Hennessy v Lynch

CATCHWORDS: Tort - defamation - series of four slanders published to the same person - defence of triviality - damages - aggravated compensatory damages

Defamation Act 1974 (NSW), ss.13 and 46A LEGISLATION CITED: Defamation Act 1889 (Qld), s.20 Defamation Act 1957 (Tas), s.9(2)

Ainsworth v Burden [2006] NSWCA 199 Andrew v John Fairfax & Sons Ltd [1980] 2 NSWLR 225 Assaf v Skalkos [1999] NSWSC 1332 Carson v John Fairfax & Sons Ltd (1993) 178 CLR 44 Chappell v Mirror Newspapers Ltd (1984) Aust Torts Rep 80-691 Crampton v Nugawela (1996) 41 NSWLR 176 at 193 Cuming v Hennessy [2005] NSWSC 1219 David Simon Co v Mather [1977] VR 516 David v Chibo [2006] NSWSC 1257 Doelle v Bedey [2007] QCA 395 Elliott v The Age Company Ltd [2006] VSC 52 English and Scottish Co-operative Mortgage and Investment Society Ltd v Odhams Press Ltd [1940] KB 440 Goodrich Aerospace Pty Ltd v Arsic [2006] NSWCA 187 Harrigan v Jones (2000) Aust Tort Rep 81-621 Hennessy v Lynch [2006] NSWDC 26 Hennessy v Lynch (No. 2) [2006] NSWDC 49 Herald and Weekly Times Ltd v McGregor (1928) 41 CLR 254 Hill v Church of Scientology of Toronto (1995) 184 NR 1 (SCC) John Fairfax Publications Pty Ltd and Another v Gacic and Others (2007) 235 ALR 402 CASES CITED: John Fairfax Publications Pty Ltd v O'Shane (No 2) [2005] NSWCA 291 Jones v Sutton (2004) 61 NSWLR 614 Jones v Sutton (No 2) [2005] NSWCA 203 Kiam v Neill [1996] EMLR 493 (CA) King and Mergen Holdings Pty Ltd v McKenzie (1991) 24 NSWLR 305 Lang v Willis (1934) 52 CLR 637 Markovic v White [2004] NSWSC 37 McMullen v TCN Channel 9 Pty Ltd [2000] NSWSC 925 Moit v Bristow [2005] NSWCA 322 Monti-Haitsma Enterprises Pty Ltd v Lord (New South Wales Court of Appeal, 12 May 1988, unreported) Morosi v Mirror Newspapers Limited [1977] 1 NSW 749 Perkins v New South Wales Aboriginal Land Council (Supreme Court of New South Wales, 15 August 1997, unreported) Rigby v Mirror Newspapers (1963) 64 SR (NSW) 34 Rogers v Nationwide News Pty Ltd (2003) 216 CLR 327 Singleton v Ffrench (1986) 5 NSWLR 425 State Bank of New South Wales Limited v Currabubula Holdings Pty Limited and Anor [2001] NSWCA 47 The Nominal Defendant v Kostic [2007] NSWCA 14 Waterhouse v Broadcasting Station 2GB Pty Ltd [1985] 1 NSW 58 Zaia v Chibo [2005] NSWSC 917 Zarth v Williamson and Ors [2006] NSWCA 246

PARTIES: Plaintiff: Paul James Henessy Defendant: John Lynch

COUNSEL: Plaintiff: M Neil QC / J Young Defendant: D Campbell SC / R Weaver

SOLICITORS: Plaintiff: Shaw McDonald Pty Ltd Defendant: Higgins & Higgins Lawyers

1. The plaintiff and the defendant own adjoining rural properties. The defendant owns and resides at a rural property which is almost entirely surrounded by land owned by the plaintiff, situated off the Tarana Road at Raglan, near Bathurst in New South Wales.

2. The plaintiff by way of statement of claim filed on 26 May 2006 claims damages from the defendant for defamation for four oral publications to an employee of the plaintiff, Mr John Sydney Hasler, which occurred on 14 October 2002, 18 December 2005 and 26 March 2006.

Commencement of defamation proceedings between two neighbours

3. I shall first set out a brief summary of the progress of these proceedings in the District Court. The statement of claim was amended in August 2006 to enlarge the text of each of these publications. On 27 September 2006, I handed down a judgment in relation to challenges to the imputations (Hennessy v Lynch [2006] NSWDC 26). Following the filing of amended pleadings, a fourth publication dated 6 October 2000 was added.

4. In my judgment of 13 October 2006 (Hennessy v Lynch (No. 2) [2006] NSWDC 49) I set out the text of each of the four matters complained of and I will not repeat their content here.

5. On 14, 15 and 16 February 2007, a section 7A jury was empanelled to determine whether each of the oral publications had been published by the defendant to Mr Hasler. Mr Hasler gave evidence and was cross-examined. The defendant did not give evidence. The jury in answers to questions held that the following imputations were conveyed and defamatory: First publication

(a) That the plaintiff is a former bankrupt. (b) That the plaintiff is a bankrupt. (d) That the plaintiff is not credit-worthy. (e) That the plaintiff does not pay his accounts on time. (f) That the plaintiff was refused further credit by Fish & Sons. (g) That the plaintiff was refused credit by Alan Wilding.

(b) That the plaintiff is a former bankrupt. (c) That the plaintiff is not credit-worthy. (d) That the plaintiff did not pay his account at Sid Newhams. (e) That the plaintiff did not pay his account at Fish & Sons. (f) That the plaintiff was refused credit by Sid Newhams. (g) That the plaintiff was refused credit by Fish & Sons. 6. Following the section 7A trial, an amended defence pleading substantive defences of justification to imputations 9(d), 9(e), 9(f) and 9(g) and 15(d), 15(e), 15(f) and 15(g) as well as a defence of contextual truth, together with a defence of qualified privilege at common law (for all four publications) and unlikelihood of harm (again for all four publications). On the first day of the trial, the defendant sought leave to file in court a further amended defence withdrawing the defence of contextual truth to the third and fourth publication and the defence of common law qualified privilege to all four publications. Accordingly the sole defence is a defence under section 13.

7. The matter was listed for hearing between 27 and 30 August and 4 September 2007. It was stood over for further directions to Friday 14 September to permit the parties to provide additional written submissions.

8. The issues identified by the parties are straightforward. First, there is the question of whether section 13 can provide a defence to one or more of the four publications. Secondly, there is the issue of damages, including a claim by the plaintiff for aggravated compensatory damages. Aggravated compensatory damages are claimed by reason of the five particulars set out in paragraph 18 of the third further amended statement of claim and in addition on two other bases. The first of these is the pleading of a defence of truth and contextual truth, which was abandoned on the first day of the trial and the second is the conduct of the trial itself, including cross-examination as to the falsity of the imputations.

9. The plaintiff, whose curriculum vitae was tendered (exhibit G), told the court that his great grandfather had been born in the area in 1832. Subsequently the plaintiff's grandfather and mother were born in the area and had rural holdings. His younger brother, Mr Peter Hennessy QC, also has a substantial holding in the same area (T-4). His ninety-four year old uncle was the Mayor of Turon Shire for twenty-seven years and the Deputy Mayor of Bathurst for ten years. The plaintiff's uncle was involved with grazing until the latter years of his life and his grandfather was a grazier all his life in that area. It is a social pattern in the area that farmers going back generations seem to inter-marry with people in the area and the plaintiff has many relatives in the area as a result.

10. The circumstances of publication of the first matter complained of were as follows. The plaintiff said (T-7) that early in 2002 he had a telephone conversation with Mr Hasler, whom he employed to manage his farmland. Mr Hasler told him he had been approached by the defendant and a "heated discussion" took place during which the defendant alleged to Mr Hasler that the plaintiff was a former bankrupt. Mr Hasler said that this conversation occurred about a week after his commencing work with the plaintiff. The plaintiff then learned, later in 2002, that the plaintiff had made further allegations about him, namely the publication giving rise to the imputations found by the section 7A jury set out above.

