Snap back to reality: Defamation proceedings dismissed on appeal

A recent decision of the New South Wales Court of Appeal¹ represents a rare ‘win’ for defendants in defamation proceedings. The decision includes a detailed discussion of the defence of common law qualified privilege.

Background

The defendants own and operate a childcare centre in Chatswood, New South Wales.

The plaintiff was an employee of the defendants.

In April 2016 the defendants published a monthly newsletter, which was sent via email, to parents of the children who attended the Centre. That newsletter relevantly stated that:

'Matt [the plaintiff] – is unfortunately no longer with us due to disciplinary reasons. While being good with the children in general, Matt was not truthful with us regarding his studies and some other issues, and I felt it was better for him to move on and possibly gain a bit more life experience. We wish him well with his future.'

In response, the plaintiff commenced proceedings in the District Court of New South Wales, alleging that the contents of that email were defamatory.

Decision at first instance

The plaintiff alleged that the email conveyed several defamatory imputations, including that he was dishonest, that he had not been truthful with the Centre regarding his studies, that he was fired for disciplinary reasons, that he conducted himself in such a manner that the Centre terminated his employment, and that he was not a fit and proper person to work in childcare.

At trial, the judge was required to determine:

1. whether the imputations, as alleged by the plaintiff, arose from the subject publication;
2. whether the alleged imputations carried meanings that were defamatory of the plaintiff;
3. whether the defences relied upon by the defendants, including a defence of qualified privilege was made out;
4. if a defence of qualified privilege was made out, whether the plaintiff had established that the publication was actuated by malice, thereby circumventing the defence; and
5. the extent of the plaintiff’s entitlement to compensatory, aggravated and special damages, if liability was established.

The trial judge was satisfied that the email conveyed each of the plaintiff’s pleaded imputations and that they carried meanings that were defamatory. His Honour considered and rejected each of the defendants’ defences, including their defence of qualified privilege.

In so doing, the trial judge found that the defence of qualified privilege only protected the communication insofar as it conveyed the plaintiff’s departure as an employee from the Centre, as distinct from the reason for that departure, and found that apart from the statement 'We wish him well for the future' '[used] language … that went well beyond [the purpose of business related communications concerning the plaintiff] by adding gratuitous comments that impugned the [plaintiff’s] character and reputation in an injurious way'.

The trial judge further found that the defendants had acted with malice. His Honour did not accept the defendants’ submission that they had sincerely believed the truth of the matters raised in their defence to the plaintiff’s claim. In the alternative, his Honour accepted the plaintiff’s submission that the statements made in the email were so reckless that they amounted to wilful blindness to the truth, and thus malicious.²

Damages of $237,970.22 were awarded in favour of the plaintiff, which included an award of aggravated damages, comprised as follows:

1. compensatory and aggravated damages:    $225,000.00
2. special damages:                                      $915.30
3. interest:                                                    $12,054.92

The defendants appealed to the New South Wales Court of Appeal.

Issues on Appeal

The New South Wales Court of Appeal was required to consider whether:

1. the trial judge had erred in finding that the defendants had failed to establish a defence of qualified privilege; and
2. damages awarded were manifestly excessive.

Decision of the NSW Court of Appeal

Payne JA delivered the leading judgment, with White and Baston JJA in agreement.

Issue 1: common law qualified privilege

The Court of Appeal held that the trial judge had incorrectly applied the test to determine if a defence of common law qualified privilege was made out.  The Court of Appeal found that the trial judge conflated the two limbs of the test, which derives from the High Court decision of Roberts v Bass³ as follows:

1. the identification of the privileged occasion; and
2. the relevance of the defamatory statements to the privileged occasion.

Moreover, the Court of Appeal was critical that the trial judge had considered the subjective intention of the defendants to determine if the statements made were relevant to the privileged occasion identified, in circumstances where that subjective intention was only relevant in determining if malice existed to defeat the defence of qualified privilege. 

The Court of Appeal agreed with the trial judge’s finding that an occasion of qualified privilege did exist on the facts in the case, that being, that there was a special and reciprocal relationship between the parents and the defendants, in that there was an interest in the parents to receive up-to-date business information from the Centre about who was employed and therefore looking after their children. However, the Court of Appeal diverged from the trial judge in finding that the special and reciprocal interest of the parties was broader than what was described by the trial judge, including information as to why a staff member was no longer working for them and information about their qualifications to care for children, if any.   

