Supreme Court of Tasmania|1999-02-17|Before: Slicer JJ, Wright J, Underwood J, Crawford J

Avram, John v Inches, Brian Maxwell [1999] TASSC 10 (17 February 1999)

TITLE OF COURT: SUPREME COURT OF TASMANIA (FULL COURT)

Damages - General principles - Exemplary, punitive and aggravated damages - Aggravated compensatory and exemplary damages distinguished - Exemplary damages only awarded if aggravated compensatory damages inadequate punishment - Need to show restraint.

Rookes v Barnard [1964] UKHL 1; [1964] AC 1129, followed in part.

Uren v John Fairfax & Sons Pty Ltd [1966] HCA 40; (1966) 117 CLR 118; XL Petroleum (NSW) Proprietary Limited v Caltex Oil (Australia) Proprietary Limited (1984 - [1985] HCA 12; 1985) 155 CLR 448, applied.

Backwell v AAA (1997) 1 VR 182, followed.

Defamation - Damages - Assessment - Special matters to be considered by jury - Aggravation - Exemplary or compensatory damages - Exemplary damages only awarded if aggravated compensatory damages inadequate punishment - Need to show restraint - Need for direction to the jury.

Judgment ID Number: [1999] TASSC 10

Hearing of the appeal with respect to terms of final order adjourned sine die.

1 The appellant was a councillor for the Municipality of Sorell and the respondent was the general manager of the Sorell Council. On 20 February 1997, the respondent commenced proceedings against the appellant for damages for defamation. The respondent pleaded that he had been defamed at a meeting of the Sorell Council on 23 December 1996. The statement of claim, par2 alleged that at the meeting the appellant said:

"Both the Mayor and the General Manager have lied and are liars.

* put in issue the making of the defamatory statement; alternatively,

* pleaded that the words were said in circumstances in which the plaintiff was not likely to be injured;

* claimed that the words were published in good faith in the course of the discussion of a subject of public interest, the public discussion of which was for the public benefit; and/or

* claimed that the words were true and their publication was, in the circumstances, for the public benefit.

4 The trial of the action commenced before Wright J and a jury on 23 March 1998. On 2 April 1998, the jury answered in the affirmative all the questions on the issue of whether the words relied upon were said, and whether they carried the imputations that the respondent was a liar and had lied. The jury answered in the negative the questions put with respect to issues raised in defence of the claim and assessed damages in the sum of $15,000 for compensatory damages and $25,000 for exemplary damages. Accordingly, the learned trial judge entered judgment for the respondent against the appellant for $40,000 and costs to be taxed.

5 From that judgment, this appeal is brought. Strictly speaking "appeal" is a misnomer. The appellant is making an application for a new trial pursuant to the Supreme Court Civil procedure Act 1932, s39, for it is not suggested that error attended the entry of judgment in accordance with the findings of the jury. The "notice of appeal" seeks an order for a new trial or, alternatively, that this Court assess the damages properly payable.

6 As amended, there are four grounds of appeal. They are all limited to the issue of damages. The first ground alleges that the sum of $40,000 is an amount which no jury, viewing the whole of the evidence, could have properly found. The remaining three grounds allege errors of law in the directions to the jury.

7 On Friday, 16 August 1996, the Sorell Chamber of Commerce held a function at the Gordon Highlander Hotel in Sorell. The appellant and the respondent were both there. The respondent said in evidence that in the course of a conversation with the appellant, the latter said that there was corruption in the Planning Department of the Sorell Council. The respondent said that the appellant told him that he had, and had seen, documents to prove that a member of staff in the Planning Department (whom he named) had members of his family either on boards or on companies that were involved in developments within the municipality. The following Monday, the respondent reported this conversation to the Mayor of Sorell.

8 In his evidence, the appellant said that he recalled the conversation with the respondent in the Gordon Highlander Hotel, but he claimed that he said to the respondent no more than "people in the community believed ... there may be corruption in the council". The appellant said that he said to the respondent, "well, I've seen documents and talked to people who have been to me as their former Member of Parliament and shown me things that have caused me distress and concern." The appellant denied that he told the respondent that he had any documents that had anything to do with corruption in the Sorell Council. The appellant said that he also told the respondent at the Gordon Highlander Hotel that "some people believed" that there may be corruption in the Planning Department.

9 Following the conversation between the respondent and the Mayor, the respondent consulted the Director of Public Prosecutions and ultimately was interviewed by the police. The appellant was also interviewed by the police about allegations of corruption in the Sorell Council. It appears that nothing came of these investigations by the police.

10 The Mayor made a statement about this matter in writing which she tabled or read at the meeting of Council held on 5 November 1996. The statement thanked the voters and councillors for their confidence in her ability to continue in the office of Mayor of Sorell. In it, the Mayor said:

ON MONDAY, 19TH AUGUST, 1996, COUNCIL'S GENERAL MANAGER INFORMED ME THAT HE HAD ATTENDED A FUNCTION AT THE GORDON HIGHLANDER HOTEL ON FRIDAY, 16 AUGUST, ORGANISED BY THE SORELL CHAMBER OF COMMERCE. HE TOLD ME THAT AT THAT FUNCTION, A LOCAL BUSINESS MAN SAID TO HIM THAT THERE WAS CORRUPTION IN THE COUNCIL AND THAT HE (THE BUSINESS MAN) HAD DOCUMENTS AND HAD SEEN OTHER DOCUMENTS TO PROVE IT.

SINCE THEN THERE HAVE BEEN RUMOURS CIRCULATING IN THE MUNICIPAL AREA WHICH HAVE THE POTENTIAL TO AFFECT THE REPUTATION OF THE COUNCIL, ITS SENIOR STAFF AND THE COUNCILLORS.

AS A RESULT OF WHAT THE GENERAL MANAGER TOLD ME, I FORMED THE VIEW THAT SUCH RUMOURS COULD NOT BE LEFT UNRESOLVED. THE GENERAL MANAGER REFERRED THE ALLEGATION OF CORRUPTION TO THE DIRECTOR. OF PUBLIC PROSECUTIONS, MR DAMIAN BUGG QC, ON 20TH AUGUST, 1996. MR BUGG QC ARRANGED A MEETING BETWEEN THE GENERAL MANAGER AND THE ASSISTANT COMMISSIONER OF POLICE, MR LUPPO PRINS. THAT MEETING OCCURRED ON 20TH AUGUST. ASSISTANT COMMISSIONER PRINS SUGGESTED THAT THE MATTER BE PURSUED DIRECTLY WITH DIVISIONAL INSPECTOR, JOHN TALBERT, AT BELLERIVE POLICE HEADQUARTERS. THE GENERAL MANAGER MET WITH INSPECTOR TALBERT LATER THAT MORNING.

INSPECTOR TALBERT SUGGESTED THAT THE GENERAL MANAGER AND I SPEAK WITH THE PERSON TO ASCERTAIN WHETHER HE WOULD BE WILLING TO PROVIDE ANY INFORMATION WHICH HE HAD OR KNEW OF TO THE POLICE TO ENABLE AN INVESTIGATION TO BE UNDERTAKEN.

LATER ON TUESDAY, 20TH AUGUST, THAT PERSON ATTENDED THE COUNCIL OFFICES AND SPOKE WITH THE GENERAL MANAGER AND 1. AT THAT TIME HE WAS ASKED WHETHER HE WOULD PROVIDE THE INFORMATION RELATING TO HIS ALLEGATION OF CORRUPTION TO THE POLICE.