11. The plaintiff said he was shocked and bewildered because he had never been confronted with any such allegation before, and he was concerned because he was a chartered accountant. The allegation was completely false. The plaintiff decided that as he had only recently acquired the property which was adjacent to the defendant's, he should give Mr Lynch a chance in that with the effluxion of time Mr Lynch would come to understand the allegation was baseless. His overwhelming concern was that this allegation might be repeated to other people. He said at T-11: " It heightened and intensified the hurt and the injustice, the frustration, the abhorrent [sic] of what was said about me. That it would be repeated to many people. Because of the very nature of the community and where we share contractors, agents merchants. And that was my great concern. Not that it was said to Mr Hasler as such, but rather it went way beyond Mr Hasler. "

12. In late 2002 the plaintiff consulted a firm of solicitors in Bathurst. They sent the following letter to Mr Lynch on 26 November 2002: "Dear Mr Lynch

We have been consulted by Mr Hennessy concerning comments made by you about him in a telephone conversation with Mr S Hassler [sic] an employee of Mr Hennessy's on 14 October 2002. In that telephone conversation we are instructed that amongst other things you said to Mr Hassler about Mr Hennessy that:

1. Mr Paul Hennessy had been bankrupt. 2. That Mr Hennessy was not able to get credit at some business houses in Bathurst. 3. That Mr Hassler had no ethics working for Mr Hennessy and that he would work for Bin Laden.

Those allegations are false and clearly defamatory.

As you are aware, Mr Hennessy is an Accountant in professional practice in Bathurst and Sydney and the comments made by you concerning him are grave and adversely reflect on his competence, professional ability and on his position in the community.

We are instructed therefore to request that you submit to us within seven days, a clear and unqualified apology and retraction in the form attached to this letter.

Upon receipt of that apology our client will then consider his position in regard to commencement of legal proceedings against you for defamation.

We are instructed to give notice that if we do not have the signed written apology within the time specified, legal proceedings may issue without further notice to you seeking damages. In the meantime our client reserves his rights."

13. Attached to this letter was the following draft apology: " APOLOGY TO PAUL HENNESSY

I John Lynch of "Dockairne", Raglan did on 14 October 2002 in a telephone conversation make a number of statements about Paul Hennessy. I acknowledge that I said:

1. Mr Paul Hennessy had been bankrupt. 2. That Mr Paul Hennessy was not able to get credit at some business houses in Bathurst. 3. That Mr Hassler (an employee of Mr Hennessy) had no ethics working for Mr Hennessy and that he would work for Bin Laden.

These statements are completely without foundation and I wholly retract them.

I greatly regret any distress or embarrassment that my statements may have caused to Paul Hennessy and I apologise to Paul Hennessy and withdraw those statements unreservedly.

It is apparent from this letter that this is a reference solely to the second publication and not to the first. This is the subject about which the plaintiff was cross-examined in some detail and I discuss this evidence further below.

No reply was ever received to the letter. The plaintiff was asked how he felt about not receiving any suggested offer of apology or response other than a complaint from a local solicitor that the letter should have been sent to him:

"I felt that Lynch had demonstrated arrogance, insensitive [sic], uncompromising approach to an extremely hurtful allegation with [sic] any substance, without any foundation and which I found to be extremely malicious and vicious." (T-13)

The plaintiff received legal advice to "let it go" and he decided to do so.

In his evidence Mr Hasler said (T-82) that when he had the second conversation, by telephone, he was of the opinion that the defendant was affected by alcohol (T-82.27) and that he told the plaintiff this. This appears to have been a factor in the plaintiff not taking the matter further.

Over the next three years there was no recurrence of any defamatory publication. However, the relationship between the parties over this period of time continued to be strained. The problem appears to have been that the plaintiff's property completely encircled the defendant's and there were disputes about access roads, as the statutory declaration of Mr Hasler (exhibit C) sets out. Mr Hasler says in paragraph 20 of exhibit C that over the next two years he did not record any conversations with the defendant, although he spoke to him regularly, and these conversations do not appear to have been friendly.

According to the plaintiff's evidence, the relationship over this period was "manageable" (T-31). There were complaints to the police and "police proceedings", but these had been finalised in the earlier part of 2002 (T-32). However, the defendant continued to live on a landlocked holding (T-32) and there were a number of complaints initiated by the plaintiff against the defendant concerning the providing of fencing applications and a dispute about cattle (T-37.31-.34). There were constant complaints by the defendant that he could not get out of his landlocked property because he was having problems getting access to travel over the plaintiff's property.

It is indicative of the ongoing problems that on 18 October 2002 Mr Hasler wrote a letter following publication of the second matter complained of in which he reported the defendant as saying that the reason for the plaintiff's conduct was that the plaintiff was "trying to get him out, as you want to have his property" (T-170-171). The plaintiff denied this allegation. He agreed he had made an offer to purchase shortly after publication of the second matter complained of but said that he did not make the offer privately, but when the property was on the market he made an offer.

The following occurred at T-171: "Q. And of course you knew that he was landlocked, wasn't he? A. Yes.

Q. And after you purchased your landholding in that area, denied him access by routes that he was previously permitted access by, didn't you? A. Only after he did some appallingly unneighbourly things.

Q. Can you answer my question, did you deny access or not? A. Yes.

Q. These appalling neighbourly - A. Just - he had access but there was further access across the railway crossing. Now, he impounded my cattle, and the police had to - and he was very unneighbourly, I said "John, I won't allow it, but for emergencies, you can use it".

Q. This is the matter we were talking about earlier in the week when you said you were being cordial with him and then you said you thought it was 2003 and I reminded you it was 2001, do you remember that? A. Yes.

Q. And the reason why you say you did nothing or said nothing about the 2001 publication was that you were trying to be cordial and get on with your neighbour? A. Yes, and the advice from a lawyer at the time -

Q. But you didn't see a lawyer at the time? [Objection]

Q. Sorry, the advice from a lawyer at the time? A. Was not to pursue it.

Q. I'm talking about the initial publication that came to your attention in March of 2002 that your servant said occurred in October of 2001? A. That's correct.

Q. You said that, if I remember correctly, you did nothing about that because you wanted to be cordial and get on with your neighbour? A. Yes.

Q. And that was just false, wasn't it, because all of the matters you've just adverted to and the things I said to you previously? A. Not at all."

In the weeks leading up to the third matter complained of, according to Mr Hasler's evidence (exhibit C, paragraph 23), Mr Hasler rang the defendant to say that his bull was in the lucerne paddock and asked him to come and get it. When he did not come for six weeks, Mr Hasler put the bull calf into another paddock.

On Sunday, 18 December 2005 the defendant attempted to call Mr Hasler about five times. He contacted Mr Hasler eventually at about 6.00pm or shortly thereafter to say that he and his solicitor had measured the easements for the new yards which were four feet over the easement line and they had to be moved.

Mr Hasler replied "I have no intentions of moving the yards and you can get stuffed".

Mr Lynch replied saying that Mr Hasler should not have sown lucerne onto part of the easement and that the defendant was going to put a grid in the corner where he wanted to and not where Mr Hasler wanted him to. He went on to say that he knew Mr Hasler's problem in that he had bankrupted three people he had worked for. Mr Hasler replied "John, you wouldn't know what you are fuckin talking about". Mr Lynch then replied, "You're working for a former bankrupt" to which Mr Hasler said, "It is none of your bloody business". Mr Hasler terminated the call. I have set out the text to explain how it was that after three years the allegation of bankruptcy had come up again.

There was no further communication of substance between the defendant and Mr Hasler until Sunday, 26 February 2006. The defendant and Mr Hasler were still having trouble concerning the defendant's young bull, which persisted in wanting to join the young female cows. Mr Lynch was wanting to go over and get the young bull but Mr Hasler said "I don't like my cattle being disturbed and I will get him out". Mr Hasler later did that and rang the defendant to ask him to collect the bull. The defendant said he would pick up the bull that afternoon. The bull was still there the next day so Mr Hasler rang to find out what was going on. The defendant replied "The bull beat me as I was taking him home", from which I infer that the bull escaped and returned to be with the cows. Mr Hasler said he would return the bull to Mr Lynch's property later that day.

Nevertheless, the bull managed to get back into the plaintiff's property again on 15 March and again on 18 March, having travelled through three paddocks to get there. The bull was a very determined one and returned again on 26 March 2006. On 27 March 2006 Mr Hasler got the bull out of the paddock and back to the defendant's property. This caused Mr Hasler a lot of trouble and he had words with the plaintiff which resulted in the plaintiff saying "I don't talk to you Sid - ring my solicitor if you have anything to say". Mr Hasler accordingly left a message on the defendant's answer phone saying "I have put your bull back to your property and if he gets in again I will impound him". (The impounding process means that the bull is sent to the pound at Bathurst who contact the registered owner via the tag on the bull and arrange for collection of the bull after the payment of a fee).

