Aktas v Westpac Banking Corporation Limited [2009] NSWCA 9 | Case summary | Zoe

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Aktas v Westpac Banking Corporation Limited [2009] NSWCA 9

[2009] NSWCA 9

Court of Appeal (NSW)|2009-02-09|Before: Ipp JA, Basten JA, McClellan CJ, Fullerton J

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At a glance

Source facts

Court

Court of Appeal (NSW)

Decision date

2009-02-09

Before

Ipp JA, Basten JA, McClellan CJ, Fullerton J

Source

Original judgment source is linked above.

Judgment

Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.

Appeal Outcome: Special leave granted by the High Court, 11 December 2009 s48/2009 [2009] HCATrans 326 [2010] HCATrans 43

Appeal allowed, 4 August 2010 [2010] HCA 25

New South Wales

Court of Appeal

CITATION: Aktas v Westpac Banking Corporation Limited [2009] NSWCA 9

This decision has been amended. Please see the end of the judgment for a list of the amendments.

HEARING DATE(S): 26-27 November 2008

JUDGMENT DATE:

9 February 2009

JUDGMENT OF: Ipp JA at 1; Basten JA at 2; McClellan CJ at CL at 3

DECISION: 1.The appeal by Mr Aktas dismissed with costs.

2.The appeal by Homewise upheld in part. The award of damages for contract in the court below quashed and an award of damages in the sum of $117,000 substituted.

3.Otherwise the appeal by Homewise dismissed. Homewise ordered to pay 60 per cent of Westpac’s costs of the appeal.

CATCHWORDS: DEFAMATION - defences - privilege - qualified privilege - privileged occasion - reciprocity of duty and interest - connection between defamatory imputation and privileged occasion - defamatory imputation concerning dishonoured cheques - DAMAGES - assessment of damages in actions for defamation – assessment of damages in actions for breach of contract

LEGISLATION CITED: Defamation Act 1974

Property, Stock and Business Agents Act 1941 (repealed)

Local Courts (Civil Claims) Act 1970 (repealed)

Cheques Act 1986 (Cth)

CATEGORY: Principal judgment

CASES CITED: Adam v Ward [1917] AC 309

Amalgamated Television Services Pty Ltd v Marsden [2002] NSWCA 419

Australian Broadcasting Corporation v Comalco Limited (1986) 12 FCR 510

Ballin v Bank of Australasia (1895) 16 LR (NSW) 15

Baltic Shipping Co v Dillon [1993] HCA 4; (1993) 176 CLR 344

Bashford v Information Australia (Newsletters) Pty Limited [2004] HCA 5; (2004) 218 CLR 366

Beach v Freeson [1972] 1 QB 14

Browne v Bank of Australasia (1881) 2 LR (NSW) 325

Bryanston Finance Ltd v De Vries [1975] 1 QB 703

Carson v John Fairfax & Sons Limited [1993] HCA 31; (1993) 178 CLR 44

IPP JA: I agree with McClellan CJ at CL.
BASTEN JA: I agree with the orders proposed by McClellan CJ at CL and his Honour’s reasons.
McCLELLAN CJ at CL: This appeal is concerned with the consequences in both defamation and contract, of the wrongful dishonour of cheques by a bank. There are also issues in relation to damages. The defamation claim was brought pursuant to the Defamation Act 1974 (“the 1974 Act”) which has since been repealed. Rules of the Supreme Court were made to control proceedings under the Act, including provisions as to the appropriate form of the pleadings.
On 1 December 1997 Westpac Banking Corporation Limited (“Westpac”) wrongly dishonoured 30 cheques drawn by Homewise Realty Pty Limited (“Homewise”), endorsing each of them with the words “Refer to Drawer”. The cheques consisted of rent monies collected by Homewise on behalf of its clients, and were drawn on a trust account which Homewise operated. Mr Aktas is the sole shareholder and chief executive of Homewise.
Mr Aktas and Homewise brought proceedings against Westpac claiming damages for defamation. Homewise also sued for a breach of its contract with Westpac, and in the alternative, in negligence. Pursuant to s 7A(3) of the 1974 Act a jury found that the matter complained of, being the words “Refer to Drawer”, conveyed imputations which were defamatory of the appellants. However, the trial judge found that the relevant publication was made on an occasion of qualified privilege. Against the eventuality that her decision may be overturned on appeal, her Honour assessed damages, in the case of Mr Aktas at $50,000 and Homewise at $117,000.
In respect of Homewise’s claim in contract, the trial judge was satisfied that Westpac had breached two implied terms of its contract with Homewise. Her Honour awarded Homewise damages in the sum of $84,500 for the breach. Having made an award of damages in the contract case the trial judge did not consider the claim in negligence.
Mr Aktas and Homewise appeal the trial judge’s finding that Westpac was entitled to succeed in its defence of qualified privilege. They also appeal her Honour’s assessment of damages both for defamation and breach of contract. In particular they challenge her Honour’s findings with respect to Westpac’s claim that the appellants failed to mitigate their damages. Westpac dishonours the cheques
From early 1992 Homewise conducted a real estate business known as Century 21 Homewise Realty pursuant to a franchise agreement with Century 21 Australia Pty Limited (“Century 21”). The franchise agreement ended in April 1998 and from that time the business has been conducted under a different name.
Mr Aktas controls the daily operations of Homewise. He is well known in the local area of Auburn. However, he is not a licensed real estate agent. From the time Homewise commenced business in 1992, the licence to conduct the real estate business was held by Mr Branley.
Homewise maintained the “Homewise Rent Trust Account” (“the rent trust account”) with Westpac on behalf of some of its clients pursuant to the Property, Stock and Business Agents Act 1941 (repealed). The rent trust account was one of three accounts Homewise held with Westpac, the others being the “Homewise General Account” and “Homewise Sales Trust Account”. Homewise deposited rent monies collected on behalf of its clients into the rent trust account. It would then deduct from those monies the costs associated with the management of the relevant properties. The balance in respect of each property was drawn by a cheque in the client’s favour and paid to them on either a fortnightly or monthly basis.
By late 1997 the relationship between Homewise and Century 21 had deteriorated. At some time between July 1997 and November 1997, Century 21 obtained default judgment against Homewise in respect of a money claim. The Fairfield Local Court issued a garnishee order pursuant to s 47 of the Local Courts (Civil Claims) Act 1970 (repealed) to Westpac identifying Homewise as the judgment debtor. Its terms were: “TO THE GARNISHEE:

