Court slashes Samsung's $1b damages bill

A US judge slashed nearly half of the $US1 billion ($A984.40 million) damage award a jury ordered Samsung to pay Apple over the rights to the design and technology running market-leading smartphones and tablet computers.

US District Court Judge Lucy Koh lowered the damages awarded to Apple by $US450.5 million ($A443.47 million) for 14 Samsung products including some products in its hot-selling Galaxy lineup, saying jurors had not properly followed her instruction in calculating some of the damages.

She also concluded that mistakes had been made in determining when Apple had first notified Samsung about the alleged violations of patents for its trend-setting iPhone and IPad.

Koh ordered a new trial to recalculate damages for those products.

"We are pleased that the court decided to strike $US450,514,650 from the jury's award," Samsung spokeswoman Lauren Restuccia said.

"Samsung intends to seek further review as to the remaining award."

Apple declined to comment on the Koh's ruling.

The ruling reduced Samsung Electronics' bill to just under $599 million. The judge said the tab will probably increase after the appeals of both companies are resolved.

Apple is seeking more damages and Samsung a complete dismissal of the case in the US Court of Appeals for the Federal Circuit, the Washington, D.C.-based court that handles all patent appeals.

The new trial to recalculate the damages could also increase the award.

Still, the ruling was the second significant setback in Koh's courtroom since the headline grabbing verdict was announced.

In December, Koh refused to order a sales ban on the products the jury found infringed Apple's patents.

She said Apple failed to prove the technology is what drove consumers to buy a Samsung product instead of an Apple iPhone or iPad.

Samsung says that it is continues to sell only three of the two dozen products found to have infringed Apple's patents.

After a three-week trial closely followed in Silicon Valley, the jury decided that Samsung ripped off Apple's trailblazing technology and sleek designs and ordered Samsung to pay Apple $1.05b.

Samsung has emerged as one of Apple's biggest rivals and has overtaken it as the leading smartphone maker.

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Abbott and PM descend on western Sydney

TONY Abbott has fired the first shot in this week's war for western Sydney as Julia Gillard gears up for a five-day tour to reconnect with the Labor heartland and salvage support in once-safe seats.

The opposition leader descended on Campbelltown on Saturday, pledging to solve the area's transport woes and tackle crime as new polling highlighted just how hard the prime minister will need to work during her own visit.

The Fairfax Media/ReachTEL poll found the government is on track to lose the seats of Chifley, Blaxland, McMahon and Werriwa to the Liberals at the September 14 election. All four would normally be considered safe.

Such a result would result in frontbenchers Chris Bowen and Jason Clare and backbenchers Laurie Ferguson and Ed Husic being booted from parliament, in addition to Labor MPs in more marginal seats like Lindsay's David Bradbury.

And in particularly worrying news for Ms Gillard, the poll of 2550 voters spread across the four seats finds the collapse in Labor's support is due in large part to negative perceptions of her leadership.

Mr Abbott sought to highlight the local MPs' failings too.

"You've got Chris Bowen, who couldn't stop the boats. You've got Jason Clare, who can't stop the guns. And you've got David Bradbury, who wants to attack people's superannuation," Mr Abbott told reporters at Leumeah train station.

He rejected suggestions his visit to Campbelltown was aimed at stealing the spotlight from Ms Gillard.

"I know Sydney, I'm not a tourist in Sydney and this is my 47th visit since the election to western Sydney," he said.

Mr Abbott will return to the area in the coming days and says he will stop in at the Rooty Hill RSL - next door to where the PM is staying - on Monday at the invitation of a breakfast television program.

While Ms Gillard had no public appearances on Saturday, Trade Minister Craig Emerson sought to downplay the latest poll, suggesting it could not be trusted because it was automated, unlike the better known Newspoll and Nielsen.

"The people who are more likely to respond to those polls are the ones who have got a particular adverse view," Dr Emerson told ABC television on Saturday.

Former Labor leader Mark Latham, who lives in Sydney's west, says the party has lost touch with the area. He says the old working class is steadily vanishing and being replaced by more aspirational voters.

"And unless Labor understands that it too will vanish," he told Sky News.

Labor holds Chifley on a margin of 12.3, Blaxland on 12.2, McMahon on 7.8 per cent and Werriwa on 6.8 per cent. The poll suggests a leadership switch to Kevin Rudd could keep Chifley and Blaxland in Labor's hands.

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Drastic threat over deadly Borneo siege

MALAYSIA is threatening to take "drastic action" against intruding followers of a self-proclaimed Filipino sultan after a tense standoff erupted into a shootout that killed 14 people.

Twelve followers of the little-known sultan of Sulu and two Malaysian security personnel were killed in Friday's firefight, police said, as the more than two-week-old siege in a remote corner of Malaysia turned deadly.

Dozens of Filipinos have been holed up on Borneo island, surrounded by a massive Malaysian police and military cordon, since landing by boat from their nearby Philippine islands to insist the area belongs to their Islamic leader.

"We want them to surrender immediately. If they don't, they will face drastic action," said Hamza Taib, police chief of the Malaysian state of Sabah where the drama was taking place.

His comments echoed growing Malaysian impatience with the situation.

In Manila, Philippine President Benigno Aquino urged the gunmen to surrender immediately.