On Monday, 27 March 2006 the defendant rang Mr Hasler. This is the conversation which is the fourth matter complained of. Mr Hasler said that the defendant's tone of voice was very assertive and abusive, his speech was slurred and he kept repeating the same thing over and over again and Mr Hasler "formed the view that he was affected by alcohol" (paragraph 31 of the statutory declaration).

The text of this conversation is set out in paragraph 6 of my judgment of 13 October 2006 ([2006] NSWDC 49). It was an angry conversation which the defendant opened by references to insults addressed to both Mr Hasler and the plaintiff, to which Mr Hasler responded by calling the defendant "a fucking dickhead".

Mr Hasler hung up on the defendant. The defendant attempted to call back at least five times in the next fifteen minutes but Mr Hasler recognised his number and did not answer his telephone. On Tuesday, 4 April 2006 he impounded the defendant's bull and on 16 April he received a telephone call from the defendant to say that he had been to the police station and taken out an AVO. In fact, no court process for an AVO was ever served on Mr Hasler.

Mr Hasler was used to drunken calls from the defendant. In paragraph 36 he deposes that on two other occasions when the defendant rang up speaking in an assertive and abusive tone of voice with slurred speech the telephone conversations were terminated by a loud click which was the disconnection of the call from the defendant's telephone in mid-sentence. On each occasion he said to the defendant "What was the bullshit about last night?" to which the defendant replied "Disregard everything I said".

Mr Hasler kept a diary note of his conversations (exhibit D). These diary notes confirm these conversations and also his opinion about the defendant's state of intoxication.

The plaintiff's evidence about how he learnt of the third and fourth publications were as follows. The day after the third publication Mr Hasler rang the plaintiff and said that the defendant was "at it again".

The plaintiff's description of how he felt was as follows: "Again greatly distressed, greatly distressed and hurt, and think my gosh who else has he spoken to? This has been going on for four years. And I've given him warning. He knows how injurious it can be to me and my career, my reputation. The thought of a chartered accountant being a bankrupt is horrific. It could destroy my credibility and my whole practice and be excruciatingly embarrassing to all my friends and associates. Incomprehensible that I should have to contest the allegations that I'm a former bankrupt or creditworthy. Particularly as I spent so much money in that community, income and in the city, paid to 185 merchants and nobody, but nobody, had been able to take action against me successfully to recover any alleged unpaid account. I felt absolutely violated." (T-14.30-.34)

The plaintiff learnt of the fourth publication two or three days after it was said. He was asked how he felt about the fourth publication and he said (T-15-16): "Deeply hurt and offended. And I thought the matter was getting out of control that I had somebody who was being extremely vindictive and treacherous towards me. He seemed to have an obsession about me. He seemed to be having no regard for the truth. I thought well with these vicious allegations at least he'd behove [sic] somebody to say well they're extreme allegations, I should give some evidence, because I'd already warned him four years ago this is not true, this is very injurious, please stop. Please give me an apology. He just showed defiance."

The plaintiff said he had very grave concerns that the fourth publication might go further to merchants and business houses, his professional colleagues and his friends and relatives. He was very concerned about commencing proceedings because he said he felt that they were "going to put enormous pressure on me and pre-occupy me for perhaps the next 18 months".

The plaintiff's distress did not stop after he sought legal advice. After proceedings were commenced the plaintiff went to a function at the home of a Mr and Mrs Hooper. He was told by Mr Hooper, a chartered accountant in practise in Bathurst, that the defendant's solicitor had contacted a shareholder at Sid Newhams and was wanting to obtain information about the case and whether in fact the plaintiff had short paid Sid Newhams. Mr Hooper also gave this evidence. The plaintiff said that as a result of hearing this information he became extremely agitated and told his wife that they should go home and they then left.

The plaintiff said he was particularly distressed by the s.7A hearing and said he found it "extremely difficult and distressful to listen to the conduct of the advocate for the defendant" (T-19.50-.51). He was very embarrassed during the s.7A trial because counsel for the defendant was someone he had known for some fifteen years (T-22).

The plaintiff was very angry that there was a plea of partial justification. He said he was shocked, nonplussed and thought that the defendant and his legal advisers were being vexatious and vindictive and seeking to drag out these proceedings which went with claims that were wholly without foundation. He felt bewilderment at the plea of qualified privilege and found it incomprehensible that the defendant had pleaded a duty to publish these matters. His response to the defence of unlikelihood of harm was: "I felt these lawyers will say anything. These lawyers will say anything."

He said in relation to the certification of the pleadings: "Mr Neil, much of my professional time is giving opinions, primarily audit opinions. In giving an audit opinion you never - you realise that what the word "certified" means, certified absolute truthful non-negotiable, absolute. How could a lawyer certify that there are reasonable grounds for believing on the basis of provable facts and a reasonably arguable view of the law that the defence to the claim for damages in these proceedings has reasonable prospects of success. How could he write it, let alone sign it? … I felt betrayed by the legal profession, and Mr Neil. I felt despair. … I thought these people must have evidence that I don't know exists, must have some - I was just nonplussed. Could I just add, I understand that the defendant also said on oath, he said on oath, I said he's saying this on oath what facts has he got … I thought his vicious, vindictive, he has an absolute obsession with me, he wants to make my life a nightmare, he's going to continue this frivolous action against me, break up enormous costs to me, enormous stress to me and my family and friends and put on hold my life in my sixty-seventh year." (T-24-25)

While the plaintiff blamed the defendant, he made a number of references to both Mr Weaver and Mr Campbell SC, the counsel for the defendant. The following occurred at T-25: "Q. How did you feel when you read that the defendant had said he did not undertake any steps to satisfy himself of the truth of the implications [sic] until after service of the statement of claim? A. Mr Neil, I felt a number of emotions. The plaintiff, reckless indifference, but I thought there are parties supposedly more responsible than him, a party to these, there is the solicitor, there is the barrister. How must they feel, how must they feel?

Q. Let me ask you this - A. You may shake your head Mr Campbell, you may shake your head.

Q. Look, just one moment, sir, you are here to answer questions, please. I understand how you feel but please restrict your answers to Mr Neil's questions, not to comments about Mr Campbell being at the bar table, thank you. A. Yes." (T-25)

This is an indication of the very strong feelings the plaintiff had. He repeated them at T-62: "Q. How do you feel about having been asked questions by Mr Campbell about these matters of your trading and arrangements with the various merchants that he asked you about? A. I feel violated to sit here and have those questions put." 43. Although the plaintiff had very strong feelings about the conduct of the defendant, he was able to conduct litigation during this time with other persons without feeling the same kind of emotions. Insights into this can be gleaned from a judgment of Young CJ in Equity in Cuming v Hennessy [2005] NSWSC 1219, which concerned an application by the plaintiff's former partner for the appointment of an interim receiver and manager following the breakdown of a relationship between two accountants: Cuming v Hennessy [2005] NSWSC 1219. The plaintiff did not regard the breakdown of his business relationship with his former partner as a matter of significance. In fact, he did not even tell his wife about it: "Q. You know that the business relationship that your husband has had broke down in 2005, didn't it? A. What business relationship are you talking about?

Q. His accountancy business where he was in partnership with another person? A. Who was that?

Q. You have no knowledge about that at all? A. I don't know which one you're referring to.

Q. Your husband didn't tell you anything at all about how he had to go to court and how there are problems with his accountancy business? A. My husband's accountancy business is his business. We very rarely discuss what goes on in his business.

