Defamation and sources … Nick Di Girolamo, Sydney lawyer, Liberal party operator and Obeid frontman withdraws from defamation trial against The Sydney Morning Herald … Court of Appeal orders up journalists’ sources in blow against investigative journalism 

ON April 22, Mad Max Merritt, The Australian’s legal affairs scribbler, sent one of his meteors into outer space. 

It was a lip-smacking beat-up from the dodgy people he relies on as sources and who he furiously defends in the paper.  

“Fairfax media and some of its star reporters are set to become embroiled in a spectacular defamation case in which the publisher is facing a damages claim of up to $12 million. 

The case which starts on May 16, has been lodged by lawyer Nick Di Girolamo and will subject The Sydney Morning Herald to intense scrutiny over its coverage of some of the most significant matters associated by the NSW Independent Commission Against Corruption. 

Faced with such a massive claim, court documents indicate Fairfax has adopted a high risk-strategy in which it will attempt to prove the truth of its coverage.” 

Apart from Fairfax, the other defendants were journalists Kate McClymont, Sean Nicholls and Linton Besser. 

It certainly was a “spectacular” defamation case, but not quite in the way anticipated by Max Merritt. It was all over by the fifth day with Di Girolamo withdrawing his action. 

Pity about the $12 million. 

On day one his counsel, Bruce McClintock, made an impressive start by announcing the plaintiff would not be giving evidence at the trial. 

Di Girolamo pleaded that various articles in the SMH gave rise to meanings  that he engaged in corrupt conduct and that in dealings with Australian Water Holdings he was a front man for the corrupt Obeids. 

Robert Newlinds SC gave reputation evidence, saying that when he first met Di Girolamo eight years ago he had a “good reputation … with a big future”. 

By the time of the ICAC inquiry in 2014 his reputation had been “entirely destroyed”. 

Now the courtroom campaign to restore his reputation has finished. 

Tom Blackburn, for Fairfax, in his opening pointed to a “sham transaction”, about which Di Girolamo lied, whereby money from the Obeids was treated as a loan to the plaintiff.

It enabled Di Girolamo to appear on the share register of Australian Water Holdings in order to conceal the involvement of the Obeid family. 

This afternoon Blackburn made a statement to the court:  

“The first defendant acknowledges that in the articles the subject of this litigation, it did not say and did not intend to say that Mr Nicholas Di Girolamo was corrupt or had engaged in any corrupt activity in respect of Australian Water Holdings.” 

That’s it. Case over. 

Justice Christine Adamson had allowed evidence from journalist Kate McClymont that Eddie Obeid’s modus operandi was to use “front men” to “invest and do deals”. 

Shortly afterwards Di Girolamo accepted that it was not sensible to continue. This was an important case for the newspaper to defend. It also does ICAC no harm in its struggle to investigate dodgy ministers, lawyers and business types. Significantly there was no order for the articles to be removed.

Here they are:

• Costa, Obeid and the water firm 
• Obeid link to Tigers under the spotlight 
• O’Farrell stays silent on mine and its Liberal champion 
• Water company donated cash to Nationals MP 
• Investigators turn attention to three former ministers 

It wasn’t all gloom for McClintock on Friday (May 20). 

In an horrendous decision for whistleblowers and journalism, the court of appeal (Beazley, McColl and Ward) decided to lift orders, granted by Lucy McCallum J, staying the identification of journalists’ confidential sources for Fairfax articles alleging that businesswoman Helen Liu engaged in corrupt dealings with Labor frontbencher Joel Fitzgibbon. 

Fairfax had sought a stay of the preliminary discovery on the basis that it would waive it’s right to plead qualified privilege. McCallum considered that gave Liu a remedy against Fairfax “no less effective” that an action against the sources.  

The Court of Appeal, with McColl leading the charge, didn’t agree, saying the businesswoman needed an even more effective remedy than that, because she was after aggravated damages based on her claim that the documents provided by the sources were forgeries. 

Since the original article in February 2010, Fairfax has published other information about Ms Liu, including an allegation that she had engaged in a sham marriage, amounting to “migration fraud”, for the purpose of securing Australian residency. More here 

There was also a report that while Fitzgibbon was defence minister some departmental officials believed Liu had links to Chinese military intelligence. 

McClintock’s client Ms Liu was a big donor to the Labor Party in general and Fitzgibbon in particular. She gave $130,000 to the NSW ALP and paid for Fitzgibbon to take two trips to China, which he failed to declare to parliament.