “difficulty in providing verified answers” (see [116] above). And the primary judge referred at J5 [24] to a letter from Mr Kazal’s solicitors sent by email on 15 September 2017 at 4.55 pm to the solicitors for Thunder Studios and Mr David attaching unverified answers (see [118] above). That email was sent almost an hour after the time for compliance with the self-executing order had expired.

133    There was no direct evidence as to when counsel spoke. The conversation between counsel was referred to in the email sent to the solicitors for Thunder Studios and Mr David at 4.55 pm. In addition, in Mr Mitry’s affidavit sworn 6 December 2017 at [20]-[22], he referred to the following sequence of relevant events on 15 September 2017 –

(a)    at 3.36 pm the solicitors received an email from counsel with what they understood to be the final form of answers for verification by Mr Kazal;

(b)    at 3.55 pm the solicitors sent the answers to Mr Kazal;

(c)    the solicitors then telephoned counsel to discuss the most appropriate way forward, noting the difficulties in getting in touch with Mr Kazal; and

(d)    at 4.46 pm Mr Mitry received an email from the senior of the two counsel retained to settle the draft answers, which he produced, in which counsel stated that he learned of the fact that Mr Kazal was unavailable for verification of the answers upon his return to chambers at around 4.05 pm and that he then telephoned counsel for Thunder Studios and Mr David.

134    The primary judge referred to the email from counsel to Mr Mitry sent at 4.46 pm at J5 [22]. The proper inference is that counsel for the parties did not speak to each other until after 4.00 pm when the time for compliance with the self-executing order had expired. There was, therefore, no error in the primary judge’s findings at J5 [40], and the appellants’ submissions must be rejected.

Judgment No 5 – third factual challenge

135    In relation to the third finding that is challenged, namely the finding at J5 [36] and [37] that Charif Kazal did not intend to verify his answers until it suited him after his return to Australia, counsel for the appellants submitted that the finding that Mr Kazal “never intended to do so” relied upon a selective extract from Mr Kazal’s affidavit stating that he was “out of the country and unavailable to verify the Answers”. It was submitted that the primary judge appeared to apply Mr Kazal’s stated unavailability to the entirety of his time in New York. It was submitted that this was contrary to his Honour’s finding at J5 [35] that on that day, being 15 September 2017, Mr Kazal’s evidence was that he was unavailable to verify the answers. Further, it was submitted that there was no evidentiary basis for his Honour’s conclusion that Mr Kazal’s unavailability was deliberate, and not only intentional but “always intended” (at J5 [37]), and that there had been “wilful and deliberate flouting” of the Court’s orders (at J5 [39]). Counsel for the appellants submitted that these conclusions were contradicted by other findings of the primary judge on which the appellants relied and which I summarised at [128] above. Counsel for the appellants further submitted that the primary judge at J5 [47] erroneously applied Kuhl v Zurich Financial Services Australia Ltd [2011] HCA 11; 243 CLR 361 (Kuhl) to arrive at those conclusions. It was submitted that the proper inference was not that there was such an intention, but rather that any further evidence given by Mr Kazal would not have assisted him. It was submitted that to use the failure of Mr Kazal to give evidence to support an inference of intention required that there be a basis for the inference in the first place, which there was not. Finally in relation to this aspect of the grounds, counsel for the appellants submitted that at J5 [59] (see [126] above) the primary judge imputed to Mr Kazal a state of mind upon his return from New York that was unsupported by evidence. It was submitted that it was not correct that Mr Kazal did not devote his attention to providing supplementary evidence, but rather that his solicitor chose to file an affidavit. It was further submitted that there was a compelling inference that Mr Kazal had relied on his legal advisers, and that in the circumstances an explanation by his legal advisers as to the circumstances of non-compliance with the orders had been given.

136    I do not accept that the primary judge was mistaken as to any facts that are the subject of the appellant’s third challenge. The appellant’s submissions suffer from the fact that they cherry-pick words that are stripped from their full context. One should read the whole of the primary judge’s findings at J5 [37]. Those findings are supported by all the circumstances to which his Honour referred, including: (1) Mr Kazal had previously failed to comply with orders requiring that verified answers to interrogatories be filed and served; (2) Mr Kazal was aware of the self-executing order when it was ruled upon on 18 August 2017; (3) Mr Kazal left Australia for New York on 9 September 2017 knowing of the self-executing order; (4) Mr Kazal made no attempt while in New York to comply with the order by arranging to verify his answers; (5) the only explanation that Mr Kazal gave was that he was “unavailable to verify the answers”; (6) this explanation was rejected by the primary judge because Mr Kazal could have sworn the answers in New York; (7) Mr Kazal, by his lawyers, did not seek an extension of time before 15 September 2017 despite their awareness of the consequence of non-compliance with the order; and (8) Mr Kazal verified his answers only upon his return to Australia. It was in this context that the explanation of Mr Kazal that he was “unavailable” fell to be assessed. Given the circumstances, there was no error by the primary judge in finding that Mr Kazal’s “unavailability” consisted of his failure to make arrangements to swear his answers and that this was a deliberate, unexplained, and conscious choice, and because he had made no arrangements he had never intended to verify his answers until it suited him.

137    The primary judge’s conclusions were also supported by the circumstance, to which the primary judge referred at J5 [46], that his Honour had adjourned the hearing on 4 December 2017 for the specific purpose of enabling Mr Kazal to adduce further evidence to explain his default, and to fill the gaps in the evidence to which his Honour referred. Mr Kazal did not swear any further affidavit. His solicitor, Mr Mitry, made a further affidavit in which he stated, amongst other things –

As a great deal of work was performed in the final days (and hours) before the 15 September 2017 deadline, my focus was upon ensuring that this was able to be finalised. I did not advise Mr Kazal that, regardless of the time where he was located, he should find remain awake and locate a qualified witness (who should remain with him) so that he could verify the interrogatories in order for them to be filed and served before 4:00pm (AEST) on 15 September 2017.

138    At J5 [46] the primary judge referred to the fact that Mr Mitry provided further evidence. It remained the fact that there was no explanation by Mr Kazal of his failure to make arrangements while overseas to comply with the order by verifying the answers to interrogatories. The significance of Mr Kazal’s failure to give an explanation was emphasised by his Honour by citing at J5 [52] the following passages from Tamaya Resources Ltd (in liq) v Deloitte Touche Tohmatsu (a firm) [2016] FCAFC 2; 332 ALR 199 at 226 [154]-[156] (Gilmour, Perram and Beach JJ), with the emphasis added by the primary judge –

It must be borne in mind that the explanation required is that of the moving party, not merely their solicitor or counsel. The client may very well know of matters relevant to the explanation for delay which are not known by the lawyers.

Evidence as to the explanation for delay will often be given by an applicant’s solicitor from their own knowledge but that may, in some cases, not be sufficient.