Balog and Stait v ICAC

LOWER COURT District Court JURISDICTION : LOWER COURT DC 4496/01 FILE NUMBER(S) : LOWER COURT Gibson DCJ JUDICIAL OFFICER :

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 41206/02 CA 40290/03

BEAZLEY JA SANTOW JA STEIN AJA

The appellant, a councillor on the Warringah Council for over 20 years and the outgoing Mayor, claimed he had been defamed by the respondent, a newly elected councillor, on three separate occasions in November 1999.

Following a trial under s.7A of the Defamation Act (1974) (NSW) , the trial judge upheld a defence under s.13 of the Act that the circumstances of the publication were such that the appellant was not likely to suffer harm. The trial judge provisionally assessed damages in a total amount of $5,000. Leave to appeal was granted. HELD per Beazley JA (Santow JA and Stein AJA agreeing):

(i) The correct test to be applied for the purposes of s.13 of the Defamation Act is whether, in the circumstances of the publication, the plaintiff was not likely to suffer harm: Morosi v Mirror Newspapers [1977] 2 NSWLR 749 , Chappell v Mirror Newspapers (1984) Aust Torts Reports 80-691 .

(ii) Section 13 is not concerned with whether harm was in fact occasioned, as found by the trial judge.

(iii) Although the trial judge considered that she had found that the defence had been made out on both the correct test and the test of harm suffered, her judgment focused upon considerations relevant to the incorrect test of harm suffered.

(iv) There is no inconsistency between the test stated in Morosi and Chappell and in King and Mergen Holdings Pty Limitd v McKenzie (1991) 24 NSWLR 305 .

(v) Alternatively, any misstatement should be ignored. (vi) The reputation of the plaintiff may be relevant to the s.13 defence depending upon who the recipients are of the defamatory publication and the circumstances in which it was made. It is arguable that knowledge of the reputation of the plaintiff is a special characteristic of the recipient and, for this reason, may be caught up in the circumstances of the publication: Chappell v Mirror Newspapers (1984) Aust Torts Reports 80-691 ; Perkins v New South Wales Aboriginal Land Council (unreported, NSWSC, 15 August 1997) . (vii) The respondent bore the legal and evidentiary burden of establishing the defence under s.13.

(viii) The phrase "not likely to cause harm" in s.13 refers to "the absence of a real chance" or "the absence of real possibility of harm" : Tillmanns Butcheries Pty Limited v AMIEU (1979) 42 FLR 331 .

(ix) In relation to the "grapevine effect", what is relevant for the purposes of s.13 is whether there is a chance of republication in circumstances where there is a likelihood of harm. (x) Harm can occur even where a person holds final judgment in suspense: Dingle v Associated Newspaper Limited [1961] 2 QB 162 . Hence, when considering the question of potentiality of harm under s.13, the fact that the recipient did not, at that time, form a final judgment, may not of itself establish the defence.

(xi) The content of the matter complained of is relevant for the purposes of s.13: Morosi v Mirror Newspapers [1977] 2 NSWLR 749 . The defence is less likely to be made out where the content of the imputation is serious but it is not confined to trivial content.

Appeal allowed. 2. Set aside the verdict and orders made by the trial judge 3. Judgment for the appellant in the sum of $1,000.00 in relation to the cause of action arising out of the Dubbo bus publication 4. Judgment for the appellant in the sum of $1,000.00 in relation to the cause of action arising out of the Dubbo bus republication. 5. Judgment for the appellant in the sum of $3,000.00 in relation to the cause of action arising out Councillor's lounge publication. 6. Verdicts for the appellant accordingly. 7. Order the respondent to pay the costs at first instance and of the appeal. 8. The respondent is to have a certificate under the Suitor's Fund Act 1951 (NSW) if so entitled.

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 41206/02 CA 40290/03

BEAZLEY JA SANTOW JA STEIN AJA

26 November 2004 JONES v. SUTTON Judgment 1 BEAZLEY JA: The appellant, a councillor on the Warringah Council for over 20 years and the outgoing Mayor, claimed he had been defamed by the respondent, a newly elected councillor, on three separate occasions in November 1999. Subsequent to the alleged defamations, the appellant was elected Deputy Mayor in 2000 and Mayor in 2001. 2 The first occasion of alleged defamation was on 7 November 1999. The parties were in Dubbo attending the Annual Local Government Association meeting. Whilst travelling on a bus with other councillors, the respondent spoke to Councillor Dee of Manly Council in the following terms: "Respondent: Do you know Darren Jones? I hope you're not a friend of his.

Councillor Dee: I've never met him. Respondent: That's good, I can talk to you. He's up to no good. He bought a Council property in somebody else's name but I know that he bought it. He is not a very nice type."

This conversation was referred to in the proceedings as the "Dubbo bus publication". 3 That evening, Councillor Dee was at a dinner with other local government representatives and was seated next to the appellant. He said to the appellant, in the hearing of another guest, Councillor Page, also of Manly Council: "Councillor Dee: Ruth Sutton doesn't have a high regard for you.

Councillor Dee: She asked me if I was a friend of yours. She said you were up to no good, that you'd purchased a Council building in someone else's name but that she knew you had bought it. She said you were not a very nice type."

This was referred to in the proceedings as the "Dubbo republication" and was pleaded as a republication to Councillor Page. 4 The third alleged defamation occurred just over a week later, when the respondent, together with a number of other councillors, had gathered for a drink in a lounge at the Council Chambers after a Council meeting. Those present included Peter Moxham and David Stephens, both councillors, and the Council's General Manager, Dennis Smith. During the course of a discussion amongst the group, the following conversation occurred: "General Manager: We did works at Narrabeen beach in 1998 following the severe storms. We had to place rocks on the beach to protect properties. Those works were essential.

Respondent: The worst thing about this matter was that the rocks dumped on the beach were dumped from trucks owned by Darren Jones.