On 1 December 1997, the garnishee order was forwarded to Ms Lidgard, an officer within Westpac’s Account Verification Branch, with some correspondence signed by the assistant to the Manager of Westpac’s legal branch. The subject matter of the correspondence was described as “Garnishee Order (Action Immediately)”. The letter did not nominate which of Homewise’s accounts were subject to the garnishee order. Ms Lidgard was not aware that the rent trust account was not one that could properly be subject to a garnishee order. However, this was the case because the monies in it were held on trust in favour of Homewise’s clients: s 36(2), Property, Stock and Business Agents Act.
Ms Lidgard changed the status of all three Homewise accounts to “PCO”, (standing for “post credits only”), on the same day: ie 1 December 1997. Only credits are allowed on an account with PCO status. Customer initiated debits are not allowed. Ms Lidgard changed the status of the rent trust account and the Homewise General Account at 5:17 pm and the Homewise Sales Trust Account at 5:18 pm on the same day.
Also on 1 December 1997, Ms Pirzad, an employee of Homewise, drew 30 trust account cheques on the rent trust account. In accordance with Homewise’s usual practice, they were signed by Mr Aktas and Mr Branley and were either directly deposited to the client’s account or forwarded by mail.
At 10:19 am on 2 December 1997, after becoming aware of the true position, Ms Lidgard changed the status of the rent trust account. She did this in respect of the Homewise Sales Trust Account at 10:20 am. The PCO status remained on the Homewise General Account until some time in the first quarter of 1998 when it was removed following the resolution of the litigation between Homewise and Century 21.
Because the PCO attached to the rent trust account when the cheques were processed by Westpac a decision was made by an officer of the bank to refuse payment. As required by ss 67 and 69 of the Cheques Act 1986 (Cth), this decision was communicated to the payees. The cheques were returned to the payee, if they banked with Westpac or, if they banked with another bank, to the collecting bank. They were each endorsed with the words “Refer to Drawer”. Either Westpac or the collecting bank sent an accompanying letter. That correspondence was dated 3 December 1997. For those of Homewise’s clients who were also customers of Westpac, that correspondence stated: “On 1 December 1997 you deposited a cheque for [stated amount]. The cheque (details below) has been returned unpaid with the answer ‘REFER TO DRAWER’. The cheque is enclosed and the amount has been reversed from account number [number specified]. A fee of $9.00 is applicable and has been charged to the account number [as specified]. If you would like to obtain information on this matter, please do not hesitate to call Westpac Telephone Banking on [number supplied].”
The endorsement “Refer to Drawer” was made in standard form. There were various alternatives: “payment stopped”, “present again”, “unknown signature” and “signature unlike specimen held” which would have been used depending on the circumstances.
The trial judge found that the return of the cheques with the relevant correspondence occurred because the reversal of the PCOs was not notified to the Westpac department responsible for the correspondence (at [26]). There was no explanation as to how or why this occurred. Mr Aktas first learnt of the dishonouring of the cheques on 2 December when he was informed by one of his employees that his own trust account cheque had been dishonoured. Westpac offers to apologise
Mr Aktas personally attended Westpac’s Auburn branch on 2 and 3 December 1997 but, at least initially, was not given any satisfactory explanation as to why the rent trust account cheques had been dishonoured. He was not told when or why the PCO status had been imposed on the account. On 3 December Mr Aktas learnt that a garnishee order had been imposed on the rent trust account which had since been lifted, but was given no explanation as to why this had affected transactions on that account.
On 14 January 1998, responding to a letter from the appellants’ solicitor of 16 December 1997, Westpac acknowledged its error and apologised for dishonouring the cheques. It offered to write to each of the payees of the cheques to explain the position and said it would indicate to customers that “there were insufficient [sic] funds in the account to meet the cheques.” It sought a negotiated solution and asked the appellants to refrain from issuing any proceedings.
On 19 January 1998, Westpac wrote a further letter to the appellants’ solicitor acknowledging the mistake in the previous letter which should have said “sufficient” rather than “insufficient” funds. It also sought approval to write to the Real Estate Institute to confirm that the error was a bank error that should not reflect adversely on the appellants.
On 5 February 1998, the appellants’ solicitor responded to Westpac’s offer advising that Homewise required a letter to be sent to all its affected clients apologising for Westpac’s conduct and a similar letter to be forwarded to the Real Estate Services Council. The solicitor said they had been instructed to accept the offer of negotiation and would prepare an estimate of the appellants’ loss. That letter sought Westpac’s “urgent response”.
On 11 February 1998, Westpac responded seeking information that would enable it to meet the request that Homewise’s clients be contacted and confirmed that they would welcome receipt of the estimate of loss. On 19 March 1998 Westpac wrote noting that they had not received a response to their letter 11 February 1998. On 23 March 1998 the appellants’ solicitor responded advising that appropriate information would be to hand in the near future.
No further correspondence was received from the appellants before proceedings issued in November 2002. Staff resignations at Homewise and background of the dispute with Century 21
At the beginning of December 1997, Homewise employed a number of people. By June 1998 some of the employees, notably Mr Branley, who was the licensee, Mr Kong, who was a senior sales executive, Mr Shi and Ms Wheat had left. The appellants claimed that their departure was a direct result of Westpac’s conduct.
Mr Branley and Mr Kong left Homewise to set up a Century 21 office in Lidcombe in the first quarter of 1998. Although there were indications, particularly in evidence from Mr Nagle, the local member of Parliament, that Mr Branley may have left because of possible damage to his reputation from the defamation, the trial judge found that Westpac’s conduct was not the primary reason for their departures (at [8]). Her Honour found that Mr Shi’s departure was immaterial because, although he left in March 1998, he returned and resumed duties for two periods in April and June 1998. Her Honour also found that Ms Wheat left Homewise’s employ for unrelated reasons (at [9]). Neither Mr Branley nor Mr Kong gave evidence at the trial.
There was evidence, which her Honour accepted, that Century 21 had been looking to engage a franchisee in Lidcombe. Mr Aktas confirmed that Century 21 had already destabilised his office by December 1997 by approaching some of his staff. Her Honour found that the troubles at Homewise with dishonoured cheques may have hastened the departure of employees who were intent on leaving in any event. There is no reason to doubt the correctness of her Honour’s finding. The imputations found by the jury
In respect of Mr Aktas, the jury found that the matter complained of conveyed the following defamatory imputations: “(a) That Mr Paul Aktas had caused Homewise Realty Pty Limited to pass a valueless trust account cheque. (b) That Mr Paul Aktas had failed to ensure that Homewise Realty Pty Limited was able to meet its obligations to clients entitled to payment of moneys from its trust account. (c) That Mr Paul Aktas had failed to ensure that Homewise Realty Pty Limited did not default in the payment to clients of moneys from its trust account. (d) That Mr Paul Aktas had failed to ensure that Homewise Realty Pty Limited paid its debts as they fell due.”
In respect of Homewise, the jury found that the matter complained of conveyed the following defamatory imputations: “(a) That Homewise Realty Pty Limited was unable to pay its debts as they fell due. (b) That Homewise Realty Pty Limited was unable to meet its obligations to clients entitled to payment of moneys from its trust account. (c) That Homewise Realty Pty Limited had defaulted in the payment to the clients of moneys from its trust account. (d) That Homewise Realty Pty Limited had passed a valueless trust account cheque.”
In their original statement of claim, the appellants also pleaded the following imputations concerning Mr Aktas: “(a) the First plaintiff passed a cheque that he knew to be valueless (b) the First plaintiff passed a trust account cheque that he knew would not be honoured on presentation at the bank”