"To those who have influence and the capacity to reason with those in (the affected town of) Lahad Datu, I ask you to convey this message: surrender now, without conditions," he said in a statement.

Malaysian Prime Minister Najib Razak, whose government has been embarrassed by the security breach, said in the shootout's aftermath that he told police and armed forces to take whatever action was necessary to end the impasse.

"Now there is no grace period for the group to leave," he was quoted as saying by Malaysian media, blaming the intruders for sparking the violence.

Muslim-majority Malaysia had previously avoided tough talk, expressing hope the intruders would leave peacefully.

The Filipinos, who are estimated to number between 100 and 300, sailed from their remote islands to press Jamalul Kiram III's claim to Sabah.

Kiram, 74, claims to be the heir to the Islamic sultanate of Sulu, which once controlled parts of the southern Philippines and a portion of Borneo.

The Sulu sultanate's power faded about a century ago but it has continued to receive nominal payments from Malaysia for Sabah under a historical lease arrangement passed down from European colonial powers.

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Iran pipeline work to begin this month

A CONSORTIUM will start work next week on a much delayed $US7.5 billion ($A7.38 billion) gas pipeline from Pakistan to Iran despite American warnings of possible sanctions.

The date was announced after Pakistani President Asif Ali Zardari held talks in Tehran with Iranian counterpart Mahmoud Ahmadinejad and supreme leader Ayatollah Ali Khamenei, who urged Islamabad to press ahead with the project.

"The groundbreaking is going to be performed on March 11 on the Pakistani side of border and we hope that the presidents of the two countries will be present on the occasion," a senior Pakistani official told AFP, requesting anonymity.

He said the ceremony would mark the start of work by an Iranian-Pakistani consortium on the 780-kilometre pipeline earmarked for the Pakistani side of the border, which is said to cost some $US1.5 billion ($A1.48 billion).

A second Pakistani official also confirmed March 11 as the start date.

Although the pipeline on the Iranian side has almost been completed, Pakistan has run into repeated difficulties, both in financing the project and over a US threat of possible sanctions due to Iran's nuclear activities.

Sanctions-hit Iran eventually agreed to finance a third of the costs of laying the pipeline through Pakistani territory to Nawabshah, north of Karachi, with the work to be carried out by an Iranian company.

Pakistani officials said in mid-December that Iran had promised a $US500 million ($A492 million) loan and that Islamabad would meet the rest of the cost.

"The government has assured us that they will arrange this money through different sources including international financial institutions," a Pakistani official told AFP on Friday.

Pakistan suffers from a crushing energy crisis, but the United States says it is providing Islamabad with alternative means to help avoid sanctions.

"It's in their best interests to avoid any sanctionable activity, and we think that we provide and are providing... a better way to meet their energy needs," State Department deputy acting spokesman Patrick Ventrell said this week.

Ventrell said the United States was supporting large-scale energy projects, including one that will add 900 megawatts to the power grid by 2013, which would help supply electricity to an estimated two million Pakistanis.

But Islamabad says it will pursue the gas pipeline project regardless and that it plans to produce 20 per cent of its electricity from Iranian gas.

The country's energy crisis was most recently illustrated by a more than two-hour, nationwide blackout last Sunday.

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Man missing after trawler capsizes in Qld

EMERGENCY services are searching for a man after a fishing trawler capsized off the Gold Coast early on Friday morning.

The 39-year-old deckhand has now been missing for over 13 hours after he was washed overboard when the 50-foot boat flipped around 2am (AEST).

The skipper of the boat, who was later rescued by the crew of the AGL Action Rescue Helicopter, was trapped in an air-pocket inside the vessel for approximately two hours.

He told his rescuers he'd spent several hours on the stricken vessel before having to abandon the sinking vessel.

"He told us he made it to the bow and stayed there for about five hours when she started going under from the stern," helicopter crewman Tony Preston said.

"Luckily the life raft deployed and he was able to climb onto that and activate its beacon."

The 54-year-old skipper was taken to Robina Hospital with minor lacerations and hypothermia but is otherwise unharmed.

Gold Coast Water Police are continuing the search for the missing man.

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Manning pleads guilty to 10 charges

US Army private Bradley Manning has pleaded guilty to leaking classified information. Source: AAP

BRADLEY Manning, the Army private accused in the biggest leak of classified material in US history, could face 20 years in prison after pleading guilty to 10 charges.

Manning says he wanted to expose the US military's disregard for human life in Iraq and Afghanistan.

Military prosecutors said they plan to move forward with a court-martial on the 12 remaining charges against Manning, including aiding the enemy, which carries a potential life sentence.

For the first time, Manning directly admitted leaking the material to the anti-secrecy website WikiLeaks and detailed the frustrations that led him to do it.

"I began to become depressed at the situation we found ourselves mired in year after year. In attempting counterinsurgency operations, we became obsessed with capturing and killing human targets on lists," the 25-year-old former intelligence analyst in Baghdad told a military judge.

He added: "I wanted the public to know that not everyone living in Iraq were targets to be neutralised."

The slightly built soldier from Oklahoma read from a 35-page statement through his wire-rimmed glasses for more than an hour.

He spoke quickly and evenly, showing little emotion even when he described how troubled he was by what he had seen.

