FEDERAL COURT OF AUSTRALIA
FAIRFAX MEDIA PUBLICATIONS PTY LIMITED ACN 003357720
DATE OF ORDER:
THE COURT ORDERS THAT:
2. The respondents pay the applicant’s costs of the interlocutory application, amended interlocutory application and further amended interlocutory application seeking leave to amend the defence.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
(REVISED FROM THE TRANSCRIPT)
1 On 31 August 2018, I struck out the particulars of justification in the defence of The Australian Broadcasting Corporation, Fairfax Media Publications Pty Limited and their journalist, Nick McKenzie (the publishers). The publishers appealed to the Full Court, which granted leave to appeal, but dismissed the appeal on 2 August 2019: Australian Broadcasting Corporation v Wing (2019) 371 ALR 545. As a result of remarks I made during the course of argument of the strike out application on 27 June 2018, the publishers began to gather more information to supplement what they had alleged against, the applicant, Dr Chau Chak Wing, whom I erroneously named as Dr Wing in my previous reasons.
2 On 18 March 2019, while the Full Court’s decision was reserved, the publishers filed an interlocutory application seeking leave to file an amended defence that, at that stage, included more detailed allegations in support of a proposed plea of justification of two of Dr Chau’s imputations (the bribery imputations), namely (in par 5 of the amended statement of claim):
(g) The Applicant paid a $200,000 bribe to the President of the General Assembly of the United Nations, John Ashe.
(h) The Applicant was knowingly involved in a corrupt scheme to bribe the President of the General Assembly of the United Nations.
3 On 4 September 2019, the publishers filed an amended interlocutory application with a revised draft of the amended defence that contained more extensive particulars of justification. After Dr Chau filed written submissions criticising that draft, on 9 October 2019, the publishers sought to further amend their interlocutory application to rely on an updated amended draft defence that addressed some of Dr Chau’s criticisms of its predecessor, which they filed on 14 October 2019. The parties’ arguments today dealt with that draft defence.
4 The publishers rely, as their explanation for seeking leave to amend, on the statement of one of their solicitors, Dean Levitan, that, after considering the earlier strike out application and my comments during the hearing on 27 June 2018, they “immediately took steps to obtain documents that had been filed in the US proceedings”. The US proceedings comprised criminal charges brought by the United States of America against John Ashe, who was formerly President of the General Assembly of the United Nations for its 68th session commencing in September 2013 and Shiwei Yan and Heidi Park who, allegedly, had assisted Dr Chau in relation to arranging conferences at his Imperial Springs Resort in Guangzhou, including the Global Summit of SME Leaders conference held on 17 November 2013 (the 2013 conference). Each of Ms Yan and Ms Park subsequently pleaded guilty to charges against them in the United States District Court for the Southern District of New York in respect of paying bribes, or conspiring to pay, bribes to Mr Ashe in his capacity as President.
5 The sealed complaint, filed in the US proceedings on 5 October 2015, was the substantive basis for the section in the then proposed amended defence of justification the subject of my and the Full Court’s strike out decisions in respect of the publishers seeking to justify imputations (f), (g) and (h). It is not necessary to set out imputation (f) here as the publishers no longer seek to justify it.
6 Dr Chau’s solicitor, Paul Svilans, in his affidavit sworn today, produced a copy of the superseding information filed on 20 January 2016 in the US proceedings against only Ms Yan, to which she pleaded guilty, resulting in her conviction and imprisonment. The sole count in the superseding information was substantively different to the counts in the sealed complaint.
7 Ms Yan’s guilty plea to that count admitted that, with the intention of influencing and rewarding Mr Ashe, as an agent of the United Nations, she had corruptly given, offered and agreed to give him, money or financial benefits exceeding $5,000 in connection with a business, transaction and series of transactions of the United Nations, and that she had agreed “with others” to and did facilitate an arrangement for payments to Mr Ashe in exchange for official actions on behalf of Ms Yan and the behalf of others.
The new draft defence of justification
8 Subsequently to June 2018, the publishers, through their United States attorneys, began making inquiries of the Executive Office of the United States Attorney (which appears to be connected to the Department of Justice) and the Federal Bureau of Investigation (FBI) to elicit material that could support a plea of justification. They have now collected what they say is a substantial amount of material that they would wish to lead at a trial in support of the (present) draft defence. The draft defence now seeks to rely on about 40 particulars of truth, some which have a number of subparagraphs.