General Manager: I did not know Councillor Jones owned trucks other than a small one tonner and the rocks dumped on the beach were five tonnes and above.

Councillor Moxham: I would be surprised if Councillor Jones owned trucks of this size [Councillor Stephens also questioned the statement made by the defendant]

Councillor Moxham: Even we do not have large trucks. General Manager: We often hire trucks. I have no knowledge of Council ever giving any contract to Councillor Jones or the Jones family for the hiring of trucks.

Respondent: Councillor Jones does have trucks and his trucks were used to dump rocks at Narrabeen."

This was referred to as the "Councillors' lounge publication". 5 The appellant brought proceedings against the respondent in the District Court, claiming that he had been defamed in each of the publications. The respondent defended the proceedings on the basis that the circumstances of the publications were such that the appellant was not likely to suffer harm: Defamation Act 1974 (NSW), s.13.

6 A trial under s.7A of the Defamation Act was held before a jury of 4, presided over by Gibson DCJ. Pursuant to s.7A(1) the jury's task was to determine whether the matters complained of carried the imputations alleged and if so whether the found imputations were defamatory. The jury found that two imputations had been conveyed by the publications, namely: (i) That the appellant had knowingly involved himself in a questionable property dealing; and

(ii) That the appellant deserved condemnation because of his conduct in relation to the provision of trucks owned by him to be used by the Warringah Council. 7 The jury also found that the imputations were defamatory of the appellant. The jury further found that the Dubbo republication to Councillor Page was a natural and probable consequence of the Dubbo bus publication. 8 In accordance with the provisions of s.7A(4) of the Defamation Act, the defence under s.13 and the question of damages was then heard by Gibson DCJ. Her Honour upheld the defence under s.13 and entered a verdict for the respondent. In accordance with convention, her Honour also assessed the damages she would have awarded had the appellant succeeded in his claims in a total amount of $5,000.00. This amount comprised $1,000.00 for each of the Dubbo bus publication and the republication, and $3,000.00 for the Councillors' lounge publication. 9 The appellant sought leave to appeal from her Honour's orders. Leave to appeal was granted on both liability and damages notwithstanding the small amount of the verdict. During the course of the hearing of the appeal the appellant withdrew his appeal in relation to damages. The issue on the appeal was, therefore, limited to the question whether the defence under s.13 had been made out. The respondent has sought leave to file a Notice of Contention or, should it be required, he has sought leave to cross-appeal, contending that the jury's findings that the imputations were conveyed and were defamatory were unreasonable. The respondent also contends that the damages contingently determined by her Honour were excessive and that nominal damages only should have been awarded.

Issues on the appeal 10 The appellant contends that Gibson DCJ, in upholding the s.13 defence, erred in four respects. First, it was submitted that her Honour failed to apply the proper test for s.13 in accordance with the decisions of this Court in Morosi v. Mirror Newspapers [1977] 2 NSWLR 749 and Chappell v. Mirror Newspapers (1984) Aust Torts Reports 80-691. Secondly, it was argued that the trial judge confused the different burdens of proof applicable to the appellant's case on damages and the respondent's case under s.13. Next, it was submitted that her Honour failed to deal with the appellant's submission as to the meaning of the phrase "not likely to suffer harm" in s.13. Finally, it was said that her Honour, in dealing with the Dubbo republication, misunderstood the principles governing the "grapevine effect" of publications.

Issues on the Notice of Contention The correct test for the application of s.13

11 Section 13 of the Defamation Act provides: " Unlikelihood of harm 13. It is a defence that the circumstances of the publication of the matter complained of were such that the person defamed was not likely to suffer harm." 12 In Morosi, Moffitt P at p.799, explained the operation of the section in these terms: "[Section 13] is concerned with 'the circumstances of the publication' and the likelihood of harm. It looks to those circumstances as at the time of publication, and requires the tribunal of fact, being aware of those circumstances, to consider prospectively as it were, the likelihood of harm ensuing, and not whether harm did actually ensue… The subsequent acts or statements of persons from which it appears, or may be inferred, that the person defamed was or was not upset by the defamatory publication can have only a limited bearing on whether that person's reputation was likely to be damaged or his feelings were likely to be hurt." 13 His Honour at p.800, referred to the section as providing a defence to "trivial actions for defamation": He said that examples where the defence might apply include publications of limited extent, particularly where "a slightly defamatory statement" was made in private circumstances, to a limited number of persons and with jocular effect. It may be relevant that the persons to whom the statement was published were aware of the plaintiff's reputation. However, s.13 is not limited to publication involving trivial matters or content. 14 In the later decision of Perkins v New South Wales Aboriginal Land Council (unreported, NSWSC, 15 August 1997) Badgery-Parker J explained why it is that publications of serious content that are defamatory may still be caught by s. 13. He said at 27: "The question to which s13 directs attention is whether the circumstances of the publication were such that the plaintiff was unlikely to suffer harm. It appears to me, with respect, that the characterisation of the defamation as trivial involves circularity of reasoning: a defamation, no matter what the substance of the imputation, will be trivial only if the circumstances of its publication were such that the plaintiff was unlikely to suffer harm. Obviously, since the circumstances include, as the court said in Morosi, the nature of what was published, the defence is less likely to be made out where the content of the imputation is serious than when the content of the imputation is trivial, but it is misleading, in my view, to embark upon a consideration of s13 from the stand point that its application is only in respect of trivial defamations. The question whether a defamation is trivial can only be answered after, not before, the circumstances of the publication have been evaluated in terms of s13." 15 His Honour concluded that the major circumstance of the publication that would make it unlikely that the plaintiff would suffer harm, apart from content, was the extent of publication, the nature of the recipients and their relationship with the plaintiff. He said at 27: "It would be relatively easy to make out the defence in circumstances where the publication was to a small number of persons well acquainted with the plaintiff and able themselves to make a judgment of their own knowledge as to the likelihood that there was any substance in the imputation conveyed."