Q. So you knew nothing about somebody trying to put a receiver into the business? A. No.

Q. So you don't know what other stresses your husband may have had in his life as a result of his business dealings, is that right, throughout this period we're talking about? A. No." (T-70-71) 44. Mrs Hennessy was aware that there had been problems with Mr Lynch "over the past five or six years". She thought there had been numerous calls from Mr Lynch but that her husband was a stoic sort of character who did not discuss in great detail any problems that he had. She said that two of the calls related to a claim that her husband was bankrupt, that his accounts were out of order, that he had been refused credit at various companies in Bathurst and there were threats to Mr Hasler about dealing with him in various ways. She said her husband was "most distressed" and "very very upset" and that since these calls she has noticed that he becomes agitated very quickly and does not sleep very well. She said her husband worried that these sort of rumours, if they were allowed to go unchecked, could ruin his business and that her husband had worked very hard in his profession and was rightfully proud of what he had achieved. He was distressed by the litigation and felt that his life was on hold. She has noticed that he has become extremely stressed and will suddenly start talking about something completely inappropriate, which she attributes to distress caused by the matter complained of. As a result of the publication her husband needed sleeping tablets, tended to fly off the handle quickly and was suffering from the strain of litigation and extremely distressed (T-67-69).

The plaintiff's secretary, Olga Haywood, gave evidence about the effect of the publications on him. She said he was "a different person really" after the publications (T-72).

Mrs Haywood has been the plaintiff's secretary since 2003, which post-dates the first two matters complained of. She recalled him being upset because the defendant had said he was bankrupt, that he was like Osama Bin Laden and that he was not creditworthy but that she could not remember anything else (T-72). She said that this had a big impact on his personality in that his sense of humour seemed to have gone out the window and that she was concerned about his health and had had a look on the internet to see what to do in the event of an emergency. This does tend to suggest that the plaintiff's personality was more affected by the later than by the earlier publications, since the happier personality she describes postdates these publications.

Mrs Haywood knew that the plaintiff had had "a pretty nasty split up" with his former partnership and that this was very distressing to him and had an impact on his health (T-75). She was also aware of a court case where he was trying to recover fees and was unsuccessful and ordered to pay the costs. However, she thought the case did not have anywhere near the same effect on the plaintiff as these proceedings had had. She agreed that the plaintiff's work created stress to a certain extent.

Dr Gunning gave evidence concerning the plaintiff's reputation, which he said was excellent in that he was an upstanding figure who was held in high regard by all people he comes in contact with. The plaintiff had told Dr Gunning how stressed he was about the defamation proceedings and Dr Gunning had noticed a change in his personality and in recent years he had noticed the plaintiff had become more withdrawn.

Mr Ian Hooper, a director of the firm known as Sid Newham Rural Supplies, gave evidence (T-94) and said that, in addition to being of high reputation, the plaintiff was "very creditworthy" in that he "will always pay his bill". He said that to his knowledge there were no problems with the accounts at Newhams.

The defendant did not give evidence. However, Mr Kent George Fish of Fish & Sons Rural Produce Centre Pty Ltd was called to give evidence going to the falsity of the imputations, the falsity of the imputations being particularised (paragraph 18(c)) as being the basis of a claim for aggravated compensatory damages in the plaintiff's statement of claim. There is no plea of bad reputation.

Mr Fish gave evidence about the circumstances in which the words "overdue" appeared beside approximately 100 entries in the remittance advices sent to the plaintiff during the time that they had a trading relationship. He said he first came to meet the plaintiff in about 2000 and he dealt with the plaintiff between 10 August and 22 December 2000. The account became non-active until it was re-opened on 11 August 2003. The first invoice sent to Mr Hennessy in 2003 was sent on 11 April 2003. Mr Fish described the procedure he took when accounts were overdue. He described how on several occasions he spoke to Mr Hennessy or Mr Hasler to ask for the account to be paid. He said that when Mr Hennessy said that the bill would be fixed up it would be fixed, but "not immediately" and that "every month it would be a phone call but, I mean, days turned into weeks and it'd be a couple of months as sort of showing on there that things weren't being attended to on a regular monthly basis, even though it'd turn out to a sixty day account, once the ball was rolling it just kept perpetuating into just past that" (T-106).

The last transaction he had was when Mr Hasler came to the shop wanting some insect spray. As Mr Fish had not been able to get into contact with Mr Hennessy, he asked Mr Hasler to pay $17.95 in cash, which Mr Hasler did (T-108).

Shortly after that Mr Fish received a telephone call from Mr Hennessy. Mr Hennessy said to Mr Fish "I believe you owe me an apology" which Mr Fish said "Sort of caught me on the back foot to start with". Mr Hennessy told Mr Fish, "You have told one of my employees that my account is on the stop". Mr Fish replied that he was not getting his accounts paid on time. He was told either to apologise for this or Mr Hennessy would close his account and send a cheque for the outstanding balance, which was in fact what occurred because Mr Fish said he would not apologise because he was not in the wrong. Accordingly, the account was closed. The invoice in question is 8 August 2005.

Mr Fish had earlier written to the plaintiff along the following lines: "Paul, please understand. Our move to the new site has cost us a lot of money. Cash flow is important. I cannot offer 60 days at the moment. Could you please pay all overdues as a favour. Thank you Kent Fish."

This was attached to a remittance advice dated 1 August 2005.

There are other notes in the statements. For example, the statement for Wednesday, 15 October 2003 contains the note "could we attend to overdues as soon as possible. Regards Kent" and there is a reference to a late payment fee. The account dated Monday, 1 November 2004 contains the words "please Paul", and the account for Friday, 1 April contains the handwritten word "please".

The plaintiff gave evidence in reply in which he explained (T-143) that on his understanding of when the 60 days ran, he was not in default. He was sure that his secretary, whom he described as a reliable employee, would have attended to payments very promptly. He spent many hours preparing a schedule to assist the Court in understanding whether or not he was in fact paying his accounts late.

The plaintiff also tendered a bundle of documents from Newham Rural Supplies (exhibit 7). Although Mr Hooper, a director of this company, gave evidence that he regarded the plaintiff as very creditworthy, a number of these accounts have a little rubber stamp showing a man crying and contain the words: " account is overdue! please send cheque Urgently ".

The plaintiff, in his evidence in reply, indicated an intention to seek aggravated damages by reason of the leading of the evidence of Mr Fish.

The entitlement of a defendant to lead evidence of the truth of a defamatory imputation even though no plea of justification is on the record is explained by McHugh JA in Singleton v Ffrench (1986) 5 NSWLR 425 at 443. The evidence of falsity of imputations concerning the plaintiff's failure to pay his accounts on time, being refused credit by Fish & Sons and other proprietors needs to be seen in this context. This is in fact evidence going to the bulk of the imputations. Essentially, only the imputations of being a former bankrupt are matters to which this evidence cannot run.

Having set out the evidence I now turn to the contested issues in this case. The issues are whether the defence of s.13 can succeed in respect of any of the publications and, secondly, the quantum of damages to be awarded to the plaintiff.

Section 13 Defamation Act 1974 (NSW) 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."

There are similar provisions in s.20 Defamation Act 1889 (Qld) and s.9(2) Defamation Act 1957 (Tas) both of which, like s.13, require there to be a causal link between the unlikelihood of injury and the circumstances or "occasion" to use the word appearing in each of these sections of the publication. However, the defences in Queensland and Tasmania are limited to slander cases, as were the statutory predecessors to s.13.

There is no equivalent defence in the common law or in any other State or Territory of Australia, and it could fairly be said that the defence is unique to this country.

The explanation for the introduction of this unusual provision for the discouraging of actions for slander, enacted as long ago as 1847, comes from Australia's colourful past as a pioneer and convict colony. The New South Wales Law Reform Commission's 1971 Report, which led to the enactment of s.13 and extended it to written publications as well as oral publications, contained the following explanation at paragraph 60: "When New South Wales in 1847 made slander actionable without proof of special damage, doubtless it was thought desirable at the same time to discourage trivial actions for slander. The means adopted was to provide by section 2 of the Act 11 Vict No.13 for a defence to an action for slander where the words complained of did not impute an indictable offence and were spoken on an occasion when the plaintiff's character was not likely to be injured. This defence remained part of the law in New South Wales up to 1959 when a generally similar section derived from a Queensland variant was introduced (Defamation Act, 1958, s.20(1)). Under present-day conditions there is no reason why there should be a difference between written and spoken words. In the proposed section 13, tests of injury to character or reputation are abandoned in favour of a more general test: was the person defamed likely to suffer substantial harm? The question whether the matter complained of imputes and [sic] indictable offence is immaterial under the 1958 Act and would be immaterial under section 13 of the Bill. The sections confers upon juries a useful reserve power and its existence tends to discourage trivial actions."