9 The particulars allege that:
Ms Yan and or Ms Park worked with Dr Chau to arrange conferences at the Resort including the 2013 conference;
at some time prior to October 2013, Mr Ashe had opened two personal accounts (the two accounts) at two American banks, one in the name of “John Ashe dba John Ashe PGA 68” (an acronym for “President of the 68th General Assembly”), and the second entitled “Office of the President of the General Assembly PGA 68 Operating Account” (the operating account);
Mr Ashe was the sole signatory on each of those accounts;
at some time prior to 18 October 2013, Dr Chau organised, through a conglomerate, that he controlled, namely Kingold Group, to hold the 2013 conference;
by no later than about 11.54 am on 18 October 2013, Ms Yan and Ms Park had engaged in email correspondence with Mr Ashe in which they told him that they had suggested to Dr Chau that Mr Ashe be invited, he (Dr Chau) was extremely wealthy, and that if Mr Ashe participated in the 2013 conference in his official capacity as President, Dr Chau would pay all associated travel costs for him and his staff, would provide a financial contribution to him and be a good funding source to Mr Ashe in the future;
the above circumstances gave rise to the inference that Mr Ashe’s attendance at the 2013 conference would assist the commercial interests of Kingold and that Dr Chau had authorised Ms Yan and Ms Park to offer Mr Ashe significant financial inducements in exchange for his attendance at the 2013 conference in his capacity as President; and
Dr Chau had approved a formal invitation, that Ms Yan had drafted (as was the case), which, in its final form, was dated 25 October 2013 (the 25 October 2013 letter).
10 The 25 October 2013 letter stated that over 200 people were expected to attend the 2013 conference, including government and corporate leaders, such as the former President of the United States, Bill Clinton, a former French Prime Minister and a former Director General of another United Nations organisation. Dr Chau wrote in the letter that, as the organiser of the 2013 conference, he had the honour to invite Mr Ashe to present at it by delivering a milestone speech on the topic of “Identifying the Parameters of the post-2015 Development Agenda” as set out in the 68th session of the United Nations General Assembly. It reminded Mr Ashe of what he had said at the last session of the General Assembly about the time being right to work out a global development agenda based on sustainability and common ground while respecting the difference, and described that as being Dr Chau’s motive and goal in promoting the conference. He concluded the substantive part of the letter by saying that, after attending:
…I wish that you would remember that you have a sincere friend in Guangzhou Province, the economic powerhouse in China. And your friend here has the pleasure to offer you a permanent convention venue for the UN meetings on the sustainability and climate changes in the efforts to fully realize the Millennium Development Goals, as well as for the 193 members of the UN to convene for multilateral discussions on the topics of priority concerns.
11 The particulars then went on to allege that:
shortly before the 25 October 2013 letter was emailed to Mr Ashe, Ms Yan told him in another email that she would request Dr Chau to pay Mr Ashe USD200,000 in connection with his participation in the 2013 conference in his capacity as President;
on 27 October 2013, Ms Park told Mr Ashe in an email that Dr Chau would not pay the USD200,000 until Mr Ashe had communicated his acceptance of the invitation and that this circumstance gave rise to the inference that Dr Chau had told Ms Park to tell this to Mr Ashe;
on 28 October 2013, Mr Ashe sent, on his official letterhead, an acceptance of Dr Chau’s invitation. (The copy of that letter in evidence revealed that Mr Ashe proposed that logistical arrangements for his participation in the 2013 conference go through his special assistant, a Ms Fuller);
on 29 October 2013, Mr Ashe, Ms Yan and Ms Park had an email exchange in which they agreed that:
(1) Mr Ashe would revise his earlier acceptance letter to Dr Chau so as to enable logistical arrangements for his participation at the 2013 conference to go through Ms Yan, instead of through Ms Fuller;
(2) Mr Ashe would appoint each of Ms Yan and Ms Park as, first, an advisor on economic matters to him as President and, secondly, as an advisor to the Office of the Prime Minister of Antigua and Barbuda on matters pertaining to investments from the entire Asian region in that country; and
(3) Mr Ashe would nominate an appropriate bank account into which Dr Chau should pay the USD200,000;
Mr Ashe’s redrafted acceptance letter dated 29 October 2013 (the 29 October letter) that came to be sent to Dr Chau, concluded as follows:
I would be most grateful if a member of your staff could contact my Adviser on Economic Matters, Ms. Shiwei Yan, to finalize the logistical arrangements for the complete trip.