16 The approach taken to s.13 in Morosi was applied by the Court in Chappell where, Moffitt P said at p.68,947 (Samuels and Priestley JJA agreeing): "For the defence to be available the 'circumstances of the publication ' must be ' such that the person defamed was not likely to suffer harm'. The words "such that" are important. The quality of the circumstances of the publication must be the factor which renders it unlikely that the person defamed will suffer harm . Whereas a defamatory imputation is actionable per se, without damage (sec. 8-9), so that a defendant cannot defeat an action even if he were able to prove that there was no actual damage, the defence under sec.13 is directed entirely to the circumstances of the publication. … The issue is directed to the quality of the publication in respect of its proneness to cause harm. The words of sec.13 are 'was not likely to suffer harm and not 'did not suffer harm' (meaning 'probably did not suffer harm'). The quality of the circumstances of the publication determines at the moment of publication whether it is or is not actionable; Morosi (supra at p.799)." (emphasis added) 17 These principles were again accepted as correct by this Court in King and Mergen Holdings Pty. Limited v. McKenzie (1991) 24 NSWLR 305. In that case the defendants appealed against the trial judge's refusal to leave the s.13 defence to the jury. Mahoney JA said at 310: "Section 13 might have provided that there was a defence if 'in all the circumstances' the person defamed was not likely to suffer harm from the publication. In such a case, his prior bad reputation would be proved to show that he was not likely to suffer harm from the instant imputation. But, as Moffitt P pointed out in his judgment, [in Chappell ] the section did not so provide. It provided a defence only where, by reason of more restricted matters, viz, the circumstances of the publication, the plaintiff was not likely to suffer harm." 18 However, earlier in his judgment, at p.309, his Honour stated: "The s.13 defence involves that the defendant show that, for the reasons stated, the plaintiff, at the time of publication, 'was not likely to suffer harm'. This places a significant burden upon the defendant: he must negative not merely that there would be great or substantial harm but that there be 'harm' at all ." (emphasis added) 19 This passage gives rise to the principal issue argued on the appeal. Gibson DCJ considered that the passage was binding on her and stated the test for s.13 in terms that were different from and "potentially inconsistent" with Morosi and Chappell. The difference was said to be that Morosi and Chappell decided that the matter to be determined under the section was whether the circumstances of the publication were such that the plaintiff was not likely to suffer harm whereas, her Honour considered that according to this passage in King v. McKenzie, a defendant had to prove that "the plaintiff was not likely to suffer any harm at all". She said this "directly contradicts the words of the section ('unlikely')". 20 Her Honour also considered that the Court of Appeal in Assaf v. Skalkos (2002) Aust Torts Reports 81-644, repeated the need for a defendant to establish 'no harm at all' under s.13. Her Honour's interpretation of Assaf v. Skalkos fortified her conclusion that the "no harm at all" test, purported to be laid down in King v. McKenzie, was binding on her and that notwithstanding the potential inconsistency with Chappell, she was required to apply "its very strict test". Her Honour commented however that the potential inconsistency between the two tests was irrelevant in this case. It is clear that her Honour meant by this that on either test, the defence had been made out. 21 The appellant submitted that her Honour was wrong in finding that the test in King v. McKenzie was inconsistent with Chappell, and it follows, with Morosi. Considerable time was devoted to this issue during the course of the appeal. In my opinion, it is resolved more simply than the argument might have indicated. 22 In King v. McKenzie, Mahoney JA, at p.310 (in the passage set out above at [16]) said that the proper approach to s.13 was as stated in Chappell. The Court also refused leave to reargue Chappell. In doing so, Mahoney JA (Meagher JA agreeing) said at p.311: "[Counsel for the appellants submitted] that the Chappell case was wrongly decided and that he should have leave to re-argue the correctness of it. … … Chappell's case, decided that the s.13 defence exists only where the fact that the plaintiff ' was not likely to suffer harm ' arose because of ' the circumstances of the publication … ' … In my opinion, Chappell's case was correctly decided … As a matter of statutory construction, it is I think clear that it is to be by reason of the circumstances of the publication that the plaintiff was not likely to suffer harm, for the purposes of the defence. There is no reason requiring departure from the ordinary meaning of the section."

Clarke JA also considered that leave should not be given to reargue Chappell , although he did so on different grounds.

23 Mahoney JA's deliberation at p.309, which is the focus of this issue, was obiter. In that passage his Honour was not dealing with the test to be applied for the purposes of s.13 but rather with the extent of the proof required to establish the defence. He pointed out that a defendant bore a significant burden in seeking to do so, in that it was not only great or substantial harm that had to be negatived. It is possible, that in stating that the defendant had to negative "that there be 'harm' at all" his Honour overemphasised the point. It is more likely, however, as submitted by the appellant, that what his Honour meant was that what had to be negatived was that there was "likely to be harm at all". His Honour's omission to insert the word "likely" is not an omission of any moment - as I have said, his Honour's consideration was focussed on the extent of "the harm" referred to in the section, not upon whether the circumstances were such that the plaintiff was not likely to suffer harm. 24 Accordingly, the better view of King v. McKenzie, is that there is no inconsistency with Morosi and Chappell. But even if there is an inconsistency, the Court in King v. McKenzie did not purport to overrule Chappell. Rather the Court said it applied the test there stated and did so without qualification. If the passage at p.309 states the principle inconsistently with those two cases, then its effect is not to qualify as a new or different principle that changed the existing law and which must be applied. Rather, its effect is merely a misstatement which should be ignored. Accordingly, the trial judge in this case was required to apply the law as stated in Morosi and Chappell, and should have ignored any misstatement or confusion in the passage at p.309 in King v. McKenzie. 25 Before departing from this particular aspect of Gibson DCJ's judgment I should deal with two other matters. The first is her comment about Assaf. In that case, the Court of Appeal upheld the trial judge's refusal to allow a s.13 defence to go to the jury on the basis that there was ample evidence of circumstances giving rise to a likelihood of harm and none to the contrary. Mason P concluded at [77]: "The conclusion that there was no basis on which the jury could find 'unlikelihood of harm' was clearly correct." (emphasis added). Although the trial judge had referred to the passage in King v. McKenzie at p.309, there is nothing in Mason P's judgment that endorses a test in terms that a defendant needs to establish that there was "no harm at all". Rather, Mason P, although not stating the test in the specific words of the section, used the phrase "unlikelihood of harm". That phrase derives directly from the heading to the section and is no more than a shortened form of the phrase "not likely to suffer harm". It certainly does not mean the same as "no harm at all". Accordingly, her Honour's understanding of Assaf appears to be wrong.