DURING THE MEETING THAT PERSON DID NOT DENY WHAT HE HAD SAID AT THE GORDON HIGHLANDER HOTEL. HE SAID THAT HE DID NOT HAVE ANY DOCUMENTS IN HIS POSSESSION WHICH RELATED TO ALLEGATIONS OF CORRUPTION. HE SAID THAT HE HAD SEEN SOME DOCUMENTS BUT THAT HE WAS NOT PREPARED TO NAME ANY SOURCES OF HIS INFORMATION. HE SAID THAT HE WOULD NOT PASS ON ANY INFORMATION TO THE SORELL POLICE BECAUSE IN HIS OPINION THEY WERE CORRUPT. HE SAID, HOWEVER, THAT HE WOULD CO-OPERATE IN ANY INTERVIEW WITH THE POLICE.

ABOUT A WEEK LATER THE GENERAL MANAGER MET WITH AN OFFICER OF THE CIB WHO INFORMED HIM THAT THE TWO CIB OFFICERS HAD MET WITH THE PERSON. THAT AS A RESULT OF THE MEETING THE CONCLUSION OF THE CIB WAS THAT THE COMPLAINTS HAD INSUFFICIENT BASIS TO JUSTIFY ANY INVESTIGATION."

11 This statement was published in the local community newspaper called "Spec News" which circulated in the Sorell Municipality to those willing to pay 50 cents, its purchase price. It appears that the statement angered the appellant who was, he asserted, identifiable as the "local business man".

12 The evidence was that prior to the Council meeting on 23 December 1996, the respondent received a petition from rate payers. The petition sought the respondent's sacking or that he not be appointed general manager of the Council "when his term ends shortly". The respondent gave the petition to the Mayor. She had it with her at the Council meeting on 23 December 1996. The respondent said that the Council meeting was a public meeting attended by ten of the twelve elected councillors, a number of the staff of the Council, and four members of the public. According to the appellant's evidence, the Mayor said she would not table the petition, but any other councillor who wished to do so could table it. It seems there was considerable acrimony between the Mayor and the appellant. The following is an extract from the minutes of the meeting of the Sorell Council on 23 December 1996. In them, the appellant is referred to as "Councillor John, the Duke of Avram", a name he apparently assumed:

Mayor Torenius reported that the General Manager had referred to her a petition seeking his resignation or that Council not re-appoint him upon the expiration of his contract

Mayor Torenius expressed concern that petitions of this nature could be circulated without any opportunity for rebuttal by the individual to whom they were directed.

Mayor Torenius indicated that she had no intention of tabling the petition herself but indicated that if any Councillor wished to do so, she would pass them the original.

The Mayor also indicated that she had discussed the matter of petitions of this nature with the Minister for Local Government who was, concerned that people in public office could be subject to these attacks.

Councillor John indicated that the Mayor was lying as what she was stating was in the petition was not an accurate representation of its true content as the Mayor had claimed the petition called for the resignation of the General Manager when in fact it called for him to be sacked or not re-appointed.

The Mayor requested the Councillor to resume his seat. He did so. The Mayor asked if any Councillor wished to table the petition.

Councillor John indicated that he wished to table the petition so that it would be recorded in the Minutes.

The petition sought 'That the Council sack or not re-appoint the General Manager, Mr Inches when his term ends shortly' and was signed by 30 residents of the municipal area.

Councillor John stated that both the Mayor and the General Manager had lied and were liars.

'That Council move a Motion of Confidence in the Mayor and General Manager.'

Councillor John again stated that the Mayor and General Manager were liars and that the Mayor had lied in a factual statement made at the first Council meeting he had attended as a Councillor.

Mayor Torenius called Councillor John to order which the Councillor ignored.

Mayor Torenius again called the Councillor to order and was again ignored.

Mayor Torenius then requested that Councillor John leave the meeting.

The Councillor queried for how long he was being removed and the Mayor suggested that he should leave and regain his composure.

Councillor John again claimed that the Mayor was a liar, following which the Mayor required the Councillor to leave for the duration of the Meeting

Councillor john continued to make personal ,reflections against the Mayor as he left the room at 4.47 pm.

13 The respondent gave direct evidence that the appellant spoke the words relied upon in the statement of claim and that he spoke with a "forceful tone, above average speaking volume". At trial, the respondent sought both compensatory and aggravated damages. There was evidence that the Sorell Council has an approximate gross annual revenue of just over $8m and employs fifty-eight full-time and fourteen part-time staff. The appellant has been the Council Clerk or General Manager of the Sorell Council since February 1990. He was employed on a contract of service due to expire in November 1998. Evidence was given by a former Warden of Sorell and the current Mayor that the respondent had a reputation for being reliable and trustworthy. It may be noted that there was also evidence from both these witnesses that, in their view, the respondent's reputation remained untarnished following the making of the defamatory statements.

14 With respect to the respondent's duties, his counsel, Mr Holt, extracted the following from the respondent's employment contract, which was tendered in evidence, and included it in his written submissions on the hearing of the appeal:

"The duties of the General Manager are extensive. He is head of the Council's professional and salaried officers. He is charged with the responsibility of managing and developing and coordinating all of the resources of the Council. He is to be the Council's principal adviser in matters of policy. To issue public statements of fact as appropriate on matters of the Council's business. To be the channel through which the Corporation's directives are conveyed to other officers. To negotiate, sign and seal contracts on behalf of the Council. To appoint, transfer, promote, demote or dismiss officers of the Council. To provide information to the Councillors. 'To develop and maintain sound and effective communications and good relations between the Corporation and the citizens of the Municipality, other Governments at all levels and the community at large.' To foster harmonious relationships and respect between staff members and Councillors." [original emphasis]

15 The respondent gave evidence that the appellant's defamatory utterances caused him to suffer disturbed sleep and made him pre-occupied to the detriment of his relationship with his wife and three children. No doubt, any distress and pre-occupation was due, not only to the utterances, but also to the pending litigation in which the appellant denied making the utterances and pleaded, in the alternative, justification for making them. The latter is a proper matter to take into account when assessing compensatory damages. See Humphries v TWT Ltd [1993] FCA 577; (1994) 120 ALR 693 at 706.

16 The appellant's conduct between 23 December 1996 and the jury verdict is also relevant to the assessment of compensatory damages. See Praed v Graham (1890) 24 QBD 53 at 55; Triggell v Pheeney [1951] HCA 23; (1951) 82 CLR 497 at 514; Carson v John Fairfax & Sons Ltd [1993] HCA 31; (1993) 178 CLR 44 at 71. With respect to this, evidence was given that prior to the Council meeting next occurring after 23 December 1996, the respondent's then solicitors wrote to the appellant asking him to table an apology and retraction at the forthcoming meeting. This was not done. In his evidence, the appellant maintained that he did not make the alleged utterances and this was why he offered neither retraction nor apology. He said in cross-examination that he thought the solicitor's letter was "just typical of the campaign waged by the Mayor and General Manager on me".

17 With respect to whether the appellant's version of the conversation in the Gordon Highlander Hotel was correct or not, the appellant was questioned and answered in cross-examination as follows:

"Would it be your view that regardless of Mr Inches' state of mind or honesty in reporting the conversation at the Gordon Highlander Hotel if it differed from your recollection then what Mr Inches says is a lie? ... If it differed from what I believe to be true it is a lie.