The judge, Denise Lind, accepted his plea to 10 charges involving illegal possession or distribution of classified material.

Manning was allowed to plead guilty under military regulations instead of federal espionage law, which knocked the potential sentence down from 92 years.

He will not be sentenced until his court-martial on the other charges is over.

Manning admitted sending hundreds of thousands of Iraq and Afghanistan battlefield reports, State Department diplomatic cables, other classified records and two battlefield video clips to WikiLeaks in 2009 and 2010.

He said he was disturbed by the conduct of the wars in Afghanistan and Iraq and the way American troops treated the populace.

He said he did not believe the release of the information would harm the US.

"I believed that if the general public, especially the American public, had access to the information ... this could spark a domestic debate on the role of the military and our foreign policy in general," Manning said.

Manning said he was appalled by 2007 combat video of an assault by a US helicopter that killed 11 men, including a Reuters news photographer.

The Pentagon concluded the troops mistook the camera equipment for weapons.

"The most alarming aspect of the video to me was the seemingly delightful bloodlust the aerial weapons team happened to have," Manning said, adding that the soldiers' actions "seemed similar to a child torturing ants with a magnifying glass."

As for the sensitive State Department cables, he said they "documented backdoor deals and criminality that didn't reflect the so-called leader of the free world."

"I thought these cables were a prime example of the need for a more open diplomacy," Manning said.

"I believed that these cables would not damage the United States. However, I believed these cables would be embarrassing."

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NSW prison escapee charged

POLICE have charged a prison escapee who was captured in the NSW Snowy Mountains after two days on the run.

Convicted murderer Adam Bowhay, an inmate of Cooma Correctional Centre, ran away from Snowy Oval in Cooma about 1.15pm (AEDT) on Tuesday.

He was doing community work with two other inmates as part of an approved pre-release program.

Police conducted a large manhunt over the last two days.

The 34-year-old was recaptured at the township of Bredbo between Cooma and Canberra on the Monaro Highway at 11.40am (AEDT) on Thursday, after he was spotted by a member of the public.

The man was charged with escaping custody and larceny and will appear in Goulburn Local Court on Friday, police said.

Sergeant Paul Batista from Monaro Local Area Command said the larceny charges relate to items the offender allegedly stole from a local football club during his escape.

"They include some assorted tools and a backpack," Sergeant Batista told AAP on Thursday.

Bowhay has been returned to the custody of NSW Corrective Services.

He is serving a 23-year sentence for the stabbing murder of Steven Jarvis at Casino in northern NSW in 1997.

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Qld floodwaters begin to recede

AFTER peaking on Thursday morning, floodwaters at Maryborough in southern Queensland will start to drop overnight.

Water flowed through about 20 homes and businesses in the city after the Mary River broke its banks.

"It reached its highest level about 11am (AEST) at about 8.1 metres and will remain around that level for the rest of the day," said Bureau of Meteorology hydrologist Ian Rocca.

"It will start falling later this evening and overnight."

A trough over the state's southwest is forecast to move across the Darling Downs on Friday, bringing moderate to heavy falls with more rain likely in Brisbane on Saturday.

Mr Rocca said any heavy downpours could trigger local flash flooding.

"Everything's so wet at the moment in central and southeast Queensland and the Wide Bay, any rain will be runoff into the rivers now."

Despite the conditions people are still ignoring warning signs and trying to drive through floodwaters.

A 23-year-old Maryborough man was stuck for four hours on the roof of his car after ignoring road closed signs in the early hours of Thursday.

After allegedly returning an alcohol reading of 0.128 police charged him with a number of offences.

Upstream, supplies are again getting into Gympie, which was hit with a flood peak of 18.4m on Tuesday night.

The main street has been cleaned up and mayor Ron Dyne told AAP the fact that the sun came out on Thursday was a bonus.

"It may only be for a short time but it gives people confidence," he said.

Swollen rivers in the North Burnett haven't affected any homes or properties but some bridges have been damaged.

Mayor Don Waugh is in a better mood with floodwaters beginning to drop.

"The sky's blue, the sun's shining, the grass is green, you should come up and have a look at it," he joked.

In the Banana Shire, Mayor Ron Carrige says a lot of farmers getting over the January floods have been hurled back to square one.

"It's pretty disheartening."

And that's not the end of the problems around Biloela and other towns where venomous snakes have moved closer to towns due the floodwaters.

"It's very real," he said.

"Just in the town areas there are brown snakes. They are apparently pretty big ones too.

"People need to stay away from debris and long grass."

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RBS slumps to $8.9bn loss

STATE-RESCUED Royal Bank of Scotland said that net losses almost tripled to STG5.97 billion ($A8.9 billion) in 2012, when it was hit by compensation payouts and a Libor fine.

The vast loss after taxation compared with a shortfall of STG1.99 billion ($A2.98 billion) in 2011, the lender announced in a results statement, adding that 2012 had been a "chastening" year during which it sought to "put right past mistakes".

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Cyclone Rusty already battering WA coast

Red alerts have been issued in WA as tropical cyclone Rusty intensifies to a category four. Source: AAP

A LATE change of course by Severe Tropical Cyclone Rusty has spared Port Hedland the full force of 230km/h winds, leaving the tiny community of Pardoo to bear the brunt of what was a category-four monster.