26 The second matter to which I wish to make reference is the role that reputation has to play in relation to s.13. 27 In Morosi, the Court said at p.800 that it may be that publication to a small group of people who had knowledge of the plaintiff's reputation and their acceptance of that reputation as properly reflecting the plaintiff's personality, is relevant to the circumstances of the publication. 28 This was considered extensively by Moffitt P in Chappell, where his Honour held, at 68,950 that prior bad reputation, as such, was not relevant to the defence under s.13, because it is not a "circumstance of the publication". It is something that existed prior to the communication. However, reputation may have some role to play in s.13, depending upon who the recipients are of the defamatory publication and the circumstances in which it was made. This is because the recipient of the communication is proximate to it. It is arguable that any special characteristics of him or her as recipient such as personal knowledge of the person defamed may be caught up in the circumstances of the publication. Thus, a defamation to a group of friends in a bar may attract s.13: see Moffitt P in Chappell at 68,948. 29 Hunt CJ at CL, sitting at first instance, also dealt with the question of reputation in the context of s.13 in Singleton v John Fairfax & Sons Ltd (No. 1) [1983] 2 NSWLR 722, where he said that bad reputation, in an appropriate case, may be taken into account as one of the circumstances of the publication. His Honour did not make a general statement that bad reputation was relevant for the purposes of s.13. It depended upon the circumstances. I am not satisfied that his Honour stated the principle any more widely than did Moffitt P in Chappell. To the extent that his Honour's statements on this might be considered to be wider, then Chappell, as a judgment of this Court is, of course, binding. 30 In King v McKenzie, therefore, Mahoney JA was correct when he said that Chappell held that prior bad reputation was not one of the circumstances of the publication. 31 Accordingly, her Honour's comment at [49] that Mahoney JA's statement in King v McKenzie that "bad reputation of the plaintiff was therefore not one of the circumstances of the publication appears to contradict the passages in Morosi and Singleton" does not accurately reflect the authorities. I should add, her Honour's comment does not touch upon any issue in the proceedings as there was no allegation of bad reputation, so it is unclear whether her Honour's observation was intended to be merely a comment or whether she thought there was more relevance in the point.

32 However, there is, a more fundamental reason why the debate as to whether her Honour wrongly applied King v. McKenzie is not to the point. Although her Honour referred both to Chappell and to King v. McKenzie and purported to apply both tests she thought were or possibly were derived from each, she applied a different test altogether. This is apparent from various passages in her Honour's judgment, including the following. 33 At [53(6)] her Honour referred to situations where the defence might apply. She referred to "circumstances particular to the recipients to the publication [so that] the plaintiff's reputation does not suffer any harm (King v. McKenzie at 309G)". Next [53(8)] her Honour said: "The defendant must establish that the plaintiff did not suffer harm at all" (King v. McKenzie at 309G; Assaf v. Skalkos at [73] (emphases added). Then at [64] her Honour said: "The issue is whether the circumstances of the publication are such that the plaintiff was, to use the words of the section, not likely to suffer harm" which the Court of Appeal has held ( King v. McKenzie at 309G) " requires proof that the plaintiff suffered no harm at all . " (emphasis added) 34 A test stated in these terms is wrong. Whatever view is taken of the passage in King v. McKenzie at p.309, it still states the test in terms of "proneness" to cause harm. The authorities are clear that the section is not concerned with whether harm was occasioned, as her Honour stated was required. As Moffitt P said in Morosi, s.13 requires the Court to look at the circumstances at the time of publication and "to consider prospectively … the likelihood of harm ensuing".