The general principles relevant to the defence of qualified privilege have been settled for many years. However, as with so much of the law with respect to defamation, the simplicity of those principles can be compromised by the temptation to generate unnecessary complexity. Why the law of defamation is bedevilled with these difficulties, many of which are the result of debates about the pleadings, I do not understand. It provides no service to those who defame or who are defamed.
In Toogood v Spyring (1834) 1 Cr M & R 181; (1834) 149 ER 1044 (at 1049-1050) Parke B explained the relevant principle. In the event of the unauthorised publication of defamatory matter the law presumes malice in the publisher. However, that presumption will be displaced where the publication “is fairly made by a person in the discharge of some public or private duty, whether legal or moral, or in the conduct of his own affairs in matters where his interest is concerned.” The defence of qualified privilege will itself be displaced if the plaintiff can prove that the defendant was motivated by actual malice.
The necessary requirement for an occasion of qualified privilege is a reciprocity of duty and interest. Defendants must show that he or she published the defamatory matter pursuant to an interest or duty and that the recipient had a reciprocal interest in receiving the published matter: Bashford v Information Australia (Newsletters) Pty Limited [2004] HCA 5; (2004) 218 CLR 366 (at [9]); Adam v Ward [1917] AC 309 (at 334).
A court must consider the circumstances claimed to give rise to a privileged occasion with “close scrutiny”: Bashford (at [10]). The nature of the communication, the status or position of the publisher, the number of recipients and the nature of any interest they had in receiving it, and the time, place and manner of, and reason for, the publication must all be considered: Bashford (at [54]) (McHugh J, in dissent as to the outcome). It is necessary to identify, with some degree of precision, the subject matter of the communication: Bashford (at [231]) per Callinan J, also dissenting, but not on matters of principle. This is because the defence focuses on the subject matter of the communication rather than the actual communication itself: Bashford (at [231]). The actual communication may be false. However, this is not to the point, because qualified privilege reflects the law’s recognition that public policy requires certain recipients to receive “frank and uninhibited communication” on particular subjects from particular sources: Reynolds v Times Newspapers Limited [2001] 2 AC 127 (at 195 per Lord Nicholls in Court of Appeal).
I have already indicated that actual malice was not pleaded in the present case. On the hearing of the appeal a belated attempt was made by the appellants to raise as an issue the fact that Westpac had returned dishonoured cheques after it had been recognised that a mistake had been made in placing a PCO on the account. If made good this allegation may have provided evidence of actual malice. However, the issue was not raised at the trial and Westpac opposed the grant of leave to raise it on the appeal. It submitted that if it had been an issue at the trial it would have been necessary to explore both the knowledge of relevant officers with Westpac and the system which Westpac had in place to control the processing of dishonoured cheques. The submission is sound and in my judgment, applying the principles in Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1, leave to raise the additional ground should be refused.
When the defence of qualified privilege is raised two questions will commonly arise. Firstly, was the occasion of the publication one on which the necessary reciprocity of duty or interest existed (the “occasion”)? Secondly, was the matter which defamed the appellant sufficiently connected to the privileged occasion to attract the defence (“relevance”)?
It is important to remember that the defence is available in the circumstance where a plaintiff is damaged by imputations which are false. If true the imputations may be protected by that fact alone, although under the 1974 Act they must also relate to a matter of public interest (s 15(2)). The occasion
Qualified privilege may arise in the employment context, eg: the giving of an employment reference by a former employer about a former employee to a prospective employer: Coxhead v Richards (1846) 2 CB 569; Spring v Guardian Assurance plc [1995] 2 AC 296; Bashford (at [69]). It may also arise from the exercise of a social duty. Privileged occasions may protect communications made with a view to the detection of crime (Kine v Sewell (1838) 3 M & W 297 (at 302); (1883) 150 ER 1157 per Parke B; Stuart v Bell [1891] 2 QB 341) or complaints about public officials or persons with public duties to the relevant authorities (Beach v Freeson [1972] 1 QB 14). Communications made pursuant to a private duty, to a close family member with a view to protecting their interests, may fall within a privileged occasion. An example is where a near relative warns a person about the character of a person they are about to marry: Todd v Hawkins (1837) 8 C & P 88 (at 91-92); (1837) 173 ER 411 (at 412). In the commercial context, a communication made by the publisher of a trade journal pursuant to a duty to its subscribers may be protected, notwithstanding that the communication is made for profit (Bashford; cf Macintosh v Dun (1908) 6 CLR 303; [1908] AC 390).
A reply made by a defendant to an attack by the plaintiff against the defendant’s character (Loveday v Sun Newspapers Ltd [1938] HCA 28; (1938) 59 CLR 503), property (Norton v Hoare (No 1) [1931] HCA 51; (1913) 17 CLR 310) or against a person the defendant has an interest in defending (Adam v Ward) may be protected by privilege. Communications made pursuant to business and commercial interests, such as a request for information by a person intending to deal with a business person may also be protected: Waller v Loch (1881) 7 QBD 619 (at 27); Bashford (at [70]). Similarly, communications made by shareholders in a company alerting other shareholders to maladministration or incompetence on the part of company officers may also be made on a privileged occasion: Bryanston Finance Ltd v De Vries [1975] 1 QB 703 (at 736). Such communications reflect the notion that the interest acted upon may be held in common with the recipient, as opposed to being exclusive to the defendant: Howe & McColough v Lees [1910] HCA 67; (1910) 11 CLR 361 (at 369). Thus an employer and an employee will have a common interest in the success of a business. A communication made by an employer to its employees, stating that an employee has been dismissed and the reasons for that dismissal, may be protected: Hunt v Great Northern Railway Company.
The question raised by the present appeal is whether, when the occasion for the defamatory communication was created by the error of the person making the communication, the protection of qualified privilege should be available. It was not argued at the trial that the communication was false. At the time of the communication payment of the cheques had been refused. The communication was made in furtherance of the statutory scheme which provides for that refusal to be communicated to the payee: Cheques Act 1986 (Cth) ss 67, 69. The mistake in the present case was in the decision made by the bank to refuse payment. That decision was made because of the erroneous application of a PCO to the rent trust account.
The present situation and similar situations have been previously considered by different courts. They have arrived at different answers. The Australian decisions include a Victorian line of authority starting with Hussey v Bank of Australasia (1889) 15 VLR 9, which concerned a communication made with respect to a promissory note. The plaintiff gave a note to the payee payable at the defendant bank, where the plaintiff had an account. The plaintiff subsequently altered the note by writing the word “Royal” before “Bank of Australasia”. The payee presented the cheque at the defendant bank (not the Royal Bank of Australasia), which did not notice the alteration. The plaintiff had an account at the defendant bank, but this contained less than the amount specified in the note, and, accordingly the cheque was returned with the letters “N.P.F.” (“not provided for”). The defendant bank, by its mistake, did not present the promissory note to the drawee bank for payment.
A’Beckett J found that the matter complained of was published on an occasion of qualified privilege. He identified the basis for the occasion as the business relationship between the defendant bank and the payee. He said (at 12): “The writing seems to me well within the principle which protects statements injurious in their consequences, but made without malice in the course of business, instances of which will be found collected in Odgers on Libel (2nd ed.), under the heading of ‘Statements necessary to protect the defendant’s private interest’. ‘Any one,’ says Lord Denman in the case of Tuson v Evans … ‘in the transaction of business with another has a right to use language bona fide which is relevant to that business, and which a due regard to his own interest makes necessary, even if it should directly or by its consequences be injurious to another…’”
His Honour added that the defendant bank’s mistake did not disentitle it from relying on the privilege because it was a bona fide mistake (at 12): “It is true that if the writing…had been carefully examined, the defendant would have found that it was made upon another bank…but this should not deprive it of the protection to which it would have been entitled had the demand been properly made upon it, and it had, by bona fide mistake, declined to pay…”
In Levy v Union Bank of Australia Limited (1896) 21 VLR 738, the plaintiff had an account with the Bendigo branch of the defendant bank. He drew a cheque on that account and paid it to the payee. There was sufficient money in the plaintiff’s account to meet the cheque. The payee presented the cheque to the Melbourne branch of the defendant bank, where the payee had an account. The Melbourne branch did not forward the cheque to the Bendigo branch for presentation. Instead, it sent the cheque back to the payee with a letter saying: “The cheque specified below, which was lodged for collection on your account, has been returned unpaid, and the amount has been placed to the debit of your account this day. The cheque is enclosed.”

