Paper that exposed Captain Dragan paid a big price for its pains

Serbian Captain Dragan Vasiljkovic in Krajina, Croatia in 1994.

The conviction and jailing of Dragan Vasiljkovic in Croatia is a victory for the justice system. But that cannot be said about what happened in Australia when this man’s evil past was exposed.

Vasiljkovic, best known as Captain Dragan, treated this country’s courts like his plaything. He used the law of defamation against this newspaper for revealing the truth: a war criminal was living among us. And although he lost in court, the price of this newspaper’s victory was immense — legal costs of $1.5 million that will never be recovered.

There might once have been a time when media outlets could simply absorb that sort of cost. But not anymore. Hundreds of jobs in newspapers have disappeared and they are not coming back.

Paul Whittaker, editor-in-chief of The Australian, believes this case shows that the justice system is out of step with the financial reality confronting the media industry.

On one level, the justice system — here and in Croatia — has vindicated this newspaper. But the Australian aspect of the Captain Dragan case has set a dreadful precedent. Who will risk exposing the next war criminal?

In 2005 Vasiljkovic was going by the name of Daniel Snedden when he was tracked down by Natasha Robinson, who now works for the ABC, and Paige Taylor, who is The Australian’s bureau chief in Western Australia. But for their tenacity this man might still be strutting around some golf course in Western Australia.

Their scoop appeared in this newspaper on September 8, 2005, and the captain launched defamation proceedings two months later. The following year he was arrested by the Australian Federal Police after Croatian authorities charged him with three war crimes.

His legal strategy then had two fronts: he had defamation proceedings running against The ­Australian while he was simultaneously trying to fight off extradition. Both strands raised the same issue: was Captain Dragan a war criminal?

Normally, the criminal law takes priority and at the height of this affair, Ken McKinnon, who was then chairman of the Press Council, said he did not see how it would help justice to permit the issue of defamation to supersede the question of whether war crimes had taken place.

“It’s a subsidiary issue. It’s crazy,” he said in September 2008.

Leanne Norman, one of the nation’s most experienced media lawyers, agreed: “I definitely think the criminal proceedings should go first,” she said at the time.

“The criminal justice system is more important than people’s civil rights and it must take priority.”

Even before the defamation proceedings got under way, the official involvement of the courts in the supposed hurt to Vasiljkovic’s reputation was looking decidedly silly. The International Criminal Tribunal for the former Yugoslavia had already made several adverse findings about him in a judgment delivered against a political leader of Croatian Serbs, Milan Martic.

That judgment said the captain was involved in a conspiracy to drive non-Serbs from parts of Croatia and Bosnia-Herzegovina.

While it would have made sense to give priority to the criminal process, it was not to be. The defamation case went ahead in the NSW Supreme Court and that imposed an extraordinary burden on this newspaper that left a lasting impression on Whittaker.

“We were forced to effectively run a war crimes trial in the NSW Supreme Court,” he says.

“A team of lawyers was sent overseas at great expense to the former Yugoslavia to gather evidence before a prosecution could be brought by the nation-state of Croatia, which was not allowed to share any evidentiary material with our legal team.”

Whittaker said the case was the most expensive he had been involved in at The Australian and highlighted the enormous cost of defending legal claims even when media organisations were clearly acting in the public interest.

It also highlighted the “gross inadequacy of security for costs provisions where judges allow anyone to have their day in court without them having to bear any financial risk if they lose the case”.

“Even though we gathered crucial new evidence and won the case in the Supreme Court, and at every appeal stage along the way, we ‘lost’, as we have no prospect of recovering the huge sums we have expended in defending this matter.

“The courts are out of step with the reality of the present-day financial position of the modern media environment where publishing companies’ balance sheets are under more pressure than ever,” Whittaker says.

Ashurst partner Robert Todd, who was part of the The Australian’s legal team, says the case has some key lessons.

“There is no doubt that the courts have got to find a way so they do not get involved in claims that could be resolved elsewhere — particularly in a hearing of the type that was conducted in Croatia,” Todd says.

“Given the outcome in Croatia, the utility of the defamation proceedings — even though they were won by The Australian — is almost nonexistent, other than to impose a very heavy financial burden on a media company.”

In terms of public policy, this case is sending the community the worst possible signal.

If another reporter were to track down another war criminal living anonymously in Perth, the cost of fending off Captain Dragan will not be forgotten.

Thanks to this case, and the way it was handled, the financial risk associated with serious journalism is heading in the wrong direction.

All this is taking place when the federal government has just agreed to spend $50 million on subsidising jobs for journalists at small or regional publications.

The paper’s victory was accompanied by an order for costs, but most of that money never arrived.

So, what needs to change? Within the legal profession, access to justice is considered to be a goal that is beyond reproach. Yet there are other goals that are just as important, such as ensuring the justice system is not used against innocent parties to impose massive cost burdens.

As this case shows, the judiciary feels bound to give everyone access to the courts — even to impecunious litigants such as Captain Dragan.

This gives great weight to the public interest in access to justice, and almost no weight to the risk of imposing ludicrous legal costs on the ostensible “winner”.

The way forward might involve liberalising the rules governing security for costs — which are orders for litigants to pay amounts into court to cover the other side’s legal bills in the event of a loss.

This happened in part of the litigation between Vasiljkovic and The Australian. But it needs to be seen in context.

It meant that this country’s justice system allowed a war criminal to run a losing case that generated legal costs of $1.5m while paying just $40,000 of what he owed.

In the Supreme Court, The Australian’s legal costs amounted to $1.22m. In the NSW Court of Appeal this newspaper spent $218,000. Vasiljkovic also sought leave to appeal to the High Court and lost once more.

His case was such that The Australian was not even required to present oral submissions, but the High Court episode still cost this newspaper another $97,910.69.

The High Court adjourned for only a few minutes before Justice Bill Gummow returned to say the judges were not convinced that Vasiljkovic’s application dealt with issues of sufficient public importance.

Against The Australian’s massive legal bill, Vasiljkovic’s $40,000 payment is the equivalent of a rounding error. It meant the paper was out of pocket by just under $1.5m, instead of just over $1.5m.

Part of the problem, according to Todd, is that the courts are required to give everyone their day in court.

In a small number of cases the courts have been willing to use a principle known as “proportionality”, which attempts to weigh the resources and costs of proceedings against the matters in issue. But that principle is unlikely to have been applied to this type of case.

The burden of substantial legal costs can be eased if courts make orders requiring litigants to deposit money with the court as security against the possibility of an adverse costs order. Without such orders, adverse costs have little impact on impecunious litigants. For them, the threat of such an order is, in reality, no threat at all.

In defamation matters, courts generally adopt the view that even an impecunious litigant has a reputation that is of value and should be allowed to defend it.

On that point, it is worth considering the reputation that Vasiljkovic asserted that he was defending. Before returning to Serbia to wreak havoc in the Balkan wars, he was convicted in 1974 of receiving stolen goods. Ten years later, just before he left Australia, he was convicted of operating a brothel and was fined $5000.

A more balanced approach by the courts may well require statutory intervention, just as the nation’s parliaments intervened more that a decade ago to bring a more balanced approach to personal injury litigation.

“In certain circumstances, the courts believe their hands are tied in relation to security for costs,” says Todd. “It probably does need some legislative intervention or guidance for the courts.”