The eye of the massive storm began to cross the West Australian coast just before 3pm (WST) on Wednesday, more than 30 hours after the north-west coastline was placed on red alert and residents told to take shelter and stay inside.

That included the residents of the Pardoo roadhouse and the Pardoo station, about 120km east of Port Hedland, who were the first to feel the force of Rusty.

Ian Badger, manager of the Pardoo roadhouse, sent his staff to Broome earlier this week while staying to face the storm - and the damage - alone.

"I was half confident yesterday we would miss the main centre of it," Mr Badger said.

"I have got trees going over, so there is going to be a fair bit of damage.

"So we will just keep an eye on everything, and sit it out.

"I can't really do too much - it is pretty much horizontal rain."

The residents of Pardoo Station said on Facebook that the homestead had suffered some slight damage, and they were braced for more.

"We are all holed up in the homestead where the walls are so thick that if you closed the curtains you wouldn't even know it was going on!," they said.

"Have lost the roof to our car port and water damage to another building so far."

The storm was downgraded to a category three as it crossed, with Port Hedland experiencing 36 hours of gale-force winds.

Cyclone warnings remained in place from Sandfire Roadhouse to Whim Creek including Port Hedland, Marble Bar, Nullagine, Millstream, Tom Price, Telfer and Newman.

Widespread very heavy rainfall is tipped for overnight and on Thursday, and is likely to lead to major flooding in the De Grey and Fortescue catchments.

Rainfall totals of 187mm at Yarrie were recorded in the 24 hours until 9am, and a further 76mm fell from 9am to 1.30pm.

Figures from NASA satellites tracking the huge storm make for frightening reading, with the TRMM satellite, which flew directly over Rusty on Tuesday, recording an hourly average rainfall of more than 138mm near Rusty's western eye wall.

And a 3D image of Rusty's rainfall and cloud heights created at the Goddard Space Flight Center in Maryland showed the tops of some of the towering thunderstorms in Rusty's eye reaching heights of over 12km.

John Newman, the regional director of the Department of Fire and Emergency Services, said it was vital people stayed indoors until local authorities confirmed the area safe.

"During a red alert there is a threat to lives and properties," Mr Newman said.

"This message seems to fall on deaf ears as we continually encounter people outdoors and on the roads causing a danger to themselves and others."

While WA braced for Rusty, the rest of Australia's weather was also being affected, with cloud from the system streaming across the continent towards Victoria.

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Blaze in illegal Kolkata market kills 19

A FIRE swept through a six-storey building housing illegal shops in the eastern Indian city of Kolkata on Wednesday, killing 19 people who were unable to flee the inferno, local officials said.

Hundreds of firefighters gathered at the scene of the blaze at the Surya Sen market near the railway station in the centre of the former colonial capital, where decrepit and poorly maintained buildings are vulnerable to fires.

A total of 38 people who were sleeping in the building when the blaze broke out at around 4am (0930 AEDT) were rescued. Many have been transferred to two city hospitals for treatment.

"We found dozens of people lying unconscious with severe burn injuries on the floors of shops and some died of suffocation in their sleep," state fire services director Gopal Bhattacharya told AFP, adding that 19 corpses had been recovered.

The unlicensed shops clustered in the building were selling plastics, papers, and foam products which created acrid black smoke that impeded rescue efforts and led to the high death toll.

"The fire has been brought under control," Bhattacharya told AFP around midday.

City mayor Sovan Chatterjee said the building had "illegal construction and the shops inside the building were opened without permission of the civic body".

Firefighters said it was too early to pinpoint the cause of the blaze, but short-circuits caused by old and faulty wiring are frequently the source.

In March 2010 a huge blaze on one of Kolkata's most exclusive streets killed 43 while in late 2011 90 people were killed when a fire engulfed a city hospital.

In the 2010 fire on Park Street which shocked the city, many people fell or jumped to their deaths after finding that a top-floor fire exit leading to the roof had been locked.

The chief minister of West Bengal state, Mamata Banerjee, visited the scene of the fire.

She expressed regret at the endemic flouting of fire regulations and building norms in the densely populated city of 14 million.

"Kolkata is a more then 300-year-old city with nearly eight lakhs (800,000) premises. Many illegal constructions have come up over the years," she said as she announced an inquiry and compensation for the victims.

The families of the dead will receive 200,000 rupees ($A3,600).

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WA prison officers says strike likely soon

PRISON officers in Western Australia say they expect to strike in coming days as they push to at least match a wage deal recently sealed between the state government and nurses union.

WA Prison Officers Union (WAPOU) spokesman John Welch said members were unanimous at a meeting on Wednesday in voting to escalate industrial action.

The officers have sought a wage rise of 15.5 per cent over three years and have instead been offered nine per cent, which they say is inadequate.

They started negotiations with the state government in December, ahead of their enterprise agreement expiring on June 10.

Mr Welch said WAPOU has decided to step up its campaign after Australian Nurses Federation members extracted a 14 per cent wage rise from Premier Colin Barnett on the weekend as a "reward" for closing some hospital beds, refusing to do certain tasks and threatening to strike.

"I'm very clear that an offer of the sort that was made to the nurses would clearly resolve this matter," Mr Welch told AAP.