Even if Mr Inches had no intent to deceive anybody? ... Even if Mr Inches had no intent.

And you don't know whether Mr Inches had intent to deceive or not do you in his report of the conversation at the Gordon Highlander Hotel to the Mayor? ... No.

And you don't care whether he deliberately misreported it or accidentally misreported it, do you? ... .I believe he deliberately misreported it.

Can you just listen to the question please. On what do you base that belief? ... My experience since being a councillor of Mr Inches is that he continually tells lies." [emphasis added]

A little earlier, the appellant was asked and answered:

"Well why did you tell him about ratepayers having some concerns that there was possibly corruption if you didn't expect him to do anything? ... Well at least I could say that I'd brought the concerns of the ratepayers to his attention because I believe Mr Inches is deeply involved in that corruption."

18 With respect to whether the appellant had made the alleged defamatory statements, his answer to an interrogatory was tendered in evidence:

Let the defendant state whether on the 23rd day of December, 1996 at the Sorell Council Chamber at 12 Somerville Street, Sorell, the defendant spoke the words :

'Both the Mayor and the General Manager have lied and are liars.'

Or words to that effect, and if words to that effect, state what words were spoken.

The Defendant does not admit that he spoke the words set out in his this Interrogatory but admits that he said words to the effect 'both the Mayor and the General Manager have published lies about me in Spec News and in the Mayor's statement and by inference it could be implied that both the General Manager and the Mayor are or were liars'."

19 The appellant was cross-examined about this question and answer. His answers might well be described as prevaricating, but ultimately the appellant agreed that when he spoke, as he conceded he spoke by his answer to the interrogatory, the Council was not then discussing any question of whether the respondent should be sacked. However, he volunteered in cross-examination, "Well, I think he should be sacked".

20 The appellant claimed that his purpose in saying that which he admitted saying in his answer to the interrogatory was to correct "information that had been written about me - published in the Mayor's communication".

21 The jury would have been entitled to think from the manner in which the appellant conducted his case and the evidence that he gave in support of it, that he had acted quite outrageously without regard to the truth and with an intention, as was put to him but denied, to humiliate and belittle the respondent. Further, the jury might have thought that unless a substantial sum was awarded there was a likelihood that the appellant would repeat his defamatory assertions.

22 The statutory test enacted in the Supreme Court Civil Procedure Act, s39(5)(b) reflects the common law. In Triggell v Pheeney (supra) the joint judgment states at 516:

"Putting aside cases in which there has been a misdirection or a wrongful rejection of evidence or evidence has been wrongly admitted, a court to which an application for a new trial is made on the ground of an excessive award of damages must consider whether the damages are at large as they are in libel and so peculiarly within the discretion of the jury and in such a case it is for the court to decide not whether the verdict seems to it to be right but whether the verdict is such as to show that the jury have failed to perform their duty : cf per Lord Halsbury, Metropolitan Railway Co v Wright (1886) 11 App Cas 152, at p 156 and Miles v Commercial Banking Co of Sydney (1904) 1 CLR, at pp 473, 474."

23 In Carsen v John Fairfax & Sons Ltd (supra) the joint judgment expressed the test in these terms at 61 - 62:

"If an appellate court is convinced, not that in its own view the amount is too high or too low but that the amount awarded is so high or so low that it is outside the range of what could reasonably be regarded as appropriate to the circumstances of the case, the proper performance of its functions will require it to intervene to prevent a miscarriage of justice Coyne (1991) 172 CLR, at 211 p 215."

24 Carson is also authority for the proposition that upon appellate review of damages for defamation, it is appropriate, as a "cross-check", to have regard to awards for general damages in substantial personal injury cases. See also John v NMGN Ltd [1997] QB 586.

25 Trials for damages for defamation are rare occurrences in Tasmania, so rare that there has yet to emerge a "tariff" to which regard may be had in a general way upon consideration of the issue raised by ground 1 of the appeal. The researches of counsel discovered only seven awards in the last thirty-four years, and one of those was a trial with a jury in the Court of Requests in 1989. Mr Wood, counsel for the appellant, relied upon the Gazette of Law and Journalism (1996) as his principal research material. He submitted that the report in the Gazette of a verdict of a jury in the Court of Requests could be used as a yardstick to measure whether the award of damages in this case was excessive. The report only notes that an award of $2,500 was made with respect to a defamation by the defendant writing to about twenty-five members of a union criticising the plaintiff, expressly imputing that he was a liar. The Gazette contained no other information about the case. There is insufficient material to determine whether the facts in that case were similar to the facts in this case but, in any event, a single decision in a lower court does not establish a "tariff" for damages awards in this Court.

26 It is appropriate to note the purposes for which compensatory damages for defamation are awarded. In this case, there was no evidence of pecuniary loss and accordingly the specific purposes to be served by the award of damages were:

27 With respect to reparation for harm done to reputation, Windeyer J said in Uren v John Fairfax & Sons Pty Ltd [1966] HCA 40; (1966) 117 CLR 118 at 150:

"It seems to me that, properly speaking, a man defamed does not get compensation for his damaged reputation. He gets damages because he was injured in his reputation, that is simply because he was publicly defamed. For this reason, compensation by damages operates in two ways - as a vindication of the plaintiff to the public and as consolation to him for a wrong done. Compensation is here a solatium rather than a monetary recompense for harm measurable in money. The variety of the matters which, it has been held, may be considered in assessing damages for defamation must in many cases mean that the amount of a verdict is the product of a mixture of inextricable considerations."

28 The above proposition was approved in Carson at 61, 69 and 104. Also, with respect to reparation for harm done to reputation, Lord Hailsham's words in Broome v Cassell & Co [1972] UKHL 3; [1972] AC 1027 at 1071 should be borne in mind:

"Not merely can [the plaintiff] recover the estimated sum of his past and future losses, but, in case the libel, driven underground, emerges from its lurking place at some future date, he must be able to point to a sum awarded by a jury sufficient to convince a bystander of the baselessness of the charge."

29 The libel which the jury found the appellant published was very serious, having regard to the circumstances in which it was uttered, the relationship between the appellant and the respondent and the position held by the respondent in the Sorell Council. The respondent was the senior officer of a large corporation and the appellant was in the position of a director of that corporation. The allegation of being untruthful was made in the context of the business of the corporation and, accordingly, was the very sort of allegation that calls for a substantial sum to vindicate the respondent's good reputation. The slander that the jury found the appellant had uttered fell into the category of defamatory statements to which Lord Hailsham referred in Broome (supra). The appellant's defamatory statements were at risk of turning up at some future date in some half remembered form likely to do real harm to the respondent absent a substantial award of damages to vindicate his reputation. Further, there was material before the jury with respect to the respondent's conduct subsequent to the making of the statements, to which I have referred, which the jury were entitled to regard as aggravating the compensatory damages.

30 The sum of $15,000 is not excessive when "cross-checked" against awards made for general damages in serious personal injury cases. In all these circumstances, I am far from persuaded that the award for compensatory damages was one which the jury, viewing the whole of the evidence reasonably, could not have properly found. It is appropriate to deal with the award for exemplary damages after considering the other grounds of appeal.

"The Learned Trial Judge failed to direct or adequately direct the jury that they could award exemplary damages if and only if the sum which they had in mind to award by way of compensatory damages was inadequate to punish the appellant for his conduct as found by them."