The defence was rarely the subject of judicial comment prior to Lang v Willis (1934) 52 CLR 637, where the defence succeeded in relation to political speeches made during a by-election. Rich J noted (at 650) the role of the defence in Australia's colonial past when it was introduced "to meet the hard conditions of pioneer days". His Honour went on to note that this was because a different view might be taken concerning words spoken in a bar or during a family squabble to statements made during a church vestry meeting or at a directors meeting.

The plaintiff submits that the test is whether in the circumstances of the publication the plaintiff was not likely to suffer harm. This requires proof of the absence of a real chance or possibility of harm: see Jones v Sutton (2004) 61 NSWLR 614, Ainsworth v Burden [2006] NSWCA 199.

The plaintiff in further written submissions submits that Chappell v Mirror Newspapers Ltd (1984) Aust Torts Rep 80-691 "sets out the law which, it is submitted, has not been changed by later decisions" and particularly draws my attention to the statement of Moffitt P at 68-947: "For the defence to be available the "circumstances of the publication " must be " such that " the person defamed was not likely to suffer harm (emphasis added). 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."

The correctness of Chappell was canvassed in arguments before the Court of Appeal in King and Mergen Holdings Pty Ltd v McKenzie (1991) 24 NSWLR 305 at 309-311 and 318. The facts in that case were not dissimilar to the present, in that the matter complained of was only published to persons previously aware of its contents (and with their own information as to truth or falsity). The defendant submitted that as a result the persons to whom the publication was made would not have taken a different view of him as a result of the publication, and for this reason the plaintiff was not likely to suffer harm. The Court of Appeal considered the defence should have gone to the jury on this basis. However, all three appeal judges expressed reservations about the correctness of Chappell. However, Mahoney JA (with whom Meagher JA agreed) expressed the view that even if he believed Chappell to have been wrongly decided, leave would not be granted to argue its incorrectness as the previous court had unanimously adopted one of two acceptable constructions of the section and the decision had been acted upon over a period of years.

Central to this judgment was the statement by Mahoney JA that the defence places a significant burden on the defendant, who must negative not merely that there had been great or substantial harm, that there had been "harm at all". This led to a series of decisions where the defence failed on this basis.

In Assaf v Skalkos [1999] NSWSC 1332 Carruthers J noted at [13] that in King and Mergen Holdings Pty Ltd v McKenzie Mahoney JA had held that the s.13 defence "places a significant burden upon the defendant: he must negative not merely that there would be a great or substantial harm, but that there could be harm at all". His Honour went on to note at paragraph 60 that the test was as follows: "I have referred to the test, if I could use that expression, identified by Mahoney JA in King and Mergen Holdings , namely the defendants must negative not merely that there would be great or substantial harm but that there be harm at all."

Carruthers J referred to the decision of Badgery-Parker J in Perkins v New South Wales Aboriginal Land Council (Supreme Court of New South Wales, 15 August 1997, unreported) where the test had been stated in more generous terms and permitted to go to the jury; Carruthers J noted that he had "given it [the judgment] such weight, if I may respectfully say so, as I feel in the circumstances of this particular case it bears" (at [49]) but did not accept its correctness.

The defendant in Assaf v Skalkos appealed the trial judge's refusal to permit a s.13 defence to go to the jury. The Court of Appeal, in rejecting this ground of appeal, noted at [77] that: "Carruthers J pointed out that the test identified by Mahoney JA in King and Mergen Holdings (at 309) was that the defendant bore the significant burden of negativing not merely that there would be great or substantial harm but that there be "harm" at all."

Leave to appeal to the High Court in Assaf v Skalkos was refused, as was leave to appeal in Mergen Holdings v McKenzie.

In McMullen v TCN Channel 9 Pty Ltd [2000] NSWSC 925 Dunford J referred with approval to the test enunciated by Mahoney JA and noted at [85]: "It must be shown that the plaintiff was unlikely to suffer, not great or substantial harm, but any harm at all."

Mr Neil QC for the plaintiff opened his case on the basis that the test was as set out in King and Mergen Holdings Pty Ltd v McKenzie. Senior counsel for the defendant referred to the more recent decision of Jones v Sutton (2004) 61 NSWLR 614. I am indebted to counsel for the plaintiff for providing me with written submissions in which they confirm that the better view is that there is no inconsistency between King and Mergen Holdings on the one hand and Chappell and other decisions on the other, but that if there is King did not overrule Chappell. Rather, Jones v Sutton says that King and Mergen applied the test stated in Chappell, and did so without qualification (written submissions, paragraph 12).

Having noted this change of position by the plaintiff, I note the plaintiff accepts that the meaning of "unlikely to cause harm" means there must be "the absence of a real chance" or "the absence of real possibility of harm". The plaintiff draws my attention to the further statements of Beazley JA at [64]-[65] where her Honour noted that the fact that the publication was sufficient to raise doubts about the plaintiff's integrity in the mind of the person who heard the words spoken demonstrated that the publication was not such that the appellant was not likely to suffer harm.

The plaintiff submits that in each case Mr Hasler, the recipient of the publication, has given evidence that doubts were raised in his mind about the plaintiff and these doubts recurred on each occasion. It is further submitted: "However even without such evidence it could not be said that there was an unlikelihood of harm either to reputation or to feelings at the time of publication. There was a real likelihood of at least doubt. Further, a record by Hasler to Hennessy was at least likely and hence there was a likelihood of harm."

The plaintiff notes at [67] in Jones there is obiter about the possibility of an exceptional case where a recipient never, as a matter of course, believed the particular maker of the statement. It is submitted that this is not such an exceptional case.

What features of each of the publications should be taken into account in relation to the defence?

The first is that each of these is an oral publication, published to only one person. In Morosi v Mirror Newspapers Limited [1977] 1 NSW 749 at 800 and in Chappell at 68,947 per Moffitt P, it was noted that the defence is essentially available to publications of a limited extent. The history of the section and the manner of its application could mean that visual or aural impact, and the informality of spoken language, could be relevant factors in the defence.

A second relevant feature is the knowledge and characteristics of the recipients. This may be of particular relevance if they already knew the plaintiff's reputation and are able to make a judgment based on their own knowledge of him or her: see Perkins v Aboriginal Land Council at 27, Morosi v Mirror Newspapers Limited at 800, Chappell v Mirror Newspapers Ltd at 68,948. Where the recipient of the publication has a close association to the plaintiff, such as the relationship between an employer or an employee, or between a company and its directors, it may be that "the defence of unlikelihood of harm (s.13) will succeed" (State Bank of New South Wales Limited v Currabubula Holdings Pty Limited and Anor [2001] NSWCA 47 at 114 per Giles JA.

The next relevant feature is that the circumstances or occasions on which defamatory matter is published may be of significance. The references to statements made on social occasions, particularly when alcohol is consumed (see, for example, Lang v Willis), or informal conversations late in the evening (Chappell v Mirror Newspapers at 68,948) are relevant. The reference by Rich J in Lang v Willis to the "hard conditions of pioneer days" could perhaps mean the hard life on the land that farm owners arguably still lead today.

Next, the defence may be applicable to a statement made as a rejoinder, or in a heated exchange or argument. A statement by a recipient flatly contradicting the statement may also be a factor: see Harrigan v Jones (2000) Aust Tort Rep 81-621 at 67,289 per Matthews AJ. However, some caution should be used in this regard, as the defence is not a licence to insult others in argument.

The reputation of the defendant can be relevant, according to King v McKenzie at 311G. This would arguably be a circumstance of the publication. The publication by a person whom the recipient believes is solely motivated by jealousy, or who is regarded as beneath contempt, might be a statement which would attract the defence. However, this is a factor which should be treated cautiously, because known personal dislike is not an excuse to allow someone to freely slander another.

As these proceedings involve a slander, I can also gain some guidance from interstate jurisdictions where the defence is available for slanders, such as the recent decision of the Court of Appeal in the Supreme Court of Queensland in Doelle v Bedey [2007] QCA 395. Keane JA, delivering the judgment of the Court, noted that the defence will apply where the circumstances render it unlikely that the defamed person will suffer harm. It may be relatively easy to make out the defence when 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. While Keane JA's statements in the Court of Appeal are obiter (in that publication was not able to be proved), his Honour noted that the relevant exchange came late in the course of heated and exhausting negotiations about a tenancy and that the plaintiff and defendant had had unfriendly relations and dealings for some years (at [10]). His Honour went on to note (at [11]) that the evidence which demonstrated the triviality of the appellant's case was adduced in the appellant's own case from witnesses actually called by him. While this is a reference to the trial judge having held the defence would be applicable despite not being pleaded, it is also an indication of what the Queensland Court of Appeal considers would amount to evidence relevant to the defence.