35 Although I consider her Honour erred both in her understanding of King v. McKenzie, and in the test she actually applied, a complication arises. At [50] her Honour considered that even if there was a difference between Chappell and King v. McKenzie it made no difference in this case. Her Honour explains this in her conclusion on liability. She says at [201]: "I find that each of the defendant's publications of 7 November 1999 and the publication of 16 November 1999 was published in circumstances in which the plaintiff was not likely to suffer harm and further (conformably with King v McKenzie at 309 per Mahoney A-CJ) that he in fact suffered no harm whatever." (emphasis added) 36 The question which thus arises is whether there is any basis for appellate intervention given that her Honour found that the defence had been made out on the application of the correct test. The answer to that question must depend upon the extent that her Honour gave appropriate consideration to the factors that are relevant to the test properly stated. In my opinion, the difficulty with upholding her Honour's finding on the correct test is that the judgment focuses upon the considerations relevant to the wrong test. Those considerations are largely irrelevant to the Chappell test. Her Honour does not, or at least does not sufficiently, make findings on matters that are permissible considerations had she applied the correct test only, but rather tends to resolve the considerations having regard to the wrong test. This is apparent from the manner in which her Honour deals with the evidence of Councillor Dee and Councillor Page at [79]-[83], where the emphasis is upon the factors that lead her Honour to conclude that no harm was suffered. 37 The problem is also demonstrated by the matters raised in the further aspect of the appellant's argument in which he complains that her Honour reversed the onus on the s.13 test. Burden of Proof 38 The respondent bore the legal and ultimate evidentiary burden of establishing the defence under s.13. On the approach taken by her Honour the question she set herself to determine was whether the circumstances were such that "harm was caused". Whether harm was in fact caused was a matter upon which the appellant bore the legal and ultimate evidentiary onus in relation to damages. The appellant submitted that it would have been difficult, if not impossible, for the onuses to have been kept separate and properly applied on the primary approach she took to the application of s.13. It was said this was apparent from her statement (at [83]) that Councillor Dee's evidence as to his lack of belief in the allegations was "strong evidence" that in his mind the appellant's reputation suffered "no harm at all". It was also said to be evident from her Honour's finding that the appellant's evidence of his hurt feelings was relevant to the s.13 determination. Whether or not a person's feelings were hurt (and her Honour found the appellant's were not), is not relevant to s.13. That is a matter for damages. 39 I am not sure that the problem here is really a question of onus, because once evidence is given, it becomes evidence in the case, regardless of which party tendered it. The question then becomes whether the evidence, in its entirety, is sufficient to satisfy such onuses as are borne by the respective parties. 40 The question here is whether her Honour, in finding that the defence was made out on the basis of the principles established in Morosi and Chappell in fact properly considered the "circumstances of the publication" so as to determine whether the defence had been made out. The question under s.13, whether the person is not likely to cause harm given the circumstances of the publication, is very different from the question whether harm has been suffered. As I have indicated, the evidence relevant to each issue is different. The conceptual foundation of each is also different. Her Honour, although stating that she considered that both tests were satisfied on the evidence, does so in a context where she applies the test whether the appellant suffered harm. Her Honour does not appear to consider and evaluate the different considerations relevant to the correct test. This is apparent from her statement at [83] in relation to Councillor's Dee's evidence. There were several aspects of Councillor Dee's evidence that required consideration. Significantly for the purposes of s.13, his evidence as to his reaction to the Dubbo bus publication, had to be considered at the time of publication. Her Honour did not consider that evidence. Rather, she considered his evidence 'at the end' - after the publication and after he had spoken to the appellant. That evaluation was relevant to the different question of damages - as to whether the appellant had suffered harm. 41 When the judgment is viewed as a whole, it appears that the underlying reasoning is that if the appellant failed on the stricter test that Gibson DCJ considered she had to apply, it followed that he would fail on the Morosi test. This is apparent not only from the specific findings that her Honour made, (of which the finding in respect of Councillor Dee's evidence is an example) but also from the combination of her comment at [50] that on the facts as she found them the potential inconsistency between the two tests was irrelevant and her "wrapped up" conclusion at [201]. 42 Another point was argued on this issue. The respondent contended that even if her Honour erroneously applied King v. McKenzie, that approach had been urged upon her by the appellant so that he could not now be seen to complain. Whilst it appears that her Honour considered that the appellant had urged King v. McKenzie as being binding upon her, senior counsel for the appellant submitted to this Court that what had been argued before her Honour was that the case, as properly interpreted, should be applied. However, as I consider that her Honour erred in a different respect altogether, this debate has become irrelevant to the outcome of the appeal. 43 It follows that I consider that the Court should intervene and itself consider whether the defence was made out on the evidence.

Meaning of unlikely to cause harm 44 The appellant submitted that the trial judge failed specifically to deal with his submission as to the meaning of "not likely to cause harm". That is correct. However, given the error I have found, the significance of this issue for the appeal is not so much her Honour's omission, but the meaning of the phrase so as to ascertain whether the defence was made out on the facts of the case. 45 The appellant contended that the phrase "not likely to cause harm" refers to "the absence of a real chance" or the "absence of real possibility of harm": see Tillmanns Butcheries Pty Limited v. AMIEU (1979) 42 FLR 331 at 339 and 347. 46 Another possible meaning and that for which the respondent contends is that s.13 means that it is "more probable than not that the defendant will not suffer harm": see Australian Telecommunications Commission v. Krieg Enterprises Pty. Limited (1976) 14 SASR 303 at 309-310. However, the word "probable" itself bears a variety of meanings, depending upon its context. In Overseas Tankship (U.K.) Limited v. The Miller Steamship Co. Pty. Ltd. [1967] 1 AC 617 Lord Reid at 634-635 remarked upon this, stating that the meanings included: "more probable than not"; "likely but not very likely"; "a bare possibility". 47 Senior counsel for the respondent submitted that the meaning of "not likely to cause harm" had to be construed against the history of the introduction of the section in 1847 when defamation legislation was first introduced in New South Wales. That legislation departed from the common law in that it removed the necessity for proof of special damage in the case of oral defamation (slander). The compromise, it was said, was to protect defendants from the actionability of trivial cases by the introduction of the s.13 defence. That protection was only provided by the meaning for which the respondent contended. 48 The appellant's preferred version is supported by two complementary legal principles. First, in the law of defamation, it is presumed that some damage will flow from the publication of a defamation in permanent form: see Defamation Act ss. 8-9; Gatley, 10th ed, para. 3-9. Section 13 affects that common law right in that if the defence is established, the presumption will not operate. Secondly, as a matter of statutory construction, where there are alternate constructions of a statutory provision available, there is a presumption in favour of a construction that will mitigate the impact of the section on the common law principle. In Potter v Minahan (1908) 7 CLR 277 at 304 O'Connor J said: "It is in the last degree improbable that the legislature would overthrow fundamental principles, infringe rights, or depart from the general system of law, without expressing its intention with irresistible clearness; and to give any such effect to general words, simply because they have that meaning in their widest, or usual, or natural sense, would be to give them a meaning in which they were not really used." "If the legislation admits of a wider interpretation than that which we have given to it…then the narrower construction is nevertheless to be adopted upon the basis that where two alternative constructions of legislation are open, that which is consonant with the common law is to be preferred…"

See also Bropho v State of Western Australia (1990) 171 CLR 1 at 18; (1990) 93 ALR 207 at 215; Rodway v The Queen (1990) 169 CLR 515 at 522; Coco v R (1994) 179 CLR 427 at 437; Balog and Stait v ICAC (1990) 169 CLR 625 at 635-636. 49 In my opinion, the meaning preferred by the appellant is correct. That construction is supported by both the principles of statutory construction to which I have referred and also gains some support from Chappell where Moffitt P says at 68,947: "The words of s.13 are 'was not likely to suffer harm and not 'did not suffer harm' (meaning 'probably did not suffer harm')" 50 It accords with what I understand the natural meaning of the words is and as they should be understood for the purposes of s.13.