31 It is well established that exemplary damages are awarded as punishment for "conscious wrongdoing in contumelious disregard of another's rights", per Uren v John Fairfax & Sons Pty Ltd (supra) at 138, 147, 154 and 160. In that case, Menzies J said at 143:

"... I think exemplary damages could have been awarded on the simple ground that it was open to the jury to find that the defendant recklessly and arrogantly attacked the plaintiff's reputation for the purpose of publishing a sensational story to attract the custom of newspaper readers. That conduct, if so found, was malicious, wilful and reprehensible. It was a 'contumelious disregard' of the rights of the plaintiff to his reputation."

32 See also Whitfield v De Lauret & Co Ltd [1920] HCA 75; (1920) 29 CLR 71 at 77; The Herald and Weekly Times v McGregor [1928] HCA 36; (1928) 41 CLR 254.

33 It was not submitted that the evidence in this case did not permit the making of an award of exemplary damages. However, on behalf of the appellant it was contended that the law is that exemplary damages cannot be awarded unless the jury is satisfied that the compensatory damages are insufficient to punish the appellant adequately and that the learned trial judge failed to so instruct the jury. There is no doubt that the common law is as was submitted on behalf of the appellant. Mr Holt did not submit to the contrary. Although the High Court in Uren v John Fairfax & Sons Pty Ltd (supra) declared the common law of Australia to be different from the common law of the United Kingdom as expounded in Rookes v Barnard [1964] UKHL 1; [1964] AC 1129, this difference concerns the classes of actions in which exemplary damages could be awarded. With respect to the limitation that exemplary damages are only to be awarded if the compensatory damages are not sufficient punishment, Lord Devlin said in Rookes v Barnard (supra) at 1228:

"In a case in which exemplary damages are appropriate, a jury should be directed that if, but only if, the sum which they have in mind to award as compensation (which may, of course, be a sum aggravated by the way in which the defendant has behaved to the plaintiff) is inadequate to punish him for his outrageous conduct, to mark their disapproval of such conduct and to deter him from repeating it, then it can award some larger sum."

34 That compensatory damages may include a punitive element was recognised by Lord Diplock in Broome when he said at 1126:

"My Lords, the major clarification of legal reasoning to be found in the expository part of Lord Devlin's speech in Rookes v Barnard was the recognition, first, that the award of a single sum of money as damages for tort, while it must always perform the function of giving to the plaintiff what he deserves to receive to compensate him fully for the harm done to him by the defendant, may in appropriate cases also perform the quite different function of fining the defendant what he deserves to pay by way of punishment; and secondly, that even in those appropriate cases, it is only if what the defendant deserves to pay as punishment exceeds what the plaintiff deserves to receive as compensation, that the plaintiff also can be awarded the amount of the excess. This is a windfall which he receives because the case happens to be one in which exemplary damages may be awarded."

35 The learned trial judge directed the jury with respect to the matters they could take into account in assessing damages and referred to some of the relevant evidence. He then gave directions with respect to the aggravation of compensatory damages. The learned trial judge referred to "aggravating circumstances" which, he told the jury, Mr Holt claimed entitled the respondent to "compensatory damages of a fairly high order". After reminding the jury of the matters that could aggravate the compensatory damages, his Honour said:

"Now damages fall into two categories, or the damages that you can consider in this case fall into two categories. There are what we call compensatory damages, they are damages that take into account the sort of factors that I have been mentioning, which represent the jury's assessment of what the value of the harm and potential harm done to the plaintiff should be measured at in monetary terms. In other words, there's got to be a fair but moderate, and it's got to be fair to both sides, not just one or the other, it's got to be fair when judged from either side, a fair amount to compensate for the harm done. [His Honour developed this proposition.]

But in addition to compensatory damages the law also recognises that a jury can in an appropriate case award what we call exemplary damages. Perhaps a more appropriately descriptive term might be given to this form of damages by calling them punitive damages or vindictive damages or retributory damages, they are alternative terms that are given to what we normally refer to as exemplary damages. And as all of those adjectives will no doubt convey to you, the purpose of awarding damages under this heading is to, in effect, teach the defendant a lesson and to mark the jury's disapproval of high handed conduct on the part of the defendant, if that is what the jury concludes was the situation in the case before it. Such an award might be given in an appropriate case at the discretion of the jury, and it's entirely up to you, to mark its abhorrence or condemnation of the conduct of the defendant which it regards as meriting some form of punishment. This can be given in cases where the evidence shows that the defendant has acted in a high handed, insolent, arrogant, malicious or vindictive manner and in contemptuous regard or disregard of the plaintiff's rights. It must be based on more than mere disapproval by you, the jury, of the defendant's conduct. It's not just to say 'oh, we disapprove of what you did', you would have to be persuaded that the defendant was malicious or arrogant or insolent in the way in which he published this defamation, that is that he acted quite outrageously in disregard of the plaintiff's rights. Now if you should come to the conclusion that the defendant in this case has acted in that way you could then make an award of exemplary damages, punitive damages."

36 The learned trial judge then instructed the jury that on a consideration of exemplary damages, it was relevant to take into account the appellant's financial means. In the course of giving that direction, he made it abundantly clear to the jury that exemplary damages were quite different from compensatory damages. This difference was underscored by the questions that the jury were asked to answer. As typed and handed to the jury, there was a single question on the issue of damages. However, in the course of his oral directions, the learned trial judge asked the jury to divide their assessment of damages into compensatory damages and exemplary damages. To this end, he asked the jury to handwrite on their copies of the questions the amount awarded for "(a) compensatory damages; and (b) exemplary damages". With respect to this, his Honour said:

"In other words I am asking you to assess them both separately and to show, when you come back into court, what each of those amounts might be, separately. So don't just state it as one overall amount, subdivide it up. You may, of course, not award anything for exemplary damages, it's a matter for you, but if you do award exemplary damages you should specify the two amounts separately, thank you."

37 The learned trial judge's directions to the jury made it abundantly clear to the jury that:

* compensatory damages and exemplary damages were quite distinct;

* they could decide not to award anything for exemplary damages, even though satisfied that the appellant defamed the respondent;

* exemplary damages were additional to compensatory damages;

38 Although the learned trial judge did not expressly state that exemplary damages were only to be awarded if the jury were not satisfied that the compensatory damages were sufficient punishment, the jury could not have been left in any doubt that that was the effect of the directions that they were given. The majority in Broome took the same view of the summing up in that case which did not include a direction that exemplary damages were only to be awarded if the compensatory damages were insufficient punishment. That direction did stress that exemplary damages were optional and additional to compensatory damages as did the direction in this case, see Broome at 1062, 1089, 1096 and 1134.

39 In the light of the directions given, the jury could have been left in no doubt that their task was first to assess the compensatory damages and then consider whether, in addition, they should go on and make some award, taking into account the appellant's financial circumstances, to punish him. It seems to me that in so doing, the jury could not have done anything other than be satisfied that the compensatory damages were not sufficient punishment for the wrong that the respondent had suffered by the appellant's tort. In my view, ground 2 is not established.

Ground 3 - a direction to the jury to show restraint?

"That the Learned Trial Judge failed to direct or adequately direct the jury that they ought to display restraint, moderation or the like when awarding exemplary damages."

41 In Rookes v Barnard (supra), Lord Devlin referred at 1227, to three considerations which he said should be borne in mind when assessing awards of exemplary damages. He said those principles were:

* a need to show that the plaintiff was a victim of punishable behaviour;

* a need for the assessment to be considered with restraint;

* the means of the defendant are relevant to the assessment.