"Our members are not unrealistic but they've seen what's been offered to nurses and they don't understand why prison officers can't be offered the same."

He said it was highly likely WAPOU members would strike very soon.

But Mr Barnett has ruled out making an offer before the March 9 state election, asking for "cool heads".

Mr Welch countered, saying the existing nurses agreement didn't expire until the end of June and they still got a deal.

The Liberal leader is also the target of a Construction, Forestry, Mining and Energy Union (CFMEU) rally on Thursday that will involve a "march to Colin's palace at parliament", referring to his new premises at the refurbished Hale House.

The CFMEU is protesting against mining and construction jobs being given to foreign workers and say mining communities are suffering from under-investment in transport, hospitals and schools.

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Mixed reactions to summit on Qld's future

THE Queensland opposition says Premier Campbell Newman is too scared to hold his "future" summit in the southeast due to job cuts in the region.

Queenslanders have been invited to tell the state's 89 MPs what they want their state to look in 30 years' time at a meeting in Mackay on May 10.

A second summit will be held in September to review and prioritise feedback.

Mr Newman says those who contribute will help create The Queensland Plan which will influence the future decision making of all levels of government, industry and community groups.

"If we don't know where we want to be as a state, we could end up anywhere," he said.

"This is about Queenslanders taking ownership of our long-term future."

Those who can't make the summits can give feedback online.

The opposition says Mr Newman should have held the summit in the southeast, but couldn't handle the feedback over mass job cuts in the region and the push towards privatisation.

Deputy Labor leader Tim Mulherin says the Bligh government conducted six months of consultation at 13 forums before releasing the Queensland Regionalisation Strategy, the Queensland Infrastructure Plan, and the Bruce Highway Upgrade Strategy.

"If the premier had not fired all the senior public servants with all their corporate knowledge he would be aware that this data is already available to him," he said.

However, The Property Council of Australia welcomed the summit, saying it has long called for a strategy to map out where future generations will live.

Queensland executive director Kathy MacDermott said it should include necessary infrastructure, foster creativity and innovation, and provide measurable goals.

"It must go further than motherhood statements and generic reports," she said.

But Deputy Premier Jeff Seeney says Mr Mulherin - the MP for Mackay - was failing his electorate by shunning the summit and the economic benefits it would bring to his community.

"I doubt any other community leaders within the Mackay region would share the member for Mackay's view that their city should not host this major conference," he said in a statement.

Mr Seeney described The Queensland Plan as "an inclusive, positive process" and said Labor's immediate response to oppose it showed how far out of touch the party was.

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It's time to improve NSW's accounts: A-G

NSW Auditor-General Peter Achterstraat says he'll back any move to lift the dismal quality of the state's accounting, including sending senior financial bureaucrats to boot camp.

"I have been making the point since 2009 that we really do have to tighten up these figures," Mr Achterstraat said after releasing yet another damning audit.

A total of 1265 errors were made by government agencies in financial reports for the year ending June 2012, including 164 mistakes by the department of premier and cabinet and 359 errors by health.

This represents an increase of nine errors from the same period last year.

"There are just too many errors in them and 2012 was no different from 2011," Mr Achterstraat said.

"There are lots of different errors and the net result is quite a large number - there are a number (of mistakes worth) over $100 million."

The mistakes this financial year added up to about $1 billion, he added.

"Some of it is just basic maths, some of it is just spreadsheets, wrong formulas, but others are the evaluations of assets."

Mr Achterstraat said people were using a market value "when there may not be a market".

"Or they might be using discounted cashflow when there might not be any income coming in on a particular building," he said.

"There are accounting standards which say it needs to be done this way or that way, and they have to be followed."

The most common asset-related mistakes concerned the evaluation of buildings and other large infrastructure.

Other mistakes featuring smaller amounts of money involved spreadsheets and accruals.

However, Mr Achterstraat conceded some of it "was quite complicated" so people needed "a fair bit of training".

In response to the audit, NSW Treasurer Mike Baird has announced new financial reporting and accountability measures, which were endorsed by cabinet on Monday night.

"It's clear that we have a long way to go to turn around the problems in reporting and forecasting that have been systemic in NSW for a decade," Mr Baird said in a statement on Tuesday.

The changes include greater accountability for financial reporting via enhanced performance agreements for public-sector CEOs and CFOs.

The government also has the option of appointing an investigative accountant to an agency should there be poor ongoing financial management.

"I think any steps which are going to increase capabilities of the people preparing the reports and increase the quality of the finances are most welcome," Mr Achterstraat told ABC Radio.

Late last year, Mr Achterstraat identified 37 major errors in financial statements for the 2011/12 budget, changing the bottom line by $1 billion.

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Aquino warns sultan in Malaysian stand-off

PHILIPPINE President Benigno Aquino has warned a sultan he would face the "full force of the law" unless he withdraws his gunmen from Malaysia, but the elderly ruler remained defiant.

Dozens of followers of the little-known Sultan of Sulu have been facing off with Malaysian security forces for two weeks, after they sailed from remote southern Philippine islands two weeks ago to stake a territorial claim.

With the incident causing increasing embarrassment to the Philippine government, Aquino made a nationally televised address on Tuesday to try to pressure the sultan into bringing his gunmen back from Malaysia's Sabah state.