12 Other material in the evidence that the publishers relied on in support of the application to amend included, first, letters of appointment dated 16 September 2013 by the Government of Antigua and Barbuda of each of Ms Yan and Ms Park as advisors to the Office of the Prime Minister on matters pertaining to investments in it from the entire Asian region, and, secondly, letters dated 17 September 2013 that Mr Ashe signed on his official letterhead as President appointing each of Ms Yan and Ms Park as an advisor, economic matters, in his office for the duration of the then current 68th session of the United Nations that would end on 15 September 2014.
13 Next, the particulars alleged that:
Mr Ashe made the proposed appointments in consequence of email exchanges with Ms Yan and Ms Park on 29 October 2013, sent the 29 October letter in his capacity as President to Dr Chau, and on 29 October 2013, by separate email to Ms Yan and Ms Park, Mr Ashe requested that Dr Chau transfer the USD200,000 into one of the two accounts;
by no later than 3 November 2013, Dr Chau paid, or authorised the payment of, the USD200,000 by wire transfer to the operating account from the account of one of his companies, Hong Kong Kingson Investment Limited, with China CITIC Bank International;
on 4 November 2013, Mr Ashe acknowledged receipt of that money in an email sent to Ms Yan;
Mr Ashe attended, and participated at, the 2013 conference in his official capacity as President;
Dr Chau made no attempt to ascertain or comply with any applicable United Nations requirements as to donations or voluntary contributions, and that none of Ms Yan, Ms Park or Dr Chau made any request that the USD200,000 payment be treated as a voluntary contribution, gift or donation to be used consistently with the policies, aims and activities of the United Nations or the President of the General Assembly pursuant to United Nations Financial Regulations and Rules, or otherwise for the alleviation of poverty, or sought for Dr Chau an official written donation report from the United Nations or the Office of the President, or, after the payment, any sort of official receipt of it;
on about 19 February 2016, in an interview with the FBI, Dr Chau admitted that he had known of, and approved, the USD200,000 payment, had not received an official written donation report from the United Nations or the Office of the President and that, after the payment was made, he had not requested an official receipt, and (particulars (32)(d) and (e) alleged):
(d) falsely stated, contrary to the Applicant’s representation to Ashe in the Invitation, that he was not the organiser of the Conference; and
(e) falsely stated, contrary to the communications set out above, that he believed the $200,000 payment was intended for the alleviation of poverty.
recited general details of the arraignment and guilty pleas of both Ms Yan and Ms Park (although, in dealing with Ms Yan’s plea, the particulars did not refer to the superseding information).
14 Finally, the particulars concluded:
(38) In the circumstances particularised above, it is to be inferred that:
(a) the $200,000 payment by the Applicant to Ashe was a bribe to induce Ashe to attend the 2013 Conference and to use the Imperial Springs Resort for future UN events and conferences;
(b) the Applicant knew that the $200,000 payment to Ashe was such a bribe.
15 The particulars did not allege that Ms Park or Ms Yan had admitted that the USD200,000 was a bribe or that either of them had so understood it.
The publishers’ submissions
16 After the Full Court reserved its judgment on the appeal, I had to vacate the dates of the final hearing that I had fixed in September 2018 for April 2019. Consequently, there presently is no current trial date, although the publishers do not oppose me now allocating a trial date. They asserted that Dr Chau will suffer no prejudice if I were to allow the amendment because, since a new trial date can now be set, he will be able to have his case heard at what, in any event, will be the earliest possible time and that there would be no further delay arising from the amendment.