42 Lord Devlin's three considerations were adopted by Lord Hailsham in Broome at 1081 and became part of the common law of Australia by virtue of the judgment of Gibbs CJ in XL Petroleum (NSW) Proprietary Limited v Caltex Oil (Australia) Proprietary Limited (1984 - [1985] HCA 12; 1985) 155 CLR 448. His Honour said at 463:

"I nevertheless consider that in that case [Rookes] Lord Devlin was correct in pointing to the risk that exemplary damages might amount to a punishment greater than would be likely to be imposed if the conduct were criminal, and in suggesting that in making an award juries should display restraint"

43 This question was considered by the New Zealand Court of Appeal in Television New Zealand Ltd v Quinn [1996] 3 NZLR 24. In that case, although Lord Cooke, at 35, eschewed the use of the word "moderate" for fear of it being misconstrued, he said that, "the jury should be warned that in adding any punitive element within an award they should not be carried away." McGechan J, at 70, agreed that it was necessary to direct the jury in some terms to exercise moderation or restraint. In his opinion, although no specific direction to that effect was given, overall, the direction clearly instructed the jury to exercise moderation. He said at 70, "the summing up is replete with directions to be 'fair'."

44 In Backwell v AAA (1997) 1 VR 182, Ormiston J considered, at 205 - 206, the need for a direction to a jury to display restraint, moderation or the like when assessing exemplary damages. His Honour referred to XL Petroleum and concluded that such a direction was necessary. He held, at 205, that directions to be "reasonable and just" were not the same as counselling restraint and moderation. He said at 205:

"It should be remembered that this parasitic form of damages involves the infliction of a punishment which has no necessary reference to the loss suffered by the plaintiff and so in imposing a punishment by way of exemplary damages juries are asked to take on a role which they ordinarily do not have in relation to punishment, namely the fixing of an appropriate penalty."

45 In his directions to the jury on the issue of compensatory damages, the learned trial judge gave the jury the standard direction that an award had to be moderate and fair and just between the parties. I have already set this out. No complaint is made about this aspect of his Honour's summing up. On the issue of exemplary damages, the learned trial judge directed the jury (inter alia) that they could take into account the appellant's means, pointed out that that was not the determinative factor, but gave no direction that there was any need to exercise restraint. Further, no direction was given to the effect that any exemplary damages had to be assessed with fairness and moderation. The omission was, in my view, a misdirection to the jury. The effect of the omission was exacerbated by the fact that the direction for fairness and moderation as between the parties when assessing compensatory damages, was given just a few moments before the directions were given with respect to the assessment of exemplary damages. In this circumstance, the failure to direct restraint, fairness and moderation when assessing exemplary damages may have led the jury to conclude that those matters only applied to the assessment of compensatory damages. In my opinion, ground 3 is made out.

"That the Learned Trial Judge failed to direct or adequate direct the jury that mere or even vigorous persistence in a bona fide defence cannot go in aggravation of an award of compensatory damages."

46 The manner in which litigation is conducted is relevant to the assessment of damages, for it may increase the hurt that a plaintiff has suffered. See Praed v Graham (supra) at 55; Pearce v Hailstone (1992) 58 SASR 240 at 267. However, the jury cannot take into account as a circumstance of aggravation or as relevant to the assessment of exemplary damages, the justifiable or proper conduct of a defence. The majority expressed the proposition this way in Triggell v Pheeney (supra) at 514:

"It is no doubt true that the jury cannot take into consideration as a ground for giving or increasing damages, whether exemplary or compensatory, conduct of the defendant which was not merely bona fide but was justifiable or proper. A bona-fide defence raised properly or justifiably in the circumstances known to the defendant and evidence honestly given in support of such a defence doubtless cannot be used for such a purpose. But the decision of the majority in Herald and Weekly Times Ltd v McGregor [1928] HCA 36; (1928) 41 CLR 254 must mean that the conduct of the defence may be taken into consideration not only as evidencing malice at the time of publication or afterwards, as, for instance, in filing a plea, but also as improperly aggravating the injury done to the plaintiff, if there is a lack of bona fides in the defendant's conduct or it is improper or unjustifiable."

47 The mere fact that a defence failed is not conclusive that its maintenance was not justifiable. See Rigby v Associated Newspapers Ltd (1969) 1 NSWLR 727 at 740. In Coyne v Citizen Finance Limited [1991] HCA 10; (1991) 172 CLR 211, Toohey J said at 237:

"It is not the case that every unsuccessful defendant must face the prospect of damages being increased, simply because the defendant has elected to defend the action. It is for the jury, properly directed in the circumstances of the case, to determine whether the defendant's conduct lacks bona fides, or is improper or unjustifiable, in the sense referred to in Triggell v Pheeney."

48 There is an obligation on a trial judge to give a jury directions with respect to this matter. In Steele v Mirror Newspapers Ltd (1974) 2 NSWLR 348, Samuels JA said, with respect to this obligation, at 380:

"Certainly, it was ultimately for the jury to determine whether the way in which the defendant had conducted the trial was such as to attract an award of aggravated damages. But they could not effectively undertake this task without proper guidance as to the criteria which they were required to apply. The summing up gave them no guidance, because it entirely failed to indicate what were the limits of the 'forceful advocacy' which it was counsel's duty to display. Accordingly, it was left to the jury to formulate and apply whatever standards they deemed appropriate ; and in a matter which might very well have played a most significant part in producing this very large verdict."

See also Rigby v Associated Newspapers Ltd (supra) at 740; Carson v John Fairfax & Sons Ltd (supra) at 65.

49 With respect to this obligation, the learned trial judge said:

"Well, of course, a defendant is entitled to defend an action against him claiming damages. ... He's entitled to defend it on a reasonable basis and his counsel is entitled to act, if necessary, vigorously to uphold his client's rights. But, of course, a point can be reached where vigour in cross-examination becomes an overbearing cross-examination or it becomes an unreasonable cross-examination if it appears to be designed to simply repeat defamatory propositions about the plaintiff. Well it would no doubt be for you to judge that. I am not saying simply because the defence might fail that that is a basis for increasing the damages but if you were to form the conclusion on the basis of what you have heard in this court that the defence really never had any merit and it was just a transparent opportunity for the defendant to repeat his calumnies in respect of the plaintiff, well you could measure that in your damages assessment."

50 In the circumstances of this case, the above direction was sufficient. As left to the jury (not as pleaded) the appellant's case was:

* if they were said and were defamatory, they were spoken on an occasion when the respondent was not likely to be injured; and

* the words were true and the publication was for the public benefit.

51 Thus, the issues in this case were perfectly straightforward. No niceties of fair comment or malice arose for consideration. Once the members of the jury were satisfied that the words were said and were defamatory, their conclusion that they were not true led almost inescapably to the conclusion that the conduct of the defence was neither justifiable nor proper. Ground 4 is not established.

52 The Supreme Court Civil Procedure Act, s50(1)(a) provides:

"50 - (1) Notwithstanding anything in this Part contained a new trial shall not be ordered -

(a) on the ground that the trial ... judge failed to direct the jury on any question or matter which he was not asked to direct them on ... unless in the opinion of the Full Court some substantial wrong or miscarriage has been thereby occasioned; ..."