The plaintiff won at trial but lost on appeal. The Full Court (Madden CJ, Williams and Hodges JJ agreeing) held that the privileged occasion arose when the payee presented the cheque to the collecting bank, which was the defendant bank. Madden CJ identified the foundation for the privilege as deriving from the duty of the collecting bank to “look after the interests of his clients”, and the corresponding interest of the payee in receiving communications about a particular subject matter, namely the “cheque and its condition”. Madden CJ said (at 742): “At the moment Steinwehr paid in the cheque to his credit with the bank the relation commenced under which the banker had an interest, and possibly a moral duty, to look after the interests of his client, and Steinwehr had a corresponding interest to hear from his banker whatever the letter had to say about the cheque and its condition. Immediately that relation was established the privileged occasion arose.”
Madden CJ applied the decision of the Privy Council in Laughton v Bishop of Sodor and Man (1872) LR 4 PC 495; (1871) 17 ER 534 to the effect that a communication will be privileged if there is reciprocity of duty and interest with respect to the subject matter of the communication, and it is made bona fide (at 504): “Their lordships are clearly of the opinion that his charge was a privileged communication in the ordinary sense of the term, on the well-known principle that a communication made bona fide upon any subject matter in which the party communicating has an interest, or in reference to which he has or honestly believes he has a duty, is privileged if made to a person having a corresponding interest or duty, although it contains criminatory matter which without that privilege would be defamatory and actionable.”
Hussey and Levy concerned communications from different sources. Hussey concerned a communication between the payee and the bank identified (although incorrectly) as the drawee bank. Levy concerned a communication between a payee and the collecting bank which was also the drawee bank. In each case there was a privileged occasion. In the present case, Westpac as the drawee bank made defamatory communications in some cases directly to payees (who were also its clients), and in some cases to collecting banks acting for payees.
There is also a New South Wales line of authority. The decisions are of the Full Court of the Supreme Court. Like Levy, they concern communications made by a collecting bank to the payee. They decided that the privileged occasion arises when the collecting bank presents a cheque to the drawee bank for payment – in other words, when the drawee bank duly receives the cheque and decides whether to pay or dishonour it.
In McNickle v Bank of New South Wales (1881) 2 LR (NSW) 7, the plaintiff gave a promissory note to the payee which was payable at the Union Bank in Wagga four months after December 16, 1879. The payee placed the note for collection at the Gundagai branch of the defendant bank. The Gundagai branch forwarded the note to the Wagga branch of the defendant bank. The Wagga branch did not present the note for payment to the Union Bank until a few days after it had fallen due. The Union Bank refused to pay the overdue note. The manager of the Wagga branch then wrote to the payee saying that the cheque “has been duly presented for payment and dishonoured, and now lies overdue at the Bank”.
The plaintiff won at trial. The jury found no express malice on the part of the defendant bank. On appeal, Martin CJ (with whom Manning and Windeyer JJ agreed) found that the communication had not been made on an occasion of qualified privilege because the collecting bank had a duty to inform its client of “what had actually occurred” (at 9). The Chief Justice concluded that the collecting bank knew that it had caused the non-payment by not presenting the note on time and accordingly, it did not act in accordance with the duty that may have given rise to a privileged occasion. His Honour accepted the jury’s finding that there was no evidence of express malice. However, later cases suggest that knowledge is usually conclusive evidence of malice and would accordingly disentitle the defendant from relying on qualified privilege: Horrocks v Lowe [1975] AC 135 (at 150); Roberts v Bass [2002] HCA 57; (2002) 212 CLR 1 (at [83]).
There was no knowledge of the falsity of the communication in Browne v Bank of Australasia (1881) 2 LR (NSW) 325, decided by the same bench as in McNickle. In Browne, the plaintiff drew a cheque on the Bank of New South Wales, Singleton in favour of two payees. One of the payees deposited the cheque at the defendant bank at Maitland for collection. The defendant bank at Maitland, not having a branch at Singleton, forwarded the cheque to the Commercial Bank at Maitland, which had a branch at Singleton. However, the Commercial Bank immediately returned the cheque with the verbal message “indorsement irregular” by reason of the cheque being endorsed by only one of the payees. The defendant bank, not receiving this message and not making any enquiries, returned the cheque to the payee with a printed form stating that the cheque “had been refused payment at the place where payable”. In fact, the cheque had never left Maitland.
The plaintiff won at trial. On appeal, the Court concluded that the collecting bank did not have a duty to make the communication until the time it presented the payee’s cheque to the drawee bank for payment. Accordingly, a privileged occasion could only arise after presentation to the drawee bank. The Chief Justice said (at 327): “A Banker, when he has presented a cheque and it is not paid, has a privilege to make a communication to that effect to the customer who deposited that cheque. But here the duty had not arisen; therefore, here there is no privilege. Had there been a presentation there would have been a right to communicate the result to the customer. But as there was no presentation, no right, no duty had arisen, and consequently no privilege.”
This decision cannot be reconciled with Levy where the Court concluded that the privileged occasion arose when the payee presented the cheque to the collecting bank.
Hall v Bank of New South Wales (1889) 10 LR (NSW) 292 is consistent with the analysis of qualified privilege in Browne, although it is a unique case because there was no mistake on the part of the defendant bank. In Hall, the plaintiffs gave a cheque to pay J & J Wearne to the payees, Messrs Wearne & Sons, drawn on the Union Bank. The plaintiffs struck out the words “or bearer” and did not introduce the words “or order” on the cheque, so that the cheque was payable to J & J Wearne only. The payees endorsed the cheque “Wearne & Sons” and lodged it with the defendant bank, who sent it to the Union Bank to be honoured. The Union Bank returned the cheque with the words “endorsement irregular” on the back to the defendant bank. The defendant bank returned the cheque to the payees with the usual notice of dishonour.
The plaintiffs won at trial. On appeal, the Full Court (Darley CJ, Windeyer and Foster JJ) held that the communication had been made on an occasion of qualified privilege. The Court found that the circumstances did not suggest any mistake on the part of the defendant bank. Therefore, unlike in Browne, there was no mistake that prevented the privileged occasion from arising. Darley CJ said (at 295): “In this case the bill has been duly presented, and has been dishonoured, whereupon the bank were bound to inform their client of the fact, and in doing so they were privileged.”
In other words, the privileged occasion arose when the cheque was dishonoured after being duly presented by the collecting bank to the drawee bank. This is consistent with the reasoning in Browne.
The facts in Ballin v Bank of Australasia (1895) 16 LR (NSW) 15 were similar to those in Browne. The plaintiff gave a cheque to the payee, who paid it into his account at the defendant bank. The cheque was drawn on the Commercial Bank of Australia, but on a form of the Commercial Bank of Sydney. The plaintiff had crossed out the word “Sydney” and written above it “Australia.” The defendant bank, by mistake, sent the cheque to the Commercial Bank of Sydney. That bank sent the cheque back to the defendant bank, with a note saying that the cheque was unpaid, although not expressly saying that it was dishonoured. The defendant bank returned the cheque to the payee stating that it had been unpaid.
The plaintiff won at trial. On appeal, Darley CJ rejected a submission that although the defendant bank had not presented the cheque for payment at the drawee bank, it was privileged in “falsely stating that such cheque had been dishonoured” (at 17). He followed the decision in Browne, stating that the “the law on the subject is there most tersely and accurately laid down” (at 17).
The result in the present case is not dependent on accepting either the Victorian or New South Wales approach. The Victorian decisions identify the privileged occasion as arising when the payees present the cheque to their bank for crediting to their account. This occurred in relation to all the cheques in the present case. The New South Wales cases identify the privileged occasion as arising later in the process, when the cheque is presented to the drawee bank for payment or dishonouring. In the present case, each cheque was presented to the drawee bank (in this case, also the defendant bank) by payees who were either its own clients, or by collecting banks acting for payees who were not the defendant bank’s clients. Accordingly the occasion on which privilege may arise existed under either the Victorian or New South Wales approach.
There are two other cases of present significance. In Davidson v Barclays Bank Limited [1940] 1 All ER 316 the plaintiff drew a cheque on his bank account with the defendant bank in which there were sufficient funds to cover the cheque. By mistake the defendant bank returned the cheque to the payee with the notation “Not Sufficient”. Hilbery J held that the defendant bank was not protected by qualified privilege because the occasion for the communication was the defendant bank’s own mistake. His Lordship said (at 322): “… you cannot by making a mistake, create the occasion for making the communication, and what the bank seeks to do here is to create an occasion of qualified privilege by making a mistake which called for a communication on their part.”
There was no appeal in Davidson. The issue has also been considered in Ireland where a bench of four judges divided on the question: Pyke v The Hibernian Bank Limited [1950] IR 195. In that case Black J, who was in the minority on the question, concluded that Davidson was wrongly decided. The trial judge set out Black J’s reasoning: “76 Thus, it appears that on this approach, there is a distinction to be drawn between a mistaken allegation on an occasion which is privileged and relying on a mistake as giving rise to the occasion of privilege itself. The difficulties inherent in such a distinction were considered in Pyke v The Hibernian Bank Limited [1950] IR 195, where Black J referred to Davidson and commented at (221-222):