It is important that I consider the circumstances of each publication carefully.

Mr Campbell SC for the defendant drew to my attention the fact that no complaint was made by the plaintiff following the publication of the first matter complained of either at the time or in his letter following the second matter complained of, nor were any proceedings commenced over the first matter complained of until after my judgment of 27 September 2006. When it was pleaded, the wrong year was given, in that it was asserted that this publication occurred on 6 October 2000 when in fact Mr Hasler did not commence work for the plaintiff until October 2001.

It is further submitted that this was a publication essentially of two words "former bankrupt" and that publication to one person was trivial in the extreme.

However, Mr Hasler's evidence about this first publication needs to be looked at carefully. What he told the Court at T-81 is of some importance: "…I didn't know Mr Hennessy until I took the position, I had two other properties under contract at the time, I met Mr Hennessy at an agent's office and I took the position to look after the property for him and I didn't know Mr Hennessy from a bar of soap prior to that meeting, which was only prior to me taking over the place."

In other words, since he had only just commenced to work for Mr Hennessy. Consequently, although he said "I think I take great pride in estimating what people are like and I didn't pay a great deal of attention", he went on to add "I must admit you know sometimes it puts a bit of a doubt in the back of your mind if you're going to get paid, that's all" (T-80).

Consequently, the first time that something was said to Mr Hasler, it did cause him some concern, because he had only just commenced working for him and did not know him.

The following question was put to him at T-80: "Q. On the other occasions, 14 October 2002, 18 December 2005, 27 March 2006 when Mr Lynch said to you the things you gave in evidence previously, what went through your mind, what was your reaction? A. Well, similar, that I'd been paid by Mr Hennessy all the time right on time so it didn't - I didn't pay a great deal of attention to that." 94. This tends to underline that the first publication had a degree of impact because of the special circumstances.

The statement that Mr Hennessy was a former bankrupt to an employee who was dependent upon him for his salary, could not be a statement where the circumstances of the publication must be such that the person defamed was not likely to suffer harm. Mr Hasler said he did not know much about the plaintiff at that time; by inference, he probably knew little about the defendant either. It appears to have been one of the first conversations they ever had.

Accordingly, applying the test set out in Jones v Sutton, no defence under s.13 is available for the first publication.

The second publication occurred when the defendant was, according to the evidence of Mr Hasler, affected by alcohol. The defendant started by complaining about the plaintiff's cattle coming onto his property and saying that the rail crossing was going to be closed. The first thing the defendant did was to insult Mr Hasler by saying to him that "You have no ethics working for Hennessy as you know he is a former bankrupt about ten years ago and you would work for Bin Laden". Mr Hasler replied "You better watch your fucking mouth John".

This gives a good indication of the circumstances of publication, namely in an atmosphere of hostility and abuse of the kind referred to by Keane JA.

The defendant went on to add, however, material of a new nature. He went on to claim that the plaintiff "got cut off" at Fish & Sons and could not get an accountant with Alan Wilding, asked was this because he did not pay his bills on time and asked "where does he deal now"? Mr Hasler said "It is none of your frigging business".

The defendant was providing information which went further than the first publication. True it is Mr Hasler stated categorically he knew that the statement about Alan Wilding was false because there had never been an account with Alan Wilding. True it is that Mr Hasler knew the true circumstances of any problems at Fish & Sons (which, if there were any, have been lost in the mists of time). However, it is not a question of looking at the actual facts, but of the circumstances of the publication, as the Court of Appeal noted in Jones v Sutton. Those circumstances are that two men were having an argument in which one of them was well affected by alcohol and being abusive. While that will go some way towards establishing a s.13 defence, the fact remains that imputations were conveyed that the plaintiff was not merely a former bankrupt but was currently bankrupt, that he was not creditworthy and did not pay his accounts on time. Applying the test set out in Jones v Sutton, the quality of the circumstances of the publication cannot render it unlikely that the plaintiff would suffer harm.

The third publication is another argument between Mr Hasler and the defendant. The defendant said that he and his solicitor had measured the easements where the new yards were and that as the new yards were four feet over the easement line they had to be moved. Mr Hasler said "I have no intentions of moving the yards and you can get stuffed".

It is apparent from this language that the circumstances of the publication are quite different. Mr Hasler has gone from saying that the plaintiff's private business is none of his concern, or saying to the plaintiff that the plaintiff's activities are none of his business to telling the plaintiff to get stuffed, and saying that he does not know what he is talking about. Every word said by Mr Hasler in the course of this third publication is confrontational. Once again, before the defendant starts insulting the plaintiff, he insults Mr Hasler by claiming that he has bankrupted three people he has worked for, and Mr Hasler replies in terms of one provoked.

The imputation is yet another statement that the plaintiff is a former bankrupt.

In addition, when he had the third discussion with the defendant, it was clear to Mr Hasler that the defendant was intoxicated (T-82). It was put to him that he placed no weight at all on what he was saying then. He went on to say at T-83: "I did place a bit of weight - it always comes up in the back of your mind when somebody says something that because of me [sic] dealings with Mr Hennessy, he'd always paid me, so it sort of went out of the back of my mind, because I'd always been happy with how I'd been paid, so I had no reason to worry".

By this time Mr Hasler had been employed by the plaintiff for nearly five years. While he refused to agree with the contention that he didn't take anything that was said seriously, he clearly had an argument on the telephone, in a conversation which he himself terminated, and it is clear from what was said and from the circumstances of the conversation that there was an unlikelihood of harm. This was a spray of abuse from the defendant directed not only at the plaintiff but also Mr Hasler. It was another drunken telephone call from the defendant.

Having regard to the test set out in Jones v Sutton, I am satisfied that this is a case where, in relation to this publication, there was the absence of a real chance or possibility of harm. Accordingly, the defence under s.13 will succeed in relation to this publication.

The fourth publication is particularly unpleasant. The defendant, who appears once again to have been drunk, immediately opened the conversation by insulting Mr Hasler as well as the plaintiff and saying he was a former bankrupt. He then repeated that the plaintiff had been cut off at Sid Newhams and Fish & Sons. He then threatened to impound some of the plaintiff's cattle. Finally, he threatened to leave the gates open on the property, a serious threat in the country, so it is not surprising that Mr Hasler said "John I take that as a personal fucking threat".

Mr Hasler again hung up on the defendant and when the defendant rang back a further five times refused to take his call.

This is very much a borderline case. The circumstances of the publication are such that the ordinary reasonable listener is more likely to think less of the defendant than to think less of either the plaintiff or Mr Hasler. Nevertheless, it goes beyond mere drunken abuse, as the jury finding of defamatory meanings shows, and the circumstances in which imputations about the plaintiff's lack of creditworthiness were raised are matters indicating that there was a likelihood of harm.

Accordingly, applying the test in Jones v Sutton, the defence fails for the fourth publication.

The plaintiff has succeeded in relation to the first, second and fourth publications. I shall assess damages for each of the publications. I shall also set out the sum I would have awarded for the third publication.

Section 46A Defamation Act 1974 provides that when awarding damages, the Court is to ensure that there is an appropriate and rational relationship between the relevant harm and the amount of damages awarded. When considering general damages, the Court is to take into account damages for non-economic loss in personal injury awards in the State, including any awards made under any statute where the amount of non-economic loss is regulated by a "cap".

The manner in which s.46A(2) should be applied is explained by the High Court in Rogers v Nationwide News Pty Ltd (2003) 216 CLR 327. In unanimously overturning a decision of the Court of Appeal of New South Wales, which had held, inter alia, that the plaintiff was entitled only to damages of $75,000, the High Court restored the trial judge's award of $250,000 as well as setting aside the Court of Appeal's findings on liability.

In the course of restoring the verdict for $250,000 the High Court indicated the importance of a person's reputation which in the case of a professional man such as the plaintiff in these proceedings could be "his whole life" (Crampton v Nugawela (1996) 41 NSWLR 176 at 193).

The three purposes of an award of damages for defamation are consolation for the personal distress and hurt, reparation for the harm done to personal reputation and vindication: see Rogers at [60] per Hayne J.