17 The publishers argued that, in effect, the circumstances in which Dr Chau agreed to pay the USD200,000 to Mr Ashe were of such a suspicious nature that it was obviously, to his knowledge, a bribe to Mr Ashe in order, as par 38 of the particulars asserted, to induce him to attend the 2013 conference and to use the Resort for future United Nations events and conferences. They contended that this inference would support the plea of justification if the amendment were allowed. They also argued that the reason that one could infer that Dr Chau falsely told the FBI that he believed the USD200,000 payment was intended for the alleviation of poverty was that there was no reference in any of the material particularised to that intention, other than Dr Chau’s statement in the FBI interview.
18 What the publishers now seek to do is to make a substantive change to their current defence. That defence raises no plea of justification because I had struck out the prior justification pleas on 31 August 2018, which decision the Full Court affirmed.
19 In Tamaya Resources Limited (in liq) v Deloitte Touche Tohmatsu (2016) 332 ALR 199 at 224-227 -, Gilmour, Perram and Beach JJ discussed a late amendment application by a party, which had not given an adequate explanation to support the exercise of the Court’s discretion to allow that amendment. Their Honours discussed the principles that, since Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175, now govern the way in which courts approach the exercise of discretions in case management. They said (332 ALR at 225 ):
as French CJ observed in Aon at  , the House of Lords decision in Ketteman v Hansel Properties Ltd  AC 189…(Ketteman) manifests a marked departure from the approach of Bowen LJ in Cropper [v Smith (1884) 26 Ch D 700] that a costs order is a cure all. Lord Griffiths in Ketteman said…[ AC at] 220…that:
‘… justice cannot always be measured in terms of money and in my view a judge is entitled to weigh in the balance the strain the litigation imposes on litigants, particularly if they are personal litigants rather than business corporations, the anxieties occasioned by facing new issues, the raising of false hopes, and the legitimate expectation that the trial will determine the issues one way or the other…
Another factor that a judge must weigh in the balance is the pressure on the courts caused by the great increase in litigation and the consequent necessity that, in the interests of the whole community, legal business should be conducted efficiently.’
20 Their Honours then considered the issues of the nature and extent of any explanation that might be necessary and the relevance of a party’s negligence in failing to pursue either the subject matter that it sought to raise in the amendment, saying (332 ALR at 226-227 -):
 Just what explanation is called for will necessarily depend upon the particular case. The explanation will be given by, or on behalf of, the moving party. Affidavit evidence may or may not be necessary. In Cement Australia [Pty Ltd v Australian Competition and Consumer Commission (2010) 187 FCR 261] for example, as the explanation was that the error was one of judgment by senior counsel for the ACCC, a statement by him from the bar table, to which no objection was taken, was accepted by the Court as sufficient.
 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. This is such a case. The primary judge was correct to conclude that the explanation offered by Tamaya was deficient because Ms Banton could not explain why she did not know of the Chilean audit issues until she was told by Mr Basford. Her Honour’s approach does not involve any error of principle.
 We observe, in this respect, that in Aon the plurality had regard to letters which were in the possession of the ANU one year or so before proceedings commenced and which bore on the issues the subject of the amendment application as relevant to the consideration of the adequacy of the explanation for the delay: Aon at  and  .
 In any event, Tamaya, as we have observed, concedes that the Chilean audit issues could have been identified before these proceedings were commenced. As we have said, why they were not may have many explanations. None of those explanations are before us.
 Even assuming negligence, such conduct of litigation does not attract indulgence from the Court as it might previously have in different times: GSA Industries [Pty Ltd v NT Gas Ltd (1990) 24 NSWLR 710] at 716, cited by French CJ in Aon at .
 Further, as Heydon J observed in Aon at , the explanation for the delay in bringing the amendment application in that case, supported by an affidavit from the ANU’s solicitor, did not go so far as to exclude the possibility that the relevant facts could have been known earlier. His Honour said:
‘There was nothing to indicate that whatever was seen as relevant had not been available earlier if diligence had been employed.’
