A Fairfax journalist's recollection of a conversation he had with a legal adviser to a Chinese-Australian businesswoman should have been accepted by a court as admissions made on her behalf, the media organisation says.
The Age newspaper and journalists Richard Baker, Philip Dorling and Nick McKenzie have been ordered to reveal to Helen Liu their confidential sources for a series of stories on her relationship with federal Labor MP Joel Fitzgibbon.
Fairfax Media, publisher of The Sydney Morning Herald and The Age, is appealing against the decision.
In a hearing before the NSW Court of Appeal yesterday, lawyers for Fairfax argued the trial judge wrongly refused to admit into evidence a conversation Baker had with Donald Junn, Ms Liu's long-time legal adviser.
Baker visited Mr Junn in February 2010, before The Age and the Herald published articles examining the long-standing relationship Mr Fitzgibbon and his father Eric, a former MP, had with Ms Liu.
The articles alleged Ms Liu had paid Mr Fitzgibbon $150,000 as part of "a campaign to cultivate him as an agent of political and business influence".
Mr Fitzgibbon, the chief government whip and former defence minister, denies receiving the $150,000 payment and has launched defamation proceedings.
In an affidavit, Baker said he showed Mr Junn key documents he and his colleagues relied on to support the claims in the articles and requested a response from Ms Liu and to verify the documents.
On seeing the documents Mr Junn allegedly said: "There is a rare truth to them. You have done your homework ... They seem right in a historical context. Helen would hit the roof if she knew you had these documents.
She has something to fear from you." However during a hearing in February 2011, Supreme Court Justice Lucy McCallum held Mr Junn was not "authorised" by Ms Liu to make such admissions and ruled that the evidence was not to be used for the purpose of establishing the truth of its contents.
Rather, the evidence just established what information Baker had in his possession when researching and preparing the articles.
Yesterday, Tom Blackburn, SC, for The Age, said, as Ms Liu's then-solicitor, Mr Junn had the authority to make statements on her behalf.
A scenario in which Ms Liu would "co-operate" with the paper to "shield herself from damage", allegedly proposed by Mr Junn during the conversation, supported the likelihood that he had authority, Mr Blackburn said.
Ms Liu claims the documents are forged or falsely attributed to her and wants the journalists to reveal the identity of the sources so she can launch defamation proceedings against them.
The hearing continues today.