The grapevine effect 51 The appellant relied upon the risk of repetition or the "grapevine effect" of the "Dubbo bus publication" as a relevant circumstance in assessing whether the publication was not likely to cause harm. It was submitted that it was relevant to do so because damages are allowed for precisely that contingency: see Cassell & Co Limited v. Broome [1972] AC 1027 at 1071. 52 The trial judge approached this question by reference to the statement in Palmer Bruyn v. Parsons (2001) 208 CLR 388 that it was necessary that there be evidence that harm had resulted from the repetition. The appellant said this approach again revealed error in her Honour's treatment of s.13. 53 In Palmer Bruyn the Court was concerned with a case of injurious falsehood, which requires proof of falsity, malice and, relevantly for present purposes, special damage. Gummow J endorsed the statement of Heydon JA who, in the Court of Appeal, had said that the "grapevine effect" is "not some doctrine of law or phenomenon of life, operating independently of evidence". That comment was relevant in Palmer Bruyn because damage had to be proved. It is also relevant to the assessment of damages in defamation. 54 However, at the point in her judgment where her Honour referred to this statement, she was dealing with the s.13 defence, not with damages. It seems however, that her Honour confused the principles to be applied and relied upon the statement in Palmer Bruyn and determined that it was necessary to prove harm for the purposes of s.13. This is apparent from her comment at [100]: "I am of the view that none of the grapevine publications are capable of satisfying the evidentiary test laid down by the High Court [in Palmer Bruyn] so as to defeat the section 13 defence". It also follows, from the test her Honour applied to s.13. However, what is relevant for the purposes of s.13 is whether there is a chance of republication in circumstances where there is a likelihood of harm, not whether damages should be awarded for the contingency described in Cassell v. Broome. If the defence is not made out, evidence of the nature and extent of the republication is then relevant and necessary to the assessment of damages. It follows, that I consider her Honour's reliance upon the principle that there needs to be evidence of damage for the purposes of s.13, was erroneous. 55 There were two other factors upon which her Honour relied in finding that there was no harm suffered. First, Councillor Dee did not further repeat the matter complained of and Councillor Page, on overhearing the matter complained of, "comprehensively rejected the allegation". In my opinion, they are not relevant factors for the purposes of s.13. They are relevant for the assessment of damages. 56 When dealing with the grapevine effect and the Dubbo republication, her Honour made a number of statements with which the appellant took issue. For example, her Honour, supposedly relying upon a passage in King v. McKenzie at 511G, said that the reputation of the defendant can be a factor in the circumstances of publication. 57 King v. McKenzie does not deal with the reputation of the defendant at all. To the extent that the trial judge's comment raises the question whether the reputation of a defendant is a circumstance of the publication I will deal with that below. Another matter that her Honour considered was relevant was that Councillor Dee did not, after the dinner conversation with the appellant republish the matter complained of. That however, is not to the point. He republished the matter at the dinner and the jury found that was a natural and probable consequence of the publication to Councillor Dee. The question that had to be determined was whether, on the occasion of that publication, the circumstances were such that there was no likelihood of harm. What then were those circumstances? The trial judge considered that Councillor Page's "immediate and annihilating response" was to be given great weight in the s.13 defence. Her Honour found that Councillor Page did not think less of the appellant as a result of hearing the matter complained of at the dinner table. Her Honour also considered that the fact that Councillor Dee kept an "open mind" about the comments was fatal to the claim relating to the Dubbo bus publication, so that it followed that there could have been no likelihood of harm in Councillor Dee's repetition of it. Her Honour also considered that Councillor Page's reaction to the comment "may also have had an impact" on Councillor Dee. The difficulty with that proposition however, is that that was never put to Councillor Dee. 58 This part of her Honour's judgment is somewhat difficult to analyse. I have referred to certain of the complaints raised by the appellant to indicate that there is some basis for those complaints. However, as I have already found that her Honour erred in relation to the s.13 defence such that appellate intervention is called for, it is neither essential nor particularly useful to undertake any further analysis, except to say that the error made in relation to the proper test is replicated in this section. This is particularly evident at [83] where her Honour says that Councillor Dee's lack of belief in the allegation (itself not an accurate assessment of his evidence) is "strong evidence that in the mind of the sole recipient of this publication, the plaintiff's reputation suffered no harm at all".

Was the defence made out? 59 As I have found that the trial judge erred in her approach to s.13, it is necessary to turn to the question whether the defence was made out in respect of each publication. 60 The Dubbo bus publication occurred on an occasion when local councillors throughout New South Wales were gathered at an annual conference. The respondent accepted that the rumour about the appellant's property dealing was something that was likely to spark interest and was something that might be passed on from person to person. This was an important admission because the risk of repetition is a relevant circumstance. Another relevant circumstance of the publication was that there was a potentially large audience to whom the publication could be passed on. 61 The jury found that the Dubbo republication was a natural and probable consequence of the Dubbo bus publication, a finding that was clearly open. I should add that contrary to the respondent's submission, the republication found by the jury was not to the appellant. It was to Councillor Page. The respondent herself, having heard the rumour, passed on what the trial judge found to be a serious defamation. The fact that the matter complained of had been passed on is relevant to the question of its harmful capacity. It is not relevant, however, for the purposes of establishing the defence, whether any importance is attached to the publication. Thus, in Skalkos v. Assaf it was irrelevant to the defence that the public servant to whom the publication was made, threw the letter into the rubbish bin.