The plaintiff has drawn my attention to John Fairfax Publications Pty Ltd and Another v Gacic and Others(2007) 235 ALR 402 as to business defamation and reputation (written submissions, paragraph 2). However, there is nothing in this decision about assessment of damages, and the statement of claim does not plead that any of the matters complained of was a business libel.

The plaintiff in written submissions submits that anyone who suffers a serious libel is "prima facie entitled to substantial damages" (paragraph 3, written submissions), referring me to English and Scottish Co-operative Mortgage and Investment Society Ltd v Odhams Press Ltd [1940] KB 440 per Goddard LJ at 461. However, older English decisions such as this must be read in light of the statutory framework of the Defamation Act 1974 and, in particular, to the provisions of s.46A.

The plaintiff has drawn my attention to a series of decisions such as Crampton v Nugawela (award of $600,000), Markovic v White [2004] NSWSC 37 ($100,000) and Zaia v Chibo [2005] NSWSC 917 ($175,000) and David v Chibo [2006] NSWSC 1257 ($217,000).

The difficulty with these cases is that even though some of them deal with restricted publications, such as the twenty-two persons to whom the matter complained of was published in Nugawela, none of them relate to a case where there is publication to only one person.

The plaintiff also referred me to Monti-Haitsma Enterprises Pty Ltd v Lord (New South Wales Court of Appeal, 12 May 1988, unreported) where a verdict of $112,000 was considered excessive and the Court, with the consent of the parties, reduced the judgment to $50,000.This is a much more appropriate case in my view, but it still predates s.46A.

However, comparison to other defamation cases, while of assistance, is arguably only relevant to s.46A(1), which requires the Court to "ensure that there is an appropriate and rational relationship between the relevant harm and the amount of damages awarded". In determining the amount of damages for non-economic loss to be awarded the Court is also to take into consideration "the general range of damages for non-economic loss in personal injury awards in the State".

The Court of Appeal in John Fairfax Publications Pty Ltd v O'Shane (No 2) [2005] NSWCA 291 re-assessed damages in a defamation case. Young CJ in equity noted at [38]-[39] that, despite s.46A being in force for ten years, there did not appear to have been any substantial brake placed on large awards of damages. This is an important concern and I have taken it into account. Giles JA (at [3]) noted, however, that the law should place a high value upon reputation and, in particular, upon the reputation of those whose work and life depends upon their honesty, integrity and judgment. These factors are also important, and I have given these statements of principle great weight.

However, as John Fairfax Publications Pty Ltd v O'Shane makes clear, this exercise does not require the trial judge to recite a string of awards of damages in personal injury cases and a demonstration of precisely how these were taken into consideration in assessing the damages: see also Moit v Bristow [2005] NSWCA 322.

Although the plaintiff, in written submissions, submits that the imputations in question amount to "a serious libel", imputations as to insolvency or credit would probably fall at the bottom of the range. Gatley on Libel and Slander, 10th edition at paragraph 2.21 notes that while it is true of every householder on most days of the month to say that he owes somebody money, although an allegation that a person is insolvent or will not pay his debts is defamatory.

The level of moral opprobrium likely to be felt by the ordinary right-thinking member of the community about a person who is a bankrupt or a former bankrupt, or who has not paid his debts is likely to be less than allegations of dishonesty or professional incompetence. There has been some debate (at least in texts on defamation) about the circumstances in which such allegations can have a defamatory meaning. In the present case we have the benefit of the jury finding as to defamatory meaning, but that defamatory meaning needs to be seen in a realistic and commonsense way, having regard to the community values that would determine whether or not the publication of such an imputation amounted to a serious slander or not.

In addition to the question of the seriousness of the imputation, there is the very real difficulty of the limited extent of the publication. I should have regard to recent judgments in the New South Wales Court of Appeal concerning publications limited to one or more recipients. In Zarth v Williamson and Ors [2006] NSWCA 246 the Court of Appeal refused leave to appeal and dismissed an appeal from judgments ranging between $2,500 and $30,000 (totalling $80,000) for three plaintiffs where there were publications, including an oral publication to a receptionist, of an extremely limited nature to only a handful of people.

In Jones v Sutton (No 2) [2005] NSWCA 203 the Court of Appeal, although noting there was no appeal from an assessment of damages of $1,000 for each of two publications to one person and $3,000 for publication to three persons, nevertheless indicated, in obiter, that these were appropriate in the circumstances.

In Jones v Sutton a significant part of the case was the claim of "grapevine effect" and evidence was called from witnesses who had heard the matter complained of on the grapevine. The plaintiff in these proceedings, Mr Hennessy, has not brought a claim of "grapevine effect". Although there is a claim for hurt to feelings arising from fear of repetition, to which I shall shortly turn, the reality is that in the six years since the first matter complained of was published, no evidentiary basis for the plaintiff's fears. Indeed, the likelihood is that since these statements are bound up with the defendant's hostility not only to the plaintiff but to Mr Hasler, and had been said on occasions (in three of the cases) when the defendant was affected by alcohol, repetition when the defendant is talking to other persons, and is sober, may be unlikely.

Although the plaintiff did not plead the "grapevine effect", a significant claim was made for hurt to feelings and anxiety on the basis of fear of repetition. I shall now set out the submissions in detail. It is submitted that this was a natural and understandable concern and worry for the plaintiff particularly in light of the repetitions that have been found by the jury to have taken place. It is part of the natural "pain of mind" which accompanies such publications (Rigby v Mirror Newspapers (1963) 64 SR (NSW) 34). Hayne J in Rogers v Nationwide News Pty Limited (2003) 216 CLR 327 at [69] stated: "Two of the three purposes served by an award of damages for defamation are to provide consolation to the person defamed for the personal distress and hurt which has been done, and reparation for the harm done to that person's reputation. Necessarily, then, the amount awarded for defamation should reflect the effects which the particular defamation had on the individual plaintiff. It follows that the drawing of direct comparison between particular cases is apt to mislead, just as the drawing of direct comparisons in personal injury cases can also mislead. Comparison assumes that there is sufficient identity between the effect which each defamation had on the particular plaintiff, whereas in fact circumstances alter cases. The amount allowed in each case should reflect the subjective effect of the defamation on the plaintiff."

I accept the plaintiff's contention that fear by the plaintiff of repetition by the defendant is part of the subjective worry and stress which should be taken into account in the award. 131. Hayne J further states at [73]: "It is of the first importance to recall the fundamental principle that the damages to be awarded for defamation must compensate for the effect of the defamation on the particular plaintiff."

Again at [80]: "It was well open to the trial judge to conclude that the effect of that publication on this appellant is very large."

At [82]: "Where, as is the case with both defamation and personal injury, so much turns on the effect of the wrong on the particular plaintiff, the drawing of such comparisons has obvious difficulty. But more than that, it revealed that any comparison which is drawn must look to the particular plaintiff, not what others may have thought of the defamatory words that were published or what kind of physical injury was sustained."

In Carson v John Fairfax & Sons Ltd (1993) 178 CLR 44 at 70 Brennan J stated that: "Other heads of damage are compensation for the external consequences produced by the publication of the defamation and 'a solatium' for the plaintiff's internal hurt, that is, for the complex of the actions that the plaintiff has experienced as a result of the publication and its external consequences."

At 71: "Damages are awarded also for the plaintiff's injured feelings, including the hurt, anxiety, loss of self-esteem, the sense of indignity and the sense of outrage felt by the plaintiff. Indeed, all those objective consequences and those subjective reactions which flow naturally from publication of the defamatory matter are relevant factors."

At 104 McHugh stated: "The damage which a defamation produces is ordinarily psychological rather than material. It affects the feelings, sense of security, sense of esteem and self-perceptions of the person defamed. As a natural consequence, a defamation excites the anger and resentment of the victim and often enough generates a desire for retribution … … If an award of damages in a defamation action is to fulfil its social purpose, it must be high enough to assuage the hurt, indignation and desire for retribution which the plaintiff feels."

It is submitted that consolation damages can, and in this case, should take into account the requirement to assuage a person who has a fear of repetition. Jones v Sutton at [79] stated: "The appellant was also entitled to be compensated for the risk of repetition."

If a risk of repetition can be the subject of compensation it is submitted that a fear of repetition can and should be taken into account when assessing the component of consolation damages.