21 In the appeal from my earlier decision, the Full Court said of the publishers’ previous attempt to rely on the bribery allegations made in the sealed complaint, relevantly in respect of imputations (g) and (h), (Chau 371 ALR at ):
What is remarkable about the allegations in paragraphs 70 to 79 of the respondents’ particulars is that, apart from the allegation in paragraph 73(c) that the applicant hosted a conference, there are no direct allegations of material fact made in relation to any conduct of the applicant. Rather, the particulars allege as material facts: (1) allegations in court documents in a foreign court proceeding; (2) the hearing and outcome of a proceeding against Sheri Yan; and (3) statements made by Mr Hastie MP to the Federal Parliament. No material facts alleged in paragraphs 70 to 79, either alone or in combination, are capable of supporting the very serious allegations that are made in paragraph 80. The respondents’ attempt to justify the applicant’s imputations 5(f), (g), and (h) is untenable.
22 Their Honours substantively affirmed the approach that I had taken in argument on 27 June 2018. I accept that, at that time, the publishers’ lawyers conceived how they would prove their case of justification of imputations (g) and (h) differently. However, the simple fact remains that the only material that the publishers then had to make the previous, very serious allegations was the sealed complaint. Their reliance on it to support the plea was what their Honours held made the allegations untenable.
23 The attempt to amend the defence in June 2018 occurred in the context that the proceeding had commenced with the filing of the statement of claim on 5 July 2017, almost a year before the argument on the amendment application.
24 I reject the publishers’ argument that the amendment, as particularised in the draft defence, should be allowed to go to trial because, since theirs’ is a circumstantial case, one needs to evaluate the whole of the evidence admitted at the trial in order to determine whether the circumstantial inference ought be drawn that the USD200,000 payment was a bribe. Of course, that evaluative task is the role of the tribunal of fact (judge or jury) in a circumstantial case that is allowed to go to trial: The Queen v Hillier (2007) 228 CLR 618 at 637-638 - per Gummow, Hayne and Crennan JJ.
25 However, the particulars on which the publishers now wish to rely are highly unlikely to support the admission of evidence against Dr Chau that could make good the substantial truth of either imputation (g) or (h). In particular, even if the assertions that both Ms Yan and Ms Park had pleaded guilty to the allegations made against them were somehow admissible against Dr Chau on the issue of justification, Ms Yan’s plea of guilty on the bribery count against her could not be relevant. That is because when Ms Yan pleaded guilty to the count of bribery in the superseding information, she, through her lawyers at the plea hearing, denied that she was involved in any bribery in respect of the USD200,000 payment, although she freely admitted that she had engaged in other acts of bribery for which she was sentenced. Accordingly, her guilty plea can have absolutely no bearing on whether or not it would be possible to make out that she conspired with Dr Chau about the USD200,000 payment, as the publishers seek to allege. There is no material before me as to the circumstances in which Ms Park entered her plea and, importantly, no particularisation that she accepted that she had paid, or participated in the payment of, a bribe involving the USD200,000.
26 On the objective facts alleged, Mr Ashe asked for that payment to be made at the instigation of Ms Yan and Ms Park without any involvement of Dr Chau. Next, Dr Chau at Ms Yan’s request caused the USD200,000 to be paid to the operating account. That was an account styled “Office of the President of the General Assembly PGA 68 Operating Account”. On its face, that appears to be an account of the President of the 68th General Assembly for official purposes, albeit that the allegations in the particulars are that it was not. There is nothing in the material before me, however, to suggest that Dr Chau had any awareness that the operating account was used for a purpose other than what it appeared on its face to have had.
27 Moreover, the payment of USD200,000 appears to have been for Mr Ashe to attend at the 2013 conference and, perhaps, to consider, in his remaining nine or 10 months as President, the availability of the Resort for the United Nations to use for future events and conferences. However, there is no allegation in the particulars that anything happened subsequently to Mr Ashe’s appearance at the 2013 conference that involved him or the United Nations with Dr Chau or the use of the Resort.
28 The publishers’ assertion is that, on its face, the mere payment of the USD200,000 to secure Mr Ashe’s appearance at the 2013 conference in his role as President (or to consider future use of the Resort) is enough to constitute it as (or as capable of being found to be) a bribe to him. In my opinion, that inference does not arise. The payment to the operating account of the USD200,000 may simply have been an appearance fee paid to him, in his official capacity, to be used for United Nations purposes, or, as Dr Chau is said to have told the FBI, for the alleviation of poverty. While it is clear that Ms Yan and Ms Park, whose guilty pleas are, in my opinion, irrelevant for the purposes of evaluating the strength of the particulars, were involved in securing the payment of bribes to Mr Ashe, there is no material to establish that they admitted that they had procured the USD200,000 as a bribe. Mr Ashe’s 29 October letter, in the final form that Ms Yan had suggested when he accepted the invitation, made clear that Ms Yan, as Mr Ashe’s (not Dr Chau’s) agent in his official capacity, would be “finaliz[ing] the logistical arrangements for the complete trip”.