62 The appellant submitted that the jury's finding that the republication was a natural and probable consequence of the publication was itself sufficient to defeat the s.13 defence in relation to the Dubbo bus publication. Whilst I agree that the republication was relevant and significant, it is not necessary to determine whether it was sufficient of itself to defeat the defence in relation to the Dubbo bus publication as in this case there were other factors that were relevant. In particular, that this was a serious defamation made when the parties were at a major conference of public importance, to Councillor Dee, who did not know the appellant (T 10), was not aware that Warringah Council was faction-ridden or that there was a difficult professional relationship between the appellant and the respondent. The effect of the publication on Councillor Dee was that it "put doubts in [his] mind about the integrity of [the appellant]". The fact that Councillor Dee was, unbeknown to the respondent, a person of some discretion and was not prepared to accept the comment at face value, did not, in this case, negate the likelihood of harm. He thought that the respondent's comments were "very intriguing" and "was not aware of the implications".

63 Harm can occur "even where a person holds final judgment in suspense": see Dingle v. Associated Newspaper Limited [1961] 2 QB 162 per Devlin LJ at 196. This observation, although made in the context of damages, is pertinent to the question whether the publication was not likely to cause harm. If harm can in fact be caused where a person suspends judgment, then, when considering the question of potentiality of harm under s.13, the fact that the recipient did not, at that time form a final judgment, may not of itself establish the defence. The question that has to be asked on each occasion is whether, looked at objectively, the circumstances of the publication … were such that the person defamed was not likely to suffer harm. 64 In my opinion, having regard to the foregoing matters, the defence was not made out in respect of the Dubbo bus publication. The fact that the publication was sufficient to raise doubts about the appellant's integrity in Councillor Dee's mind, demonstrated that the publication was not such that the appellant "was not likely to suffer harm". 65 Leaving aside for the moment the question I consider at [66] I am also of the opinion that the defence is not made out in respect of the republication to Councillor Page. It is true that Councillor Page was a longstanding friend of the appellant. Councillor Page reacted angrily to the republication, considering that it was the type of comment that would be made by a person in the faction to which she believed the respondent belonged. She did not know however, of the enmity between the appellant and the respondent. The dinner was semi-formal and semi-official, in the sense that the conference provided the occasion for it. Councillor Page said that personally she did not believe the allegation but that she "didn't know it for a fact … [w]hether the building had or had not been purchased by [the appellant] in somebody else's name". 66 Subsequent events, such as the fact that Councillor Hay, who also overheard Councillor Dee's conversation with the appellant, but could not, some months later, remember what had been said, are not relevant to the question whether the defence was made out. Likewise, the question of whether any harm ensued when Councillor Page later republished the substance of the allegation to her husband, Councillors Hay and Dickman of Manly Council and a Mr. de Luca, is not relevant.

67 Does Councillor Page's reaction to the respondent, whom she considered fell into a category of person who tended to make such allegations, detract from my view that the defence has not been established in relation to the republication? The trial judge posed this question in the context of the question whether the reputation of the publisher of the defamation was relevant to s. 13. Her Honour stated at [53(9)] that "[t]he reputation of the defendant can be relevant" and cited King v. McKenzie at 311G as authority for the proposition. However, Mahoney JA was there dealing with the reputation of a plaintiff. Notwithstanding that, if it established that the recipient of the publication never, as a matter of course, believed the particular maker of the statement that might, in an exceptional case, be a circumstance of the publication. However, I do not believe this is such an exceptional case. The respondent was a duly elected member of Council. It follows that she must have had respect in some, if not most circles in which she was publicly active, including in the wider domain of local government councillors. She was not a member of the group to whom Councillor Page referred in her response at the dinner, nor was there any evidence that she was a member of any group with a poor or vindictive reputation. The respondent, for her part, never suggested that notice should not have been taken of her comments. Her case was that she had not made the defamatory statements attributed to her. It follows that there was nothing about the respondent herself or her reputation in this case that negated the likelihood of harm in relation to the circumstances of the publication. 68 That leaves the circumstances of the Councillor's Lounge publication that occurred late one evening after a council meeting. Although the councillors were "winding down" with a drink, the occasion still had some official connection. It was on Council premises, after official business and was typically an occasion where Council issues were discussed informally. Again, the defamation was serious. The real question is whether the circumstance that the publication was to persons who were either political allies of the appellant, in the case of Councillors Moxham and Stephens, or politically sympathetic to him, in the case of the General Manager, together with the fact that Councillor Moxham and the General Manager had some knowledge of both the affairs of the appellant and those of Council, was such that harm was not likely to be suffered. 69 The "nature" of the recipients and their relationship with the appellant is relevant: see Perkins. Her Honour considered that the knowledge that the 3 recipients of the publication had of the appellant was the same kind that existed between the Premier and Perkins: see Perkins at 27 where Badgery-Parker J said that the recipients of the defamatory publication were well acquainted with the defamed person and well able to make their own assessment as to whether there was any substance in the allegations made. 70 In my opinion, the circumstances here are not of the same quality. True it is that Councillor Moxham thought that the allegation was far-fetched. However, a statement that is wrong or far-fetched may still potentially cause harm. It depends on all the circumstances of the publication.