"If you choose not to co-operate, the full force of the laws of the state will be used to achieve justice for all who have been put in harm's way," Aquino said.

"This is a situation that cannot persist. If you are truly the leader of your people, you should be one with us in ordering your followers to return home peacefully."

Aquino, flanked by his interior and justice secretaries, also warned the sultan that he may have broken laws, including one banning citizens from inciting war that carries a maximum prison term of 12 years.

But the 74-year-old sultan, Jamalul Kiram III, showed no signs of buckling, calling a press conference from his home in a poor Muslim enclave of Manila to insist the stand-off would continue unless his demands were met.

"As far as we are concerned we have not committed (a) crime," Kiram said, adding his followers cornered in a fishing village in Sabah on Borneo island would not initiate any violence with the Malaysian security forces.

"But we are prepared to defend our lives and aspirations."

Kiram says he is the head of the Islamic Sultanate of Sulu, which once controlled parts of Borneo including the site of the stand-off, as well as southern Philippine islands.

The sultanate leased northern Borneo to Europeans in the 1870s. While the sultanate's authority gradually faded as Western colonial powers exerted their influence over the region, it continued to receive lease payments for Sabah.

Kiram and his family, as heirs to the sultanate, still receive nominal annual compensation from Malaysia and they want more money.

Kiram said the gunmen would only lay down their arms if the Philippines and Malaysia agreed to negotiate terms for joint development of Sabah.

Pressed on details of the proposed development, Kiram's adviser Abraham Idjirani told reporters the sultanate should receive as royalties 50 per cent of proceeds from Sabah's economic growth.

But Kiram also said his followers wanted to remain in Sabah even if a financial deal was struck.

"(They want to) peacefully settle in Sabah, which is our homeland," Kiram said.

Malaysian authorities have sought to ensure tensions do not escalate at the site of the stand-off, surrounding the gunmen but keeping their distance.

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Argo wins best film as Oscars shared out

BEN Affleck's Iran hostage drama Argo has won the coveted best film Oscar, as other key prizes were shared among several films at the 85th Academy Awards, Hollywood's biggest night.

Taiwan-born Ang Lee on Sunday won best director for spectacular 3D fantasy Life of Pi, while Daniel Day-Lewis won a record third best actor trophy for Lincoln and Jennifer Lawrence was crowned best actress for Silver Linings Playbook.

But veteran filmmaker Steven Spielberg, whose presidential drama had the most nominations with 12 nods, went home from Hollywood's biggest awards show with only two awards, best actor and a technical prize for production design.

Overall, Life of Pi won the most Oscars with four, against three for Argo and Les Miserables, two each for Django Unchained and Lincoln, and one for Zero Dark Thirty.

In a heavily musical show, Adele sang Oscar-winning 007 theme Skyfall as part of a segment feting 50 years of Bond films, while Shirley Bassey belted out Goldfinger.

Legendary diva Barbra Streisand also gave her first Oscars performance for 36 years, singing The Way We Were as part of a tribute to late composer Marvin Hamlisch.

Affleck, whose movie had taken virtually all of the top prizes during Hollywood's awards season during the past two months, paid tribute to Spielberg in his acceptance speech.

"Steven Spielberg, I want to acknowledge, I feel is a genius and a towering talent among us," said Affleck, who was not nominated for best director or best actor at the Oscars, in a perceived snub.

In an unexpected move, the best picture winner was announced by US first lady Michelle Obama, addressing the Oscars show - and final presenter, legend Jack Nicholson - by videolink from the White House.

"I was hallucinating when that was happening. I was just asking... 'Was that Michelle Obama?' The whole thing overwhelmed me. It was an enormous honour. It was very cool," Affleck said backstage afterwards.

Hunger Games star Lawrence got a standing ovation as her award was announced, over fellow nominees Jessica Chastain, French star Emmanuelle Riva, Naomi Watts and nine-year-old Quvenzhane Wallis, the youngest ever nominee.

Day-Lewis, who had been widely expected to win best actor, appeared to fight back tears as he took the stage - and then joked as he was handed the golden statuette by Meryl Streep.

"Three years ago, before we decided to do a straight swap, I had been committed to play Margaret Thatcher," he said, referring to Streep's Oscar-winning performance as the former British premier in The Iron Lady.

"Meryl was Steven (Spielberg)'s first choice for Lincoln," he said, to laughs from the assembled A-listers at the Dolby Theatre in Hollywood on Sunday night. "And I'd like to see that version."

Austrian director Michael Haneke's Cannes-winning Amour won the best foreign language film prize at the Oscars, widely seen as the most unpredictable for years.

Best supporting actor went to Austrian Christoph Waltz, who played a dentist turned bounty hunter in Quentin Tarantino's blood-spattered spaghetti western tribute Django Unchained. Tarantino won for best original screenplay.

Best supporting actress went to Anne Hathaway - who joined fellow Les Miserables cast members in singing hits from the movie. The cast of Chicago also reunited in song, on the 10th anniversary of its best picture Oscar win.

The best animated feature film award went to Scottish-themed Brave, which beat fellow nominees including video game adventure Wreck-It Ralph, which had been tipped as the marginal frontrunner.

The star-studded show was preceded by a two-hour A-list fashion parade on the red carpet, with a healthy serving of old-school Hollywood glamour on display.