Two of the other judges in Pyke, Geoghegan J and O’Byrne J, were of the view that Davidson was correct. Chief Justice Maguire did not find it necessary to deal with the issue.
In Lloyds Bank PLC v Rogers (English Court of Appeal, 20 December 1996, unreported) Simon Brown LJ stated: “The correctness of Hilbery J’s decision in Davidson has been doubted and never yet tested.”
The approach in Davidson has found favour in academic writings. A L Tyree, in “Wrongful Dishonour, Defamation and Qualified Privilege” (1980) 8 Aust Bus LR 220, argues (at 231) that the result in Davidson is correct, although its reasoning is deficient. Tyree also expresses his preference for the Davidson approach in A L Tyree and P Weaver, Weerasoria’s Banking Law and the Financial System in Australia (6th ed, 2006) (at 359).
The argument which I apprehend underpins the approach of Hilbery J is that by affording the defence of qualified privilege to someone, who by reason of their own error is under a duty to communicate the consequences of their error to another, the law has extended beyond that which is necessary for the good order of society. Against that proposition must be weighed the importance of efficient and effective communication of a bank’s dealing with a cheque, even if it has made an error. In many cases the drawer’s reputation may be injured from the erroneous refusal by the drawee bank to honour a cheque. However, unless communication is made, the payee will not only not receive the funds to which they are apparently entitled, but in the absence of any communication they would, at least for a time, be unable to address the problem. If a mistake has occurred and the payee does not receive the relevant funds the logical step for the payee is to raise the matter with the drawer. If a bank error is responsible for the communication it can be readily identified and remedied. Although the drawer’s reputation may suffer, in most cases of error this will be transitory. Greater damage may be done, including damage to the payee, by a delay in the payee being made aware that the cheque has not been honoured. Even if occasioned by the bank’s own mistake there are good reasons why the communication contemplated by the Cheques Act should be protected. To my mind those reasons are persuasive in the present circumstances. Relevance
Section 9 of the 1974 Act provided that a plaintiff is required to sue on the imputations arising from the matter which the plaintiff alleged defamed him or her. A controversy, stimulated by the appellants in the present case, has been generated about whether a defendant could successfully defend by pleading that the matter complained of was published on a privileged occasion or was required to plead that the defamatory imputation was published on that occasion. Once the purpose of the defence is understood most people would respond with the question “what is the debate about?” The defence has the purpose of protecting the defendant from liability for damages for publishing a defamatory imputation. Does it really matter whether the protected occasion is described as the occasion on which the imputation is published or the occasion on which a matter was published which gave rise to the defamatory imputation? The issue was considered by McColl JA in Lindholdt v Hyer [2008] NSWCA 264 where her Honour considered the decision of the trial judge in the present case. I shall return to that matter below.
Before the occasion on which a defamatory imputation is published will be protected by qualified privilege there must be a sufficient connection between the imputation and the privileged occasion. Accordingly, as Gummow J pointed out in Bashford (at [135]) it is first necessary to identify the particular imputation before determining whether it was published on a privileged occasion. Only then can the issue of relevance be resolved.
Although the decided cases reflect decisions made after consideration of these two issues, the appropriate sequence in the reasoning process has not always been followed. In most cases this does not matter, although this is not true of all cases. Problems may arise when a publication makes a number of statements which give rise to a variety of imputations, some of which may be defamatory and others not. To speak of the publication being an occasion of qualified privilege without further refinement may be misleading. It is only matters in respect of which the publication is occasioned by the necessary reciprocity of interest and duty which the law describes as being published on an occasion of qualified privilege.
In Bashford, Gummow J expressed the following caution (at [135]): “It is clear that both the primary judge and the Court of Appeal proceeded on the assumption that it was first necessary to establish that the principal part of the article was published on an occasion of qualified privilege and only then to consider whether the defamatory imputation, although not contained within the principal part of the article, nevertheless, was relevant to it. In my view, such an approach requires caution. The defence of qualified privilege is a plea in confession and, as such, is predicated upon the existence of a defamatory imputation to which the privilege attaches. To speak of qualified privilege attaching to a non-defamatory statement is to ignore this fundamental characteristic. It follows that questions of relevance, in the sense in which that term was used by the judges below, will ordinarily only arise where two or more defamatory imputations are published on a single privileged occasion. In such circumstances, it will be necessary to determine whether each imputation falls within the umbrella of the applicable privilege or whether one of the imputations is not relevant and, therefore, not covered by the defence. In the present case, only one defamatory imputation has been found to have been conveyed. It is therefore necessary to consider whether that imputation was made on an occasion giving rise to a defence of qualified privilege arising out of a reciprocal duty or interest” (footnotes omitted).
The issue can be readily understood by a variant of the present case. If a bank returned a cheque to the payee having correctly determined that there were insufficient funds with two endorsements, one being “Refer to Drawer” and the other, the “drawer is a thief”, the imputations arising from the publication of the first statement, made necessary by the bank’s decision to refuse payment, will be an occasion of qualified privilege. The publication of the second will not, there being no interest or duty on the part of the bank to publish that the drawer is a thief, with whatever defamatory imputation may be found to arise from the publication of that statement. An occasion on which matter which gives rise to defamatory imputations is published may not be used for some purpose or motive foreign to the duty or interest that protects the making of the statement: Roberts v Bass (at [62]).
The decision in Bashford concerned the publication of a defamatory article in the Occupational Health and Safety Bulletin. There was no question that the article defamed the plaintiff. At issue was whether the occasion for the publication was one of qualified privilege and, of relevance to his appeal, whether that part of the article which defamed the plaintiff was sufficiently connected to the privileged occasion to attract the defence. The High Court, by majority, held that the occasion was privileged, being satisfied that the matter which defamed the plaintiff was sufficiently related to the privileged occasion.
On the question of the test of relevance Kirby J said: “[191] The test of relevance: The foregoing conclusions bring me to the last point, which was the one upon which, in the Court of Appeal, Rolfe A-JA reached his dissenting conclusion. Accepting that the occasion was privileged, was the defamatory imputation (being the mistaken reference to the appellant personally) germane to the occasion? Or did it amount to ‘[t]he introduction of ... extraneous matter’ so as to ‘afford evidence of malice which will take away protection on the subject to which privilege attaches’ or otherwise take that part of the publication outside the protection of the privilege?