53 It was common ground that no direction was sought that upon the assessment of exemplary damages, the jury must display restraint, moderation or the like. Mr Holt, for the respondent, submitted that upon appellate review, the amount awarded for exemplary damages was not manifestly excessive and, accordingly, the appellant was unable to show that some substantial wrong or miscarriage had been occasioned by the omitted direction. However, this is not the correct approach to the Supreme Court Civil Procedure Act, s50(1)(a). In Balenzuela v De Gail & Anor (1959 - [1959] HCA 1; 1960) 101 CLR 226, the court was concerned to examine the common law position with respect to miscarriages of justice and compared it to the then English rule, O58, r10(2). This rule is in identical terms to the Supreme Court Civil Procedure Act, s50(1)(a). Dixon J (as he then was) said, at 236, that where the error was of law, it was not for the court "to proceed to inquire into the facts of the case and form a conclusion as to what the jury would or should have done had the trial proceeded entirely in conformity with law and without any misdirection ...". After examining the position at common law and finding no difference between it and the English rule, his Honour said, at 236:

"... it is enough if it appears to the court deciding an application for a new trial that an error of law has been made at the trial which may operate to do any of the following three things - (a) improperly to limit or enlarge the evidentiary materials by which it is not an unreasonable hypothesis to suppose the judgment of the jury might be affected, even if illogically; or (b) in the case of misdirection touching standards or criteria of liability, wrongly to expose the party to a hazard that is appreciable and not illusory of a verdict for or against him that otherwise might not have been found; or (c) in matters of burden of proof, of the legal need of corroboration or of other like incidents of the jury's consideration of the case, to provide an erroneous guidance which it is not unreasonable to regard as capable of contributing to the result. These categories are probably not exhaustive but it is enough if a case falls within one of them; if it does it is necessary to treat it as involving a substantial wrong or miscarriage."

54 The misdirection, or omitted direction, identified by ground 3, fell into one or more of the categories identified by Dixon J. The appellant is entitled to a new trial or a reassessment of damages by this Court because the jury deliberated on the verdict under a misapprehension. See Holford v Melbourne Tramway and Omnibus Co Ltd [1909] VicLawRp 89; [1909] VLR 497 at 526. The failure to direct the jury upon the assessment of exemplary damages to display restraint, moderation or the like, affected the standards or criteria by which those damages had to be assessed, thus exposing the appellant to the hazard that the award for exemplary damages was thereby enlarged. Accordingly, I would allow the appeal.

55 I would quash the award of damages, or at least so much of the award as relates to exemplary damages, but before determining the precise form of that order and before determining any consequential order, I would hear counsel further.

56 I agree with the judgment of Underwood J and what he proposes.

57 I have had the advantage of reading, in draft form, the reasons for judgment of Underwood J and agree with his reasoning and conclusions in relation to grounds 1, 2 and 4 of the appeal.

"That the learned trial Judge erred in failing to direct or adequately direct the jury that they ought display restraint, moderation or the like when awarding exemplary damages."

59 The jury assessed compensatory damages in the sum of $15,000 and $25,000 for exemplary damages. There was evidence that the respondent had not been adversely affected, in a financial sense, by the statements found by the jury to have been made by the appellant. He retained his position as general manager of the Sorell Council, and it would appear from the evidence that little credence had been given by the members of the Council, its employees or the community at large, to those statements. The award of exemplary damages clearly shows that the jury intended to make an award in an amount which reflected condemnation of the conduct of the appellant as a holder of public office and his treatment of an employee of a statutory corporation.

60 In his directions to the jury, the learned trial judge dealt with the question of compensatory damages and how "aggravating circumstances" might impact on their assessment. In their consideration of any assessment of harm in monetary terms, the jury were directed that such assessment should be fair and moderate:

"In other words, there's got to be a fair but moderate, and it's got to be fair to both sides, not just one or the other, it's got to be fair when judged from either side, a fair amount to compensate for the harm done."

The learned trial judge then directed the jury in relation to the assessment of exemplary damages in the following terms:

"But in addition to compensatory damages the law also recognises that a jury can in an appropriate case award what we call exemplary damages. Perhaps a more appropriately descriptive term might be given to this form of damages by calling them punitive damages or vindictive damages or retributory damages, they are alternative terms that are given to what we normally refer to as exemplary damages. And as all of those adjectives will no doubt convey to you, the purpose of awarding damages under this heading is to, in effect, teach the defendant a lesson and to mark the jury's disapproval of high handed conduct on the part of the defendant, if that is what the jury concludes was the situation in the case before it. Such an award might be given in an appropriate case at the discretion of the jury, and it's entirely up to you, to mark its abhorrence or condemnation of the conduct of the defendant which it regards as meriting some form of punishment. This can be given in cases where the evidence shows that the defendant has acted in a high handed, insolent, arrogant, malicious or vindictive manner and in contemptuous regard or disregard of the plaintiff's rights. It must be based on more than mere disapproval by you, the jury, of the defendant's conduct. It's not just to say 'oh, we disapprove of what you did', you would have to be persuaded that the defendant was malicious or arrogant or insolent in the way in which he published this defamation, that is that he acted quite outrageously in disregard of the plaintiff's rights. Now if you should come to the conclusion that the defendant in this case has acted in that way you could then make an award of exemplary damages, punitive damages."

He later told them that the financial means of the appellant were relevant to their consideration of this head of damage; and in dealing with the specific questions to be answered by the jury, added:

61 It is common ground that the jury were not specifically directed that they ought display moderation in their award of exemplary damages although they were given such a direction in general terms. The relevant test of moderation is that as stated by Lord Devlin in Rookes v Barnard and Others [1964] UKHL 1; [1964] AC 1129, when he said at 1227 - 1228:

"To these two categories which are established as part of the common law there must of course be added any category in which exemplary damages are expressly authorised by statute.

I wish now to express three considerations which I think should always be borne in mind when awards of exemplary damages are being considered. First, the plaintiff cannot recover exemplary damages unless he is the victim of the punishable behaviour. The anomaly inherent in exemplary damages would become an absurdity if a plaintiff totally unaffected by some oppressive conduct which the jury wished to punish obtained a windfall in consequence.

Secondly, the power to award exemplary damages constitutes a weapon that, while it can be used in defence of liberty, as in the Wilkes case, can also be used against liberty. Some of the awards that juries have made in the past seem to me to amount to a greater punishment than would be likely to be incurred if the conduct were criminal; and, moreover, a punishment imposed without the safeguard which the criminal law gives to an offender. I should not allow the respect which is traditionally paid to an assessment of damages by a jury to prevent me from seeing that the weapon is used with restraint. It may even be that the House may find it necessary to follow the precedent it set for itself in Benham v Gambling, and place some arbitrary limit on awards of damages that are made by way of punishment. Exhortations to be moderate may not be enough.

Thirdly, the means of the parties, irrelevant in the assessment of compensation, are material in the assessment of exemplary damages. Everything which aggravates or mitigates the defendant's conduct is relevant.

Thus a case for exemplary damages must be presented quite differently from one for compensatory damages; and the judge should not allow it to be left to the jury unless he is satisfied that it can be brought within the categories I have specified. But the fact that the two sorts of damage differ essentially does not necessarily mean that there should be two awards. In a case in which exemplary damages are appropriate, a jury should be directed that if, but only if, the sum which they have in mind to award as compensation (which may, of course, be a sum aggravated by the way in which the defendant has behaved to the plaintiff) is inadequate to punish him for his outrageous conduct, to mark their disapproval of such conduct and to deter him from repeating it, then it can award some larger sum."