Family Guy creator Seth MacFarlane started off as Oscar host with a joke about Affleck, quipping about the lack of best director nomination by saying he was "unknown to the Academy".

Later one of his more recent creations, potty-mouthed bear Ted, appeared with his big screen buddy Mark Wahlberg and made some off-colour jokes about an orgy at Nicholson's place afterwards, and being Jewish in Hollywood.

Affleck - the first person to win best picture without being nominated as director since Driving Miss Daisy in 1990 - had been given a diplomatic boost on Saturday when new US Secretary of State John Kerry tweeted best wishes.

Afterwards the first lady took to Twitter to congratulate him.

"It was a thrill to announce the #Oscars2013 best picture winner from the @WhiteHouse!," she wrote.

"Congratulations Argo! -mo," she signed off.

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Frantic search before brothel death: court

A MELBOURNE man who was allegedly murdered outside a brothel had been frantically searching for his girlfriend who he believed was being held as a sex slave, a court has heard.

Two days before his death Abraham Papo told his best friend he had called his girlfriend's telephone but a man had answered saying the girls were not supposed to give out their numbers and to "piss off".

Mr Papo took this to mean his girlfriend was "back working in a brothel and was being held against her will", the friend Andrew Marks said in a statement tendered in the Melbourne Magistrates Court.

Mr Papo was desperate to find his girlfriend, whom he believed may be in Sydney, and was "frantic" about her, Mr Marks told the court on Monday.

On the night before he died, Mr Papo said he had found her "here", which Mr Marks took to be in Melbourne.

De Jun "Kevin" Zheng, 33, is charged with murdering Mr Papo outside South Melbourne brothel Madam Leona's in February 2009.

He told police Mr Papo had robbed him.

Senior Constable Rachel Dunkinson told the court she approached Zheng, who was standing outside a car and had blood on him.

Zheng told her "he robbed me".

Sen Const Dunkinson noticed Zheng was holding an iron bar.

She saw a man in the driver's seat of the car covered in blood who appeared to be dying.

Sen Const Dunkinson asked Zheng if he had used the iron bar to smash a window in the car and he said he had.

But Zheng said he did not know if he hit the man in the head, the court heard.

Brothel manager Cheng Chang Wang told the court he saw an "Australian male" punch Zheng in the face inside the brothel.

Both men then ran out into the street and he heard them arguing.

In a statement tendered in court, Mr Wang said he could see Zheng standing at the driver's door smashing into the car.

He did not know if Zheng had anything in his hands.

Mr Wang said when he returned to his office two cordless phones and a couple of hundred dollars were missing.

Zheng is also charged with attempting to pervert the course of justice by paying Mr Papo's family $20,000 the day after he died to ensure they did not pursue their son's death with authorities.

The committal hearing before Magistrate Ian Watkins continues on Tuesday.

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Senate on steroids over mining tax

MIX a pathetic tax, a messy political divorce and an unaccustomed spotlight and you get a Senate on steroids.

The upper house is supposed to be a little more measured, a tad more civil, than the unruly mob in the Reps.

Not on Monday, as a rare week when only the Senate is sitting started with a goodly audience of journalists rather than the usual lone scribe or two.

Question time seemed a place of surrogates - Stephen Conroy for Julia Gillard, Penny Wong for Wayne Swan and so on.

But the subject matter - mainly that under-performing mining tax - and the insults were familiar.

There was plenty of "reckless negativity" and many references to Gina Rinehart and other rich miners from government ranks. The opposition replied with periodic shouts about Eddie Obeid.

Then Eric Abetz, the opposition leader in the Senate, interrupted the session with a motion of no confidence in the government over its handling of the tax.

This is a quite common ploy in the Reps and is usually disposed of rapidly. It's very unusual in the Senate, and the result was an interminable exchange of insults as speaker after speaker went on for 20 minutes.

Samples: Kevin Rudd deserved to be ousted, but Gillard has been 10 times worse (Abetz); having known Wayne Swan since uni 35 years ago, he was a dope then and is a dope still (George Brandis).

From the government side, we had Wong imagining Abetz preparing for his speech by puffing himself up in front of the mirror.

Having plenty of journalists watching helped explain the hyperbolic performances. At one stage Abetz turned to the press gallery with "To our friends in the media..."

But it probably wasn't the main reason.

The Nationals' Barnaby Joyce interrupted Wong with a point of order supposedly on relevance, saying the only relevant matter was whether the Greens would vote with their old partner.

That sort of spurious point of order would get him kicked out down below, but they don't kick people out in the Senate. And, of course, given Christine Milne ripped up her agreement with the government last week, it was one of the more acute observations of the afternoon.

Milne, who'd been doing a lot of consulting during earlier speeches, dealt with it quite cunningly.

She moved an amendment whose effect would be to have the Senate call for a mining tax that raised enough money to pay for long-term reforms like Gonski and the national disability insurance scheme.

Then she launched into "a pox on both your houses" speech, with the opposition copping the greater part of the disease.

Her quick footwork meant she was continuing the Greens' product differentiation from the government, which was behind the divorce in the first place, without in any way moving into the opposition's camp.

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Cyclone threat to north coast of WA

RESIDENTS have been warned to prepare for dangerous weather as a cyclone intensifies off Western Australia's north coast.