As I have indicated the decision of the trial judge in the present case was considered by McColl JA in Lindholdt. Her Honour traced the history of defamation law in New South Wales and emphasised that the 1974 Act provided that a plaintiff did not sue on the publication but on the imputation which arose from it. The consequence, her Honour found, is that any successful defence, including qualified privilege, must be a defence to the imputation (at [115]). In so doing her Honour concluded that the decision to the contrary of the trial judge in the present case was not correct. Her Honour relied to a significant degree on the decision of this Court in New South Wales Aboriginal Land Council v Perkins (1998) 45 NSWLR 340 (at [114]).
Although, as I indicate below, the matter is put to rest by the relevant rules of the Court to my mind the approach preferred by McColl JA, with respect, is not correct. Because under the 1974 Act a plaintiff sues on the imputations, it is those imputations which must ultimately be defended. However, the defence will be made good if it can be shown that the defamatory matter, which gave rise to the imputation, was published on an occasion of qualified privilege and the matter was relevant to the privileged occasion. I do not understand Brennan CJ and McHugh J in Chakravarti v Advertiser Newspapers Limited [1998] HCA 37; (1997-1998) 193 CLR 519, (particularly at [8]) to say anything to the contrary. Although the imputation must be defended, the occasion which may attract the privilege is when the matter which gives rise to the imputation is published.
In the present case in respect of each appellant the jury found four imputations. They arose from the notation on each cheque pleaded as the defamatory matter “Refer to drawer”. The imputations were protected if published on an occasion of qualified privilege. The occasion, pleaded by the respondent, was the return of the cheque with the relevant endorsement.
The relevant Supreme Court Rules are consistent with this analysis. The appellants filed the second amended statement of claim on 16 April 2004. At that time, SCR 67.16 provided that: “(1) This rule applies:

Division 4 of Part 3 of the 1974 Act at the relevant time dealt with the statutory defence of qualified privilege. So expressed, SCR 67.16(3) applied to qualified privilege in both its common law and statutory forms by virtue of SCR 67.16(1).
It follows that the respondent did not have to plead that the imputations were published under qualified privilege. The Rules as they stood were consistent with the conceptual basis for the defence at common law. Whether a privileged occasion exists is determined by the occasion on which the matter complained of, which gave rise to the defamatory imputation, was published.
The issue was raised in the present case because the respondent conceded at trial that it had no interest or duty in publishing the imputations found by the jury. That concession was sought to be withdrawn on the appeal. There being no prejudice to the respondent leave to withdraw the concession should be granted. However, the fact that it was made and on further reflection, no doubt after the publication of the judgment of McColl JA in Lindholdt, withdrawn, is of no consequence. The defence was correctly pleaded. Conclusion with respect to qualified privilege
In my judgment the matter giving rise to each of the imputations was published on a privileged occasion. Having decided to refuse payment of the cheques Westpac had a duty to communicate its decision to the payees or their banks. The payees had the necessary interest in receiving that communication. The endorsement “Refer to Drawer” was conventional advice using an expression common to banking arrangements. Its use by Westpac was relevant to the privileged occasion and accordingly the imputations which the jury found to arise were themselves privileged. Damages
The trial judge assessed damages in defamation for Mr Aktas in the sum of $50,000. She assessed damages for Homewise in the sum of $117,000. Her Honour awarded the sum of $84,500 to Homewise for the breach of its contract with Westpac. The appellants challenge each decision. In particular her Honour’s finding that the appellants unreasonably failed to mitigate and the consequences of that failure are disputed.
Because I am satisfied that the publication was protected by qualified privilege it is not necessary to determine the damage issues relevant to the claim in defamation. However, I am of the opinion that the challenges should fail.
An award of damages in defamation serves three purposes. It provides reparation for the harm done to the plaintiff’s reputation; consolation for distress or hurt to the plaintiff’s feelings; and vindication of the plaintiff’s reputation: Carson v John Fairfax & Sons Limited [1993] HCA 31; (1993) 178 CLR 44 (at 60). The first two purposes are frequently considered together. In John Fairfax & Sons Limited v Kelly (1987) 8 NSWLR 131 McHugh JA (with whom Kirby P relevantly agreed) discussed the impact of time on damage caused by a defamation. There may be continuing damage to feelings and reputation after publication right up to the date of the verdict (at 143): “In many cases the award will reflect an amount for continuing injury to feelings and reputation to the date of verdict. Hence the amount awarded may, and usually will, be higher than the amount which would have been awarded as at the date of publication or even as at the date of the writ.”