71 In this case, there is the added circumstance that Councillor Stephens did not know either the appellant or the respondent, although he had some knowledge that the appellant drove around in a 'ute'. His initial reaction was that the allegation "couldn't be true". That is not a rejection of the allegation. That is a reaction to an allegation of improper conduct, and as he said, he could not make the assumption that the allegation was not true. Subsequently, he spoke to his father about the allegation. 72 The matter complained of was not a jocular remark. It was a serious allegation. The content of the matter complained of is relevant for the purposes of s.13: Morosi at p.800; Perkins at 27. In Perkins, Badgery-Parker J pointed out that the defence is less likely to be made out where the content of the imputation is serious but is not confined to trivial content. 73 In my opinion, given the serious content of the publication and the fact that it was made in circumstances that had a nexus to Council business and to persons who had some but not complete knowledge of the appellant's affairs, the respondent has not established that the circumstances were such that the appellant was unlikely to suffer harm.

74 Before concluding on this issue I should make a comment in relation to the investigation carried out by the General Manager and Councillor Moxham into the allegation. The trial judge found that this was not a genuine investigation, but a means to "get at" the respondent. Neither the fact of nor the outcome of the investigation was ever reported to Council and the respondent was never asked to provide evidence of her assertion. The appellant challenged this view of the investigation but it was a finding open to her Honour. However, the investigation was not a circumstance of the publication so that her Honour's consideration of it in the context of determining whether the s. 13 defence had been made out was erroneous.

Notice of Contention 75 The respondent has filed a Notice of Contention in which she seeks to maintain the verdict in her favour on the basis that the jury's findings, that the imputations were conveyed and were defamatory, were unreasonable. There was considerable debate during the appeal as to whether the respondent could pursue this claim by a Notice of Contention or whether it was necessary to seek leave to file a Notice of Cross-Appeal. The debate arose because, although the respondent sought to maintain the verdict, she also sought declaratory relief and an order setting aside the jury's answers. I have come to the conclusion that the matters sought to be raised by the respondent are properly raised as a Contention point. The respondent presently has a verdict in her favour. If she is unsuccessful on the appeal, she seeks to maintain that verdict on the Contention grounds. The jury's answers are only a step in the verdict process. They would not, in my opinion, need to be separately set aside if the respondent succeeds on her Notice of Contention. 76 However, in my opinion, the contention grounds have not been made out. It was open to the jury to find that the imputation that the appellant was up to "no good", in that he had bought a Council property in someone else's name was conveyed by the Dubbo bus publication. By introducing the allegation with the comment that the appellant was "up to no good", a question might be raised in the mind of the recipient whether the property transaction was straightforward, whether it lacked some propriety (different from being dishonest) given the appellant's position, e.g. because it had been facilitated by political or business contacts or whether the appellant wished to hide the transaction from others, either for personal or business or political reasons. In other words, it was questionable because normally when a property transaction is entered into, it proceeds in the name of the purchaser and in circumstances where the appellant was, according to the respondent "up to no good", there was unlikely to be an innocent reason why this was not the case. Given the test for setting aside the jury verdict, that "the finding [must] be one that no reasonable jury could reach" John Fairfax Publication Pty. Limited v. Rivkin (2003) 201 ALR 77; (2003) 77 ALJR 1657 per Callinan J at [185], the respondent's challenge must, in my opinion, fail. Likewise it was open to the jury to find that the imputation was defamatory. The imputation found to be conveyed by the Councillor's lounge publication was also open as was the finding that it was defamatory. The trial judge's finding that these were serious defamations is sufficient, in my opinion, to dispose of this aspect of the Notice of Contention. 77 During the course of the appeal, the Court refused leave to the respondent to raise a further ground of contention, namely that the imputations were not capable of being conveyed by the matter complained of. This ground was raised only during the course of the appeal. It was not raised prior to or at trial, during the course of the appellant's application for leave to appeal or prior to the appeal. Senior counsel for the respondent explained to the Court that there is no ready procedure in the District Court for the determination of such a question either prior to or at trial. Although the procedures in the District Court may not be tailor- made to separately deal with this issue, the fact is that such a fundamental issue should be raised at first instance. It is not appropriate for the Court to consider it for the first time on Appeal.

Damages 78 As I have explained at the outset, the appellant abandoned his appeal on against the inadequacy of damages. The respondent contends however that the damages contingently awarded by the trial judge were excessive in that, as her Honour had found no harm had been suffered, only nominal damages should have been awarded. 79 In my opinion, the award of damages should not be disturbed. They are very modest in the face of serious defamations. Her Honour's finding that the appellant had demonstrated he was incapable of hurt feelings is, with respect, somewhat contrary even if, as the trial judge found, he proved himself to be bombastic and belligerent. It would be most surprising if a person in the position of the plaintiff was not hurt by serious defamations that impacted upon his position as a Councillor. Further, for the reasons discussed above, I am of the opinion that harm did result from the publication, even if it was limited in both time and extent. The appellant was also entitled to be compensated for the risk of repetition. In my opinion, no basis has been shown to disturb the awards.

Conclusion 80 In my opinion, therefore, the appeal should be allowed. 81 At the conclusion of the appeal, there was an outstanding question relating to the award of costs made by the trial judge. As I have reached the conclusion that the appeal should succeed, the costs of both the s. 7A trial and the hearing before her Honour will follow the event. Accordingly, the Orders I propose are: 1. Appeal allowed.

Set aside the verdict and orders made by the trial judge

Judgment for the appellant in the sum of $1,000.00 in relation to the cause of action arising out of the Dubbo bus publication

Judgment for the appellant in the sum of $1,000.00 in relation to the cause of action arising out of the Dubbo bus republication.

Judgment for the appellant in the sum of $3,000.00 in relation to the cause of action arising out Councillor's lounge publication.

7. Order the respondent to pay the costs at first instance and of the appeal.

8. The respondent is to have a certificate under the Suitor's Fund Act 1951 (NSW) if so entitled. 82 SANTOW JA: I agree with Beazley JA. 83 STEIN AJA: I agree with Beazley JA. **********

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