Tropical Cyclone Rusty is expected to bring gales late on Sunday night or early on Monday, as it tracks towards the coast, followed by very heavy rain on Tuesday and Wednesday.

A blue alert for dangerous weather has been issued for coastal communities from Broome to Whim Creek, including areas around Port Hedland, Wallal and Broome.

At 2pm (WST) on Sunday, the category one cyclone was estimated to be 350km north of Port Hedland and 435km west of Broome, moving south at 8km/h, the Bureau of Meteorology said.

It will continue to intensify on Monday and there is a high risk that it will cross the coast as a severe tropical cyclone on Tuesday or Wednesday.

Tropical Cyclone Rusty is large and expected to move more slowly than usual, resulting in higher than normal rainfall, the bureau says.

Widespread very heavy rainfall is expected on Tuesday and Wednesday and is likely to lead to major flooding in the De Grey catchment and in the Fortescue.

Residents have been warned to review their family cyclone plan and organise an emergency kit with a portable battery-operated radio, torch, spare batteries and first aid kit.

The Port Hedland Port Authority said anchorage evacuation had begun and inbound shipping movements had been suspended.

Outbound movements will continue as scheduled overnight, but could be amended if flying is made difficult.

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Storms destroy homes as floods swamp NSW

Homes on the NSW mid-north coast have been destroyed as waters continue to rise across the state. Source: AAP

GALE force winds have wreaked havoc across Sydney and the NSW south coast, while around 20,000 people are isolated by floodwaters in the state's north.

The SES received more than 4000 calls for assistance overnight, including around 2000 in Sydney, where 100km/h winds resulted in an asbestos scare.

In the city's southeast, savage gusts extensively damaged the roof of the RSL club in Malabar, causing sheets of asbestos to fly onto nearby homes and roads.

A number of streets were blocked off by Fire and Rescue NSW crews on Sunday, as private contractors were tasked with cleaning up the area.

Residents were told not to panic about air contamination but to contact the NSW Environment Protection Authority if they noticed asbestos near their homes or backyards.

"It was an asbestos roof and to be concentrated like that in an area is of some concern but there is no need for residents to be concerned that the air they breathe is contaminated," Superintendent Paul Bailey told Fairfax Media.

Elsewhere in Sydney's east, locals described wind gusts that felt like "mini tornadoes", which damaged a primary school and tore part of the roof off Fox Studios.

The SES also responded to around 400 calls on the south coast, where Kiama was the hardest hit, SES spokeswoman Becky Collings said.

"We had three homes that were completely written off, and seven others that suffered significant damage," she told AAP.

"We had a lot of trees down and roof damage."

Also on the south coast, seven campers were rescued by a helicopter on Sunday morning from their camping site beside the Clyde River near Ulladulla after they were stranded by rising waters.

It was one of 70 rescues carried out by the SES since the heavy rain and flooding began on Friday.

In the Blue Mountains, west of Sydney, police and paramedics worked together to successfully locate three separate groups of bushwalkers who got lost in the extreme weather conditions.

Meanwhile, around 20,000 people isolated in the state's north - from the north coast to the mid-north coast - could remain cut off for up to a week.

"It really just depends how quickly the water can drain away," Ms Collings told AAP.

She said evacuation orders remained in place on the mid-north coast around the Macleay and Hastings rivers.

Properties at Port Macquarie were flooding on Sunday morning as the Hastings River swelled to its expected peak of 1.8 metres.

The Macleay River at Kempsey peaked at 7m on Sunday near the town's CBD, about 30 centimetres below expectations.

"A lot of the shops and homes have avoided inundation," Ms Collings said, but some parts of the town were under a metre of water on Sunday morning.

Townships on both the upper and lower Macleay remain isolated but were beginning to drop.

With calmer weather in many parts of the state on Sunday, the SES said its focus in the next 24 hours would be on recovery.

"The weather conditions have eased somewhat, so that will mean we can hopefully get through the rest of our jobs," Ms Collings said.

Flood warnings from the Bureau of Meteorology (BOM) remain in place for 16 river systems across the state.

Power supplier Ausgrid said about 6,500 homes remained without power, mainly in Sydney's north and east and on the central coast, while Essential Energy estimated a there were a further 8,000 homes across Greater Western Sydney, the Illawarra, the Southern Highlands and Shoalhaven.

Two people have died in the floods.

On Saturday afternoon, the body of a man was found in his submerged car on a flooded road at Mylneford, about 20km northwest of Grafton.

On Friday, a 17-year-old boy died after he was swept into a drainpipe while collecting golf balls in waist-deep water in the town of Kew, near Port Macquarie.

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RAAF flare drop in Vic cancelled

THE planned flare drop over Port Phillip Bay has been cancelled because of technical problems with the RAAF plane.

The airforce says the C-130J Hercules, which was due to fly over Port Phillip Bay towards St Kilda around 8pm (AEDT) as part of an anti-terrorism exercise, has returned to its base at Richmond.

The flare display was to recognise this month's 10th anniversary of continuous deployment of Australian Hercules to the Middle East, the longest such deployment in RAAF history.

The C-130J is to be part of the Australian International Airshow at Avalon Airport from Tuesday.

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