The mouse that roared: how a little Australian website stared down Murdoch’s mighty News Corp

As Lachlan Murdoch's day in the witness stand in the Dominion v Fox News case drew closer, at home in Australia the News Corp co-chairman was keen to make a separate legal case against an independent news website go away.

On Friday, just days after Fox News reached a $US787.5m settlement with Dominion in the US defamation lawsuit, Murdoch's lawyers filed one line in Australia's federal court to discontinue "the whole of the proceedings".

The whole of the proceedings was a defamation case Murdoch had brought against an Australian publication last August for daring to link him to the 6 January Capitol riots.

After hundreds of hours spent in preliminary court battles and thousands of pages of discovery, he simply dropped his case against the Australian media company Private Media, the publisher of news website Crikey.

This was the second time in a week Murdoch had walked away from a legal challenge, with this bill certain to be significantly less, but still likely in the millions.

It was quite the backflip by the 50-year-old media mogul whose legal case has played out in lurid media headlines for eight months. He launched the proceedings after Crikey named the Murdoch family as an "unindicted co-conspirator" in the US Capitol riot.

Written by Crikey's political editor Bernard Keane, the article did not name Lachlan Murdoch, but was headlined "Trump is a confirmed unhinged traitor. And Murdoch is his unindicted co-conspirator".

Incensed by the opinion piece, as well as Crikey's decision to publicise his legal letters in an advertisement the New York Times, Murdoch engaged top silk Sue Chrysanthou SC to represent him and filed a suit.

Chrysanthou talked tough, arguing the publications contained "scandalous allegations of criminal conduct and conspiracy" and carried a number of "highly defamatory and false imputations about him". Crikey argued in preliminary court hearings that the article did not suggest the Murdochs were guilty of criminal conspiracy.

But as the months dragged on and the case blew out in complexity and length and the number of respondents grew to include the company's editors and executives, Murdoch wanted to settle, the Guardian understands.

Behind the scenes his lawyers made several offers to bring the case to an end as early as January. But Crikey, the little mouse that roared, refused to back down and apologise - or remove the piece - and the case was set down for a three-week trial in October.

For Crikey the principle of freedom of speech was at stake and the publisher believed it should be free to publish a hyperbolic remark about a billionaire media proprietor without being sued. It was a brave - or foolhardy - stance because if Crikey lost it may have closed the business down.

Private Media alleged in court that neither Lachlan nor any member of the Murdoch family had publicly repudiated claims propagated on Fox News alleging electoral fraud.

Although technically unrelated, Murdoch's case against Crikey was hampered by the discovery in the Dominion case, which uncovered that Lachlan and his father, Rupert Murdoch, knew that Fox News was telling lies about the US election being stolen in 2020.

In March the case began to look rosier for Crikey as it considered the implications of those Dominion admissions.

Crikey's legal team jumped on the Dominion material and submitted an amended defence. Murdoch's lawyers objected to the defence, saying it would mean extending the length of the trial and introducing irrelevant material.

Prof David Rolph, a defamation expert at the University of Sydney's law school, said at the time the Dominion revelations were key to Crikey's case. "I think it would seem odd if on the one hand in the United States Dominion succeeds, and here in Australia Crikey doesn't with its public interest defence," Rolph said.

On Friday Rolph said the issues involved in the two cases were different but the revelations in the US proceedings were obviously damaging, and it's against that backdrop that the Australian case would have been litigated.

"It's also clear that Crikey was attempting to incorporate the US material into their defence and it would have been difficult for Lachlan to avoid getting into the box and being cross examined," Rolph said. "Obviously withdrawing those proceedings avoids that from happening. I think that's what it really boils down to."

The Dominion case had already begun to dominate proceedings. Earlier this month Crikey's lawyers told the court that Murdoch was culpable for the violent insurrection of the US Capitol, generating the type of headlines Murdoch was trying to avoid with his original claim.

Barrister Michael Hodge KC said that while many media sources fuelled a conspiracy theory that Joe Biden stole the election from Donald Trump, Murdoch could still be held responsible.

"He controls Fox Corporation," Hodge said. "He permitted for the commercial and financial benefit of Fox Corporation this lie to be broadcast in the United States.

"We say that gives rise to culpability where you are allowing and promoting this lie and that lie is the motivation for the insurrection."

Chrysanthou for Murdoch accused Crikey of including masses of material from the Dominion case in the Australian defamation lawsuit purely as part of its "Lachlan Murdoch campaign". A key tactic employed by Chrysanthou was to claim Crikey was using her client as a way to increase subscriptions and build a fighting fund. The Guardian understands this marketing campaign particularly infuriated Lachlan.

With the US media's attention on Dominion, the Murdoch camp decided to drop the case before the weekend, knowing the Crikey case would be just a footnote in the coverage outside Australia.

Murdoch's lawyer John Churchill claimed he was ending the case so as to not enable Crikey's "marketing campaign".

"Mr Murdoch remains confident that the court would ultimately find in his favour, however he does not wish to further enable Crikey's use of the court to litigate a case from another jurisdiction that has already been settled and facilitate a marketing campaign designed to attract subscribers and boost their profits," Churchill said.

Private Media's CEO Will Hayward said it was a substantial victory for legitimate public interest journalism and labelled Churchill's claim that Murdoch would have won as absurd.

Matthew Collins KC, a barrister specialising in media law and a former Australian Bar Association president, said Murdoch was liable for most of the costs.

"While every case is different, the costs that are recoverable by a party following a discontinuance of proceedings are typically in the range of two-thirds to three-quarters of the actual costs of the party," he said.