Furthermore, the Court of Appeal held that the trial judge did not apply an objective test to determine the relevancy of the email, or the parts thereof, to the privileged occasion, but seemingly applied a subjective test to determine which parts of the email were outside the scope and therefore not relevant to the privileged occasion.

The Court of Appeal affirmed that the test to determine the relevancy of defamatory statements to the privileged occasion was an objective one. A court needs to be satisfied that the defamatory material must be sufficiently connected to the privileged occasion,⁴ and the subjective intention of the defendants is not considered when determining this. The Court of Appeal concluded that the information in the email was sufficiently connected to the privileged occasion as it was relevant for the parents to know of the reasons why the plaintiff was no longer working at the Centre. Whether the reasons given were made with ill-will towards the plaintiff or were untrue was irrelevant and to the extent it was relevant, it applied to exclude natural speculations of the parents if left unsaid as to why someone who was caring for their children was no longer employed.     

The defendants were ultimately successful on appeal, with the Court of Appeal finding that the defendants had made out a defence of qualified privilege. Consistent with their findings, the Court set aside the trial judge’s decision on this issue.   

In relation to malice, assuming, for present purposes, that the trial judge was correct, the Court of Appeal stated that the plaintiff bore the onus of establishing malice in order to defeat the defendants’ defence of qualified privilege. That involved establishing a predominantly improper motive in publishing the email to the parents of the children attending the Centre in order to overcome the presumption that the defendants had acted honestly and with a proper purpose.⁵ The Court of Appeal found that the plaintiff had not discharged this onus in the proceeding, observing that none of the findings made by the trial judge could separately or together establish malice.

Issue 2: damages

The Court of Appeal expressed concern that the trial judge had failed to properly exercise his discretion in fixing the amount of damages. The Court of Appeal referred to and relied on two of its earlier decisions, wherein:

1. $150,000 in damages (including aggravated damages) was awarded in circumstances where an email was sent to approximately 650 childcare centres by officers of an industry body;⁶ and
2. compensatory and aggravated damages were reduced from $100,000 to $80,000 where allegations of a defamatory nature were communicated in a Korean language newspaper that had a circulation of 6,000 copies.⁷

Bearing the above decisions in mind, the Court of Appeal held that the damages awarded to the plaintiff by the trial judge were manifestly excessive considering that the email that was the subject matter of this dispute was only sent to 35 people. The Court of Appeal remarked that if the defence of qualified privilege had failed, it would have only awarded $40,000 to the plaintiff as the proper reflection of ‘an appropriate and rational relationship between the harm sustained by the plaintiff and amount of damages awarded'.⁸

In relation to aggravated damages, the Court of Appeal reiterated that the court can award aggravated damages where it is satisfied that the conduct of the defendant to the plaintiff was improper, unjustifiable or lacking in bona fides.⁹ However, in this instance, the Court of Appeal found that the trial judge had not referred to this test in justifying the award of aggravated damages. Moreover, there was no evidence led in the trial that demonstrated that the defendants’ conduct was improper, unjustifiable or lacking in bona fides. Accordingly, nothing warranted the award of aggravated damages in the proceeding.  

Implications

The law of defamation in Australia has come in for sustained criticism over the last few years by a variety of commentators.¹⁰ One of the repeated criticisms has been that Australian law tends to favour plaintiffs, contrary, for example, to the position in the United States of America.¹¹

Currently a review of defamation law is underway, convened by the Council of Attorneys-General. Draft amendments to the model defamation provisions were released for public comment in November 2019, with submissions closing on 24 January 2020.¹² Some of the proposed recommendations outlined in a discussion paper released in February 2019 include:

1. introducing a ‘serious harm’ threshold, whereby a statement is not defamatory unless its publication has caused or is likely to cause serous harm to reputation of the plaintiff, with the onus being on the plaintiff to establish such harm;
2. introducing a new public interest defence modelled on the New Zealand common law defence of responsible communication on a matter of public interest; and
3. caps for damages which apply irrespective of whether aggravated damages are awarded.¹³

In this context, the decision of the NSW Court of Appeal, while not directly informed by these proposed law reforms, will be welcome news for defendants, including media outlets, and liability insurers.

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Ben Hall

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Partner - Melbourne

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+61 (0) 3 9002 4502

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bhall@carternewell.com