29 There is very little in the particulars directed to establishing a case on which it could be inferred that Dr Chau knew that, or was recklessly indifferent as to whether, the payment was corrupt. I am not satisfied that, having regard to the seriousness of the allegation and the length of time which the publishers had prior to their first attempt, in 2018, to justify the imputations of bribery (in imputations (g) and (h)) and the intervening period to the present, that what is now particularised ought be allowed, at this late stage, to reshape the litigation landscape.
30 Although, if allowed, this would be, technically, the first filed amendment of the defence, in reality, it is about the publishers’ fifth iteration of an amended defence raising justification. However, the present application to amend has come about in the context of the rejection, that the Full Court affirmed, of the previously proposed amendments and the fact that there is a real likelihood that Dr Chau’s reputation has been adversely affected. He has not yet been able to have his case heard because of the delay and the need to vacate the hearing date that I had fixed for April 2019 that occurred because of the publishers’ unsuccessful appeal, which is still the subject of an unresolved application to the High Court for special leave to appeal.
31 The seriousness of the allegations in the draft defence is such that there should have been a proper particularisation of plea of justification of the two imputations of bribery much earlier than now. I am not satisfied that the publishers’ explanation for the failure to do that is satisfactory. The explanation, such as it is, is that the publishers’ lawyers misconceived that they simply could rely on the sealed complaint to prove that Dr Chau had bribed Mr Ashe. However, the sealed complaint was only ever an allegation and could not reasonably support an inference that Dr Chau was guilty of bribery even if it had expressly charged him: cf. Mirror Newspapers Ltd v Harrison (1982) 149 CLR 293. The misconception that it could support such an inference of guilt was due to the publishers’ or their lawyers’ own fault and is not something for which Dr Chau has any responsibility.
32 The publishers now seek a further indulgence to file yet another version of their defence to rely on material that raises, at best, some questions as to the purpose of the payment. In my opinion, the present particulars hardly look like supporting a case of any sufficient strength, at this stage, to warrant the grant of leave to amend.
33 I am mindful that, were this an application by Dr Chau for summary dismissal, the power summarily to dismiss should not be exercised lightly: Trkulja v Google LLC (2018) 263 CLR 149 at 158  per Kiefel CJ, Bell, Keane, Nettle and Gordon JJ. However, this is not a case where summary dismissal is involved. It is a case where well-resourced publishers are seeking an opportunity to (further) amend a defence to justify serious imputations that they published two years earlier and where their first attempt to plead that case failed before me and the Full Court because it was untenable. And, that first attempt occurred in circumstances where the publishers sought to justify serious allegations against Dr Chau that they had not properly investigated. Nor had they attempted to collect any admissible evidence in support of the proof of those very serious allegations.
34 In my opinion, the human strain on an individual in Dr Chau’s position is a relevant factor. He successfully resisted (at least to the present stage of the pending application for special leave to appeal) the publishers’ previous attempt to amend their defence to justify imputations (g) and (h). He lost the trial date because of the then unresolved appeal to the Full Court. The publishers now seek to have him face a further attempt to reagitate this issue in circumstances where, during the course of the processes of the parties’ exchange of submissions last month, the publishers again changed, although in relatively minor ways, the allegations in the draft defence.
35 I am of opinion that this application is not a proper use of the Court’s resources in accordance with Pt VB of the Federal Court of Australia Act 1976 (Cth). As I have explained, I am not satisfied with the publishers’ explanation for this amendment application. I do not consider that the way in which the current version of the particulars have been pleaded raises, in all of the circumstances, a sufficiently appropriate or arguable case to support, at this late stage, the grant of leave amend the defence.
36 For these reasons, I refuse the application with costs.