However, the nature and extent of the damage suffered as a result of a defamation depends on the particular facts. It may be that most of the damage to the plaintiff was suffered close in time to the publication, such that continuing damage was minimal: Vilo v John Fairfax & Sons Ltd [2000] NSWSC 1206 (at [25]). The Court of Appeal adopted that view of the facts in Marsden, holding that “the substantial injury to reputation was immediate” (at [1555]). I came to the same conclusion in Davis v Nationwide News Pty Limited [2008] NSWSC 946 (at [14] – [15]).
The assessment of damages in defamation is necessarily imprecise. Damages are “at large” in the sense that they cannot be arrived at through calculation or the application of a formula: Carson (at 115) per McHugh J; Rogers v Nationwide News Pty Limited [2003] HCA 52; (2003) 216 CLR 327 (at 348-349) per Hayne J. This is because much of the harm done to the plaintiff is loss that cannot be quantified in monetary terms: Rogers (at 349) per Hayne J. Consequently, assessing damages is a matter of impression and not addition: Cassell & Co Limited v Broome [1972] AC 1027 (at 1072). Juries have found it helpful to consider what the defendant, as opposed to the plaintiff, should be liable for in the circumstances to aid this impressionistic task. “It became … indisputable that a jury could consider not only what the plaintiff should receive, but what the defendant should pay”: Uren v John Fairfax & Sons Pty Limited [1966] HCA 40; (1966) 117 CLR 118 (at 151) per Windeyer J; Coyne v Citizen Finance Limited [1991] HCA 10; (1991) 172 CLR 211 (at 228) per Toohey J.
There is no doubt that the notification by Westpac that it would refuse to pay the 30 cheques was hurtful to Mr Aktas and occasioned damage to his reputation. That damage would inevitably have extended beyond the 30 persons or corporations who received letters. Other people would quickly have learned of the dishonour of the cheques. Her Honour received evidence of gossip and rumour which was seriously unfavourable to Mr Aktas, including allegations of gross dishonesty. Although harmful to Mr Aktas and no doubt the publication by Westpac was the occasion for their circulation, they were not ultimately pleaded to be imputations arising from the publication and as a consequence the jury did not so find. It is damage resulting from the imputations found to arise from the publication which is compensable: Jamoo v Nationwide News Pty Limited [2004] NSWSC 126. Her Honour was correct to confine the award so as to exclude consideration of the impact of allegations of dishonesty.
After the error was discovered, but not until approximately six weeks after publication, Westpac offered to make amends by writing to each affected payee to explain the situation. In addition it apologised to the appellants and sought to make amends without the necessity for legal proceedings.
Mr Aktas did not accept the offer. His reasons are not clear. On the one hand he said at the trial that he was too emotionally affected to be able to think clearly and give instructions. On the other hand he gave evidence that on 5 February he instructed his solicitor to request a letter of apology from Westpac to all his clients. There was a suggestion from one witness that a letter from Westpac to the clients may have caused confusion and occasioned greater damage due to many of the clients having insufficient English proficiency. However, an experienced solicitor with knowledge of the Turkish community rejected this suggestion and the trial judge accepted his opinion. Her Honour said (at [119]): “The effect of [Mr William’s] evidence was that were Westpac to have corresponded with Homewise’s clients from the Turkish community, both in English and in Turkish, and to have acknowledged its error, save only for some who would stubbornly maintain an adverse view of Mr Aktas, the greater number would not have ostracised Mr Aktas.”
This statement by her Honour is not entirely clear. It may be that she had in mind the false rumours of dishonesty. However, I would accept, in the appellants’ favour, that her Honour concluded that although an apology from Westpac would largely have brought the damage to Mr Aktas and Homewise occasioned by the publication to an end, some persons would have maintained an adverse opinion of him.
To my mind her Honour’s finding that the appellants unreasonably failed to accept the offer to make amends was correct. I do not accept the argument that a letter may have caused confusion. It would have remedied most of the problem.
Her Honour followed her finding that the appellants had unreasonably failed to mitigate by a finding that as a consequence neither appellant was entitled to damages for harm to reputation beyond June 1998. Her Honour identified this date from the evidence that once the true position had been communicated to the 30 payees it would have taken a little time for the acknowledgement of fault by Westpac and the apology to have found its way through the community.
Because of the issue to which I refer in [95] above it may be difficult to reconcile her Honour’s finding of a continuing adverse view of Mr Aktas in the eyes of some people, with a finding that harm to the appellants’ reputation would have ceased by the end of June. However, I am satisfied that the continuing damage to the appellants arising from the relevant imputations would have been of little consequence. An apology was likely to have been full in its terms and widely disseminated. Westpac offered to write to each of the payees to confirm its error. It also offered to write to the Real Estate Institute. Even if there was compensable damage occasioned after June 1998 it would have been minimal. I am not persuaded that her Honour’s assessment of loss was wrong.
Under the 1974 Act, a corporation could not bring an action in defamation unless it employed fewer than 10 persons at the time of publication and had no subsidiaries: s 8A(3). The trial below proceeded on the basis that Homewise was entitled to sue in defamation. A corporation cannot recover for hurt to feelings caused by a defamation: Australian Broadcasting Corporation v Comalco Limited (1986) 12 FCR 510. It can only be injured “in its pocket”: Lewis v Daily Telegraph Newspaper Co Limited [1964] AC 234 (at 262).
The trial judge would have awarded $117,000 to Homewise in defamation and assessed damages for breach of contract at $84,500. Her Honour concluded that Homewise should be compensated for the downturn in its business from the time of publication of the defamatory imputations and breach of contract in December 1997. Although her Honour accepted that the damage to Homewise’s reputation would have extended to June, she found that damage in contract ceased by the end of March 1998.
Her Honour received evidence from two “experts” who had analysed the impact of the defamation on the business of Homewise. The appellants engaged Mr Hilton and the respondents Mr Lom. They employed different methodologies. After they had been invited to confer and had agreed on the appropriate basis for computing any loss her Honour considered their evidence.
Her Honour preferred the evidence of Mr Lom to that of Mr Hilton. Her Honour found that because of the quality of Mr Hilton’s workings she was left with a real sense of unease as to the accuracy and reliability of his calculations. Her Honour also doubted his objectivity and independence. Importantly, her Honour found that Mr Hilton’s evidence was based on a misconception of Homewise’s case, having been instructed that staff resigned as a result of the allegation of dishonesty within the business. Her Honour found that the relevant resignations were not as a result of the defamation, a finding which was entirely appropriate. Her Honour accordingly determined to accept Mr Lom’s approach.
Homewise made two claims – one for lost rental commission and the other for loss of sales commission. Accepting Mr Lom’s evidence her Honour rejected the claim for rental commission. With respect to the loss of sales commission, after allowing for a 10 per cent discount for the downturn in commission due to causes unrelated to the defamation (the dispute with Century 21 and attrition of staff from other causes), her Honour determined that the appropriate award for Homewise in the defamation claim was $117,000.
Although as I have indicated I have a reservation with respect to the finding that no damage occurred after June 1998 to Homewise I am not persuaded that the sum determined by her Honour was inappropriate.
With respect to the claim in contract her Honour concluded that Homewise was entitled to only $84,500. She arrived at this sum by utilising Mr Lom’s assessment but allowed for a loss only until the end of March 1998. Her Honour said of the claim in contract: (at [146]): “that damages are assessed at the time of breach then an assessment of the likely consequences of the breach or, to put it in terms of the first limb in Hadley v Baxendale (1854) 9 Exch 341, the damage fairly and reasonably arising naturally in the usual course of things from the breach should also be made at the time.”
It is apparent that by dishonouring the cheques and returning them to the payees or collecting banks, Westpac breached its contract with Homewise. It did not contend otherwise. Both in tort and contract Homewise was entitled to be compensated for the loss arising from that breach. It also had a duty to mitigate and any damages were required to have regard to any breach of that duty.
Her Honour held that the difference in damages payable to Homewise in defamation and those payable for the breach of contract was to be found in the fact that damages for breach of contract must exclude the effects of the “defamation simpliciter.” Compensation in contract for damage to reputation is usually only recoverable in circumstances which have been described as “direct breach” cases: Wilson v United Counties Bank Limited [1920] AC 102. In Baltic Shipping Co v Dillon [1993] HCA 4; (1993) 176 CLR 344 (at 370) Brennan J observed that “except in the ‘direct breach’ cases, damages are not awarded for general loss of reputation without proof of pecuniary loss” (at 308).
Mr Lom’s calculations identified the loss of sales commissions after deducting the salary cost of those commissions occasioned by the actions of Westpac. That loss was suffered as a consequence of the published matter and her Honour found it would have continued until June 1998. In reaching that date, her Honour took into account Westpac’s offer of an apology in March, which should reasonably have been accepted: at [125] and [126]. However, in assessing loss for breach of contract she stated that a failure to mitigate (presumably by not taking up Westpac’s offer to write to Homewise’s customers) limited the period to the end of March 1998: at [147]. The discrepancy was not explained. That loss was the same in tort as in contract and contained no component over and above the loss of sales commissions for damage to Homewise’s reputation. A greater reduction in this period to account for a failure to mitigate was not explained and was not justified on the evidence. Accordingly, in my judgment Homewise was entitled to an award of damages in the sum of $117,000 in respect of its contracts claim.
In these circumstances Homewise has succeeded in one argument in the appeal but lost all other grounds. This complicates the order for costs in the proceedings. Although Mr Aktas’ appeal must be dismissed with costs in my opinion Homewise should only have to pay 60 per cent of the costs of its appeal.
I propose the following orders: 1. The appeal by Mr Aktas dismissed with costs. 2. The appeal by Homewise upheld in part. The award of damages for contract in the court below quashed and an award of damages in the sum of $117,000 substituted. 3. Otherwise the appeal by Homewise dismissed. Homewise ordered to pay 60 per cent of Westpac’s costs of the appeal. **********