62 The question of restraint requires consideration of the means of the defendant so that it is proportionate to and reflects the effect of punishment on that person or corporation. As Brennan J observed in XL Petroleum (NSW) Proprietary Limited v Caltex Oil (Australia) Proprietary Limited (1984 - [1985] HCA 12; 1985) 155 CLR 448 at 471 - 472:

"As an award of exemplary damages is intended to punish the defendant for conduct showing a conscious and contumelious disregard for the plaintiff's rights and to deter him from committing like conduct again, the considerations that enter into the assessment of exemplary damages are quite different from the considerations that govern the assessment of compensatory damages. There is no necessary proportionality between the assessment of the two categories. In Merest v Harvey substantial exemplary damages were awarded for a trespass of a high-handed kind which occasioned minimal damage, Gibbs CJ saying:

'I wish to know, in a case where a man disregards every principle which actuates the conduct of gentlemen, what is to restrain him except large damages?'

The social purpose to be served by an award of exemplary damages is, as Lord Diplock said in Broom v Cassell & Co, 'to teach a wrong-doer that tort does not pay'. The purpose of restraint looms large in the present case. The jury were entitled to take into account that Caltex and XL were competitors in an industry in which, notoriously, competition for markets and for outlet sites has been intense. The jury were therefore entitled to form the view that a risk of repetition of Caltex' conduct in spiking a competitor's tanks was quite unacceptable, for the intensity of commercial competition might lead to violence and counter-violence among competitors if legal process proved inadequate to suppress the use of force. And if the jury formed the view that it was desirable to ensure that Caltex did not again spike the tanks of a competitor, the jury were entitled to assess exemplary damages in an amount that would be likely to have a deterrent effect -- sufficient to make Caltex smart ... Where exemplary damages may properly be awarded to deter a tortfeasor, evidence of his means is material not only to show that he can afford to satisfy a substantial judgment or to show that he has acted on contumelious disregard of the plaintiff's rights by taking advantage of his wealth, but to show what sum will be a sufficient deterrent against repetition of the conduct that attracts the award. No doubt the width of the jury's discretion in assessing exemplary damages has evoked judicial expressions of concern about employing the civil law to inflict punishment. But it is now beyond argument that, by the law of this country, it is proper to award exemplary damages by way of punishment of the tortfeasor: ..."

Likewise, Gibbs CJ approved of a portion of the English decision when he said at 463:

" ... I nevertheless consider that in that case Lord Devlin was correct in pointing to the risk that exemplary damages might amount to a punishment greater than would be likely to be imposed if the conduct were criminal, and in suggesting that in making an award juries should display restraint."

63 No request was made by counsel for the appellant for any further direction. The jury were directed that the purpose of an award of exemplary damages was a form of punishment, that it should only be awarded if the compensatory damages were insufficient to achieve that purpose, that it must reflect the conduct of the party and must be assessed by reference to the means of the appellant. The appellant is unable to show that this was a case where no award for exemplary damages ought be permitted (Australian Consolidated Press Ltd v Uren (1967 - [1966] HCA 37; 1968) 117 CLR 185) and the failure to request a more refined direction raises the question of the effect of the Supreme Court Civil Procedure Act, s50(1)(a), which states:

"50 -- (1) Notwithstanding anything in this Part contained a new trial shall not be ordered --

(a) on the ground that the trial judge ... failed to direct the jury on any question or matter which he was not asked to direct them on, ... unless in the opinion of the Full Court some substantial wrong or miscarriage has been thereby occasioned; ..."

Whilst, where there is an error of law, an appellate court is not entitled "to proceed to enquire into the facts of the case, and form a conclusion as to what the jury would or should have done had the trial proceeded entirely in conformity with law and without any misdirection" (Balenzuela v De Gail and Another (1959 - 1960) 110 CLR 226, Dixon J at 236). It does not follow that the omission of specific words warrants the conclusion that there has been a miscarriage. As Dixon J concluded in Balenzuela (supra) an error of law is one which exists where there has been:

* a misdirection as to a standard or criteria of liability;

* error in matters of burden of proof or corroboration.

The requirement of a direction as to moderation ought be seen as one directed to the proportionality of the punishment to the means of the party. Viewed in this context, moderation is not an absolute term but is relative to the means or financial status of the tortfeasor. The award of damages in XL Petroleum of $400,000 reflected a punishment apposite to the resources of a large corporation. In this case, the jury was directed that the means of the appellant were relevant to the assessment. A statement of the third consideration advocated by Lord Devlin in Rookes v Barnard (supra) at 1228 (not rejected by the High Court in Uren v John Fairfax & Sons Pty Ltd (1965 - [1966] HCA 40; 1966) 117 CLR 118) that:

" ... the means of the parties, irrelevant in the assessment of compensation, are material in the assessment of exemplary damages. Everything which aggravates or mitigates the defendant's conduct is relevant."

is further confirmation of the principle of moderation. If such be a correct approach, then the failure to use the term "moderation" in the direction does not necessarily constitute a miscarriage. In the words of Lord Devlin in Rookes v Barnard (supra) at 1228, the approach of an appellate court ought be that:

"If a verdict given on such direction has to be reviewed upon appeal, the appellate court will first consider whether the award can be justified as compensation and if it can, there is nothing further to be said. If it cannot, the court must consider whether or not the punishment is, in all the circumstances, excessive."

If it is not so satisfied, then it is difficult to conclude that there has been a miscarriage. The provisions of the Supreme Court Civil Procedure Act, s50(1)(a), are similar to those of the Rules of the Supreme Court of Victoria, O LVIII, r6, which were considered by the High Court in General Motors-Holden's Proprietary Limited v Moularas [1964] HCA 39; (1964) 111 CLR 234. In considering the import of the Victorian rule, Barwick CJ stated at 242:

"The Supreme Court in exercising its jurisdiction to grant a new trial is supervising its own procedures to ensure that no miscarriage of justice has occurred. In this it has of necessity a wide discretion which ought not to be reduced by any universal formulation of the occasions for its exercise. No rule has been made in Victoria requiring that, without the leave of the Court, new trials will not be granted for misdirection or non-direction where the point of criticism of the summing up has not been taken at the trial in such manner that the trial judge has an opportunity to remove the criticism by redirecting the jury before they consider their verdict. But the common law on this matter is quite clear. Without attempting an exhaustive statement, it is established that, generally speaking, a criticism of the summing up which is capable of being cured at the trial must be taken at the trial and the judge asked to correct it. If this is not done in a case where it ought to be done, a new trial on the basis of that criticism of the summing up will, in general, not be ordered. Again, the matter is not the subject of any hard and fast rule, because the court retains a general discretion and is able in a proper case in the interests of justice to relax the requirement.

But there are, in my opinion, no features in this case for not insisting on applying the general rule and refusing a new trial because no exception was taken to the summing up except as to one limited point and as to that point the judge was not asked to correct his summing up."

"It may be that some cases may arise where the interests of justice may require that there should be a new trial in such circumstances but in my view they would have to be of a very special character and that is not the case here. I observe in passing that in Balenzuela v De Gail [1959] HCA 1; (1959) 101 CLR 226 and Bray v Ford (1896) AC 44, which were relied upon by the appellant, new trials were sought upon points which had been taken at the trial ..."

64 The commencing point is whether there has been some "substantial wrong or miscarriage". In Backwell v AAA [1997] 1 VR 182, the Court of Appeal of the Supreme Court of Victoria held there to have been misdirection by failure to warn the jury to display restraint and moderation in the awarding of exemplary damages. In that case, an award of $125,000 in exemplary damages had been made against a medical practitioner who had failed to adequately advise and counsel a patient in relation to an abortion required by reason of mistaken immunisation. The jury had been advised to be "reasonable and just" in assessing exemplary damages and to be "careful to see that the punishment [was] neither too great nor too little for the conduct which [was] deserving of punishment." The jury had not been directed to show moderation, "nor were they directed that they should award exemplary damages only if they thought the compensatory damages they were to award were inadequate to punish the doctor." Some eleven grounds of appeal were argued, all of which related directly or indirectly to the question of exemplary damages. As Ormiston J found at 200 - 201:

"Before his Honour had completed his charge counsel for the appellant complained that the charge contained no reference to the necessity for the jury to exercise restraint but, although it appears that his Honour accepted that proposition in general terms, he did not redirect the jury on this subject when he resumed his charge. He also refused to redirect the jury to the effect that exemplary damages were only available to the extent that compensatory damages were an inadequate punishment. His Honour then concluded his charge by referring to the submissions made on behalf of the respondent, including a reference to the claim for exemplary damages in which it had been argued that counselling had not been offered on 12 May or indeed thereafter. Again the jury were not told that it was not open to them to bring in an award of exemplary damages based on the failure to offer counselling or to provide other advice."

In dealing with the ground specific to the question of restraint, his Honour stated at 205 - 206:

"Counsel for the respondent argued that advising the jury to be 'reasonable and just' is the same as counselling restraint and moderation. I cannot agree. It might be asked why in relation to exemplary damages it is necessary to emphasise the risks of an excessive award, but not to emphasise the risks of an award which is ungenerous or 'niggardly' (as it is customarily described). Nevertheless, howsoever necessary it is to counsel a balanced award in relation to general or other damages, the object of Gibbs CJ and Lords Devlin and Hailsham was to point to a particular risk in relation to punitive damages and that risk can best be overcome by the trial judge instructing the jury that they should display restraint or moderation. It should be remembered that this parasitic form of damages involves the infliction of a punishment which has no necessary reference to the loss suffered by the plaintiff and so in imposing a punishment by way of exemplary damages juries are asked to take on a role which they ordinarily do not have in relation to punishment, namely the fixing of an appropriate penalty. The warning is perhaps even more important in an era when reports, either factual or fictional, of excessive awards of exemplary damages in the United States are reported in the papers and on the television. In these circumstances it seems appropriate that the jury should be warned about the dangers of excessive awards: ..."

However, in his Honour's view the actual award in itself did not necessarily manifest error. In relation to the submission that the verdict itself indicated that moderation had been exercised by the jury, he observed at 206:

"There can be no doubt that the total verdict was a very high award in all the circumstances and it is not possible to conclude that the omission in the charge to counsel moderation had not led the jury to take a too generous approach to the issue."

Central to the eventual decision reached by Ormiston J was the refusal by the trial judge to direct the jury in relation to the interrelationship between exemplary and compensatory damages; the matter which led him to his conclusion at 210 that:

"In the present case it is hard to see that the amount of damages sought by the respondent by way of compensation and which in fact was awarded could be seen as having imposed any significant form of punishment or provided any significant deterrence against the future behaviour of the kind complained of, but that does not mean it should not have been taken into account. In my opinion what it is important to emphasise is that, although separate awards may well be customary and desirable, a jury or judge must look at the total amount awarded in damages at the end of their deliberations and satisfy themselves that the total verdict is appropriate, as indeed juries are customarily told to do. So, even though the amount of compensatory damages could not be characterised as sufficient to reflect the jury's condemnation of the appellant's behaviour, it still remained appropriate for the jury to be told that they should look at the total of both sums awarded together in order to see whether, having regard to each of the elements contained in them, they reflected appropriate punishment for the appellant's contumelious or wanton disregard of the respondent's rights. In each case the manner in which the charge should be tailored will, no doubt, reflect the need for the jury to consider partly the amount of ordinary compensatory damages being sought, partly the character and means of the defendant and partly how far they think it appropriate to punish the defendant in order to deter like behaviour in the future. In the present case there was no discussion of the effect of the award in compensatory damages and its relationship to any award of exemplary damages, and to that extent the learned judge erred in his charge."

In his reassessment of damages, Orimiston J allowed the sum of $60,000 as exemplary damages. In the same case, Tadgell J would have ordered a new trial on the basis of two misdirections, stating at 184:

"I have had the benefit of studying the reasons for judgment prepared by Ormiston JA. I agree with him, for the reasons he assigns, that the evidence of the events of 12 May 1983 does not sustain an assessment of exemplary damages in favour of the respondent against the appellant. The jury were instructed otherwise and, since it cannot be concluded that they did not act on the instruction, their award of exemplary damages cannot be allowed to stand. Assuming for the moment that the evidence of the events of 31 May 1983 could sustain an award of exemplary damages, I agree also that it was a misdirection not to instruct the jury to take into account in determining whether any and if so what exemplary damages should be awarded, any punitive effect of the award of compensatory damages."

65 In Backwell, the court was not required to consider the issues raised by the Victorian equivalent to the Civil Procedure Act (SA), s50, since the trial judge had been specifically requested to give the direction. Further, the central error found was the failure to direct in regard to the relationship between compensatory and exemplary damages. The proportion of exemplary to compensatory damages was greater to that awarded in this case, and little actual loss was suffered by the respondent as a result of the defamation. The ratio in Backwell itself does not indicate that the jury had failed to show moderation. In the circumstances of this case, it was open for counsel for the appellant to seek a further direction. As the court (Pincus JA, Davis JA and Mackenzie J) stated in Timms v Clift [1997] QCA 61; [1998] 2 Qd R 100 at 103:

"The appellant complains that the trial judge's directions were, in a number of respects, deficient. Experience suggests that defamation trials in this State, particularly trials by jury, commonly result in appeals and, not uncommonly, new trials. The law of defamation tends to be afflicted by uncertain points of substantive law and of procedure ... McHugh JA, in Singleton v Ffrench (1986) 5 NSWLR 425 at 440, said that:

'If a party is to rely as a ground of appeal on a misdirection in a summing up, his counsel must specify at the trial that portion of the summing-up which he requires to be withdrawn. If any further direction is needed, counsel must specify with precision what direction the trial judge should give.'

This cannot be intended to prescribe that if a redirection is not sought, an appeal on that ground necessarily fails; there is no 'rigid principle of law or practice' precluding the making of an order for a new trial in such cases: ..."

66 In this case, I am not persuaded that the award of damages as assessed by the jury shows a "substantial wrong or miscarriage". It was open for the jury to conclude that the appellant's conduct warranted condemnation and the evidence is consistent with the finding. The award is not manifestly so generous or disproportionate that no sensible jury could have made it. It does not appear that the jury failed to perform their duty (Coyne v Citizen Finance Limited (1990 - [1991] HCA 10; 1991) 172 CLR 211).

67 In my opinion, ground 2A has not been made out and the appeal ought be dismissed.

68 Given that the majority have reached a different conclusion in relation to ground 2A and would allow the appeal, I would join with them in the making of the orders which they propose.

Avram, John v Inches, Brian Maxwell [1999] TASSC 10

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Judgment (188 paragraphs)

Avram, John v Inches, Brian Maxwell [1999] TASSC 10 (17 February 1999)

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Cases Cited (14)