The plaintiff's fear of repetition needs to be seen in context. It is a fear which over the years has not become reality. A fear of repetition, with no evidence over a period of years, starts to look fanciful. A plaintiff may have hurt feelings as a result of fear of repetition of the publication, but this is not an invitation to hysteria.

A plaintiff who brings a claim for defamation, like a plaintiff who brings a claim for damages for personal injury, gives evidence of the hurt and injury suffered. However, in assessing that evidence, I must see it in the context of the occasion or occasions of publication of the defamatory imputations, the extent of publication, the seriousness of the imputations and the warnings and directions given by the New South Wales Court of Appeal about the correct manner in which to interpret evidence by plaintiffs of subjective opinions about the degree of injury suffered. In particular, I should have regard to a number of issues raised in the present case in cross-examination of the plaintiff where the plaintiff's claim of hurt to feelings and of personal violation were subject to scrutiny in cross-examination.

This brings me to a consideration of the plaintiff's evidence on hurt to feelings generally.

I set out in the course of the summary of evidence above a number of the statements made by the plaintiff about his hurt to feelings. On two occasions he told the Court he felt he had been "violated". His language in relation to his reaction to these publications was dramatic and his demeanour in the witness box when speaking these words was similarly dramatic. He was angry that the defendant had defended the case, that a local solicitor named Mr Higgins had acted for him, and that Mr Campbell SC and Mr Weaver had appeared in the matter as barristers, and he said so on several occasions.

When considering the rational relationship between the harm as required by s.46A and the awards made in personal injury cases, it is helpful to note the importance of not merely accepting a statement by a plaintiff as to the degree of hurt to feelings, or pain and suffering (in the case of a personal injury claim) but to look at it objectively on the evidence in the manner advised by the Court of Appeal in The Nominal Defendant v Kostic [2007] NSWCA 14 and Goodrich Aerospace Pty Ltd v Arsic [2006] NSWCA 187.

While the plaintiff expressed his hurt to feelings strongly from the witness box, in practical terms it was apparent from his attacks on the defendant's legal representatives, from his conduct towards Mr Fish and his conduct of other contentious matters, such as the breakdown of his relationship with his former partner, that he is a man who does not brook opposition lightly. He was upset by the defendant's conduct because the defendant, having been sent a letter, had made the allegations again, and I have set out above the portion of transcript in which the plaintiff made this clear.

It is illuminating that the plaintiff's wife was completely unaware that her husband's business had broken down. This is not to criticise the plaintiff, but it is an indication of his ability to put aside what must have been pressing business concerns, that he was able to conduct the entirety of the breakdown of his business partnership without even telling his wife about it.

Hurt to feelings is a very difficult matter for any trial judge to measure. However, I have had the benefit of seeing the plaintiff in the witness box and hearing him answer questions. I have seen the anger on his face when he addressed Mr Campbell SC. He clearly is very upset about these publications, but they need to be seen in the history of the extremely poor relationship between the plaintiff and defendant going back to the earliest days of their relationship. I find that his anger with the defendant relates to other matters in which the statements forming the cause of action in these proceedings play only a part.

Accordingly, when considering the hurt to feelings of the plaintiff, I am of the view that there is a degree of exaggeration in his claim that he has felt "violated" by these publications and by the cross-examination of Mr Campbell SC.

Senior counsel for the defendant put a number of matters to me in mitigation. The first is the delay in commencing proceedings over the first and second publications, asserted to have occurred in 2000 (in fact in 2001) and 2002.

A letter requesting an apology was sent in relation to the second publication, and claims of delay in relation to this publication are understandable. However, the first publication was not the subject of proceedings until after my judgment of September 2006. That tends to suggest that any hurt to feelings caused by this publication was minimal. I have taken this into account in relation to the first publication.

Secondly, senior counsel for the defendant submitted to me that these were slanders to one person and that the recipient of the slander fell within the exception referred to in Jones v Sutton. I do not accept this submission. The fact that Mr Hasler knew the truth did not stop there being a doubt in his mind, as he said in his evidence. However, with all due respect to Mr Hasler's evidence, any doubts he had were largely being laid aside by the time of the third publication and the fourth publication, as can be seen by his reports to the plaintiff that the defendant was "at it again".

In practical terms, there are few mitigating circumstances for these publications. I now turn to a consideration of the claims for aggravated compensatory damages.

The plaintiff brings a claim for aggravated compensatory damages in relation to the following matters: (a) the defendant failed to make any or any proper enquiries as to the truth of the matters complained of; (b) the defendant gave the plaintiff no forewarning of the allegations he was about to make and gave no opportunity for the plaintiff to rebut them; (c) the falsity of the imputations; (d) the defendant's failure to offer an apology; (e) the matters complained of were published with malice and with the express purpose of causing damage and loss to the plaintiff.

In addition, the conduct of the trial and the pleading (and discarding) of a defence of partial justification are relied upon. I shall deal with each of these in turn.

Failure to enquire may be due to negligence, but such failure may also be evidence of recklessness, especially enquiry would have nailed the lie: Andrew v John Fairfax & Sons Ltd [1980] 2 NSWLR 225.

Cases about failure to enquire tend to relate to written publications rather than to words spoken in anger on in the course of a dispute: David Simon Co v Mather [1977] VR 516. In Kiam v Neill [1996] EMLR 493 (CA) the Court considered the defendant acted irresponsibly by failing to check the accuracy of a serious charge of insolvency against a prominent businessman.

The defendant's failure to enquire was foolish, especially after he was put on notice by the plaintiff's solicitor's letter, as to the later publications, that any such claim was false.

Recklessness in publication, if it has affected the plaintiff, may aggravate the damages (Andrews at 244 per Hutley JA). The failure of the defendant to make proper enquiries in relation to the fourth publication is of greater significance because he had been told in relation to the second publication that what he was saying was false.

However, in relation to the first and second publication, the failure to enquire would carry less weight. An obligation to enquire into everything one hears in daily life, including rumours circulating throughout the community, is not an expectation that the Courts should lightly impose. Consequently, while of significance for the fourth publication, this is not an issue of significance for the other publications.

Again, this is a particular more routinely given in relation to written publication rather than words spoken in anger. It is difficult to see what obligation the defendant would have had to give a warning that he was going to say something bad about the plaintiff. In my view, this is not an appropriate matter for aggravation of damages in relation to any of the publications.

I have heard Mr Fish's evidence in relation to this issue. In my view, it should be given limited weight at best. While it would appear that the plaintiff was in fact (rightly or wrongly) refused credit on one occasion and later terminated his account with Fish & Sons, that is no justification for the publication of imputations of bankruptcy or denial of credit at other premises. Accordingly, the evidence of lack of falsity of the imputations should be given only limited impact.

There is no doubt that the imputations in relation to being a bankrupt and a former bankrupt were false. The hurt to the plaintiff's feelings was increased by reason of this falsity. Accordingly, this is an appropriate matter for aggravated compensatory damages.

No apology was ever sought for the first publication and the first publication is not referred to in the letter following the second publication.

In Jones v Sutton (No 2) the Court of Appeal emphasised the need for an apology to be a genuine request. The language in which the apology was couched warned of proceedings being commenced and is minatory in terms. It was nevertheless a warning to the defendant and he appears to have behaved himself for three years thereafter. He may not have apologised, but he appears to have refrained from offending again until the two occasions of the third and fourth publications when, as was the case with the second publication, he had been drinking and was arguing with Mr Hasler.

No apology was ever sought for the third and fourth publications; instead, proceedings were commenced. This is perhaps unfortunate, as perhaps a reminder letter from the plaintiff's solicitors might have obviated the need for these proceedings.

The failure to offer an apology following the second publication in my view ought to apply mainly to the second publication, but the defendant could have apologised, even though no further apology was sought, at any time for any of the publications. The period of time and the circumstances of the publication of the third and fourth matter complained of need to be taken into account in assessing whether it is appropriate to regard it as conduct warranting the award of aggravated compensatory damages for repetitions of a libel when the falsity of the libel has been drawn to the attention of the defendant. It is my view that any claim for failure to apologise should accordingly be restricted to the second publication, notwithstanding the fact that there are two further publications following this request.

It was open to the defendant to apologise for the other publications after commencement of proceedings. He did not do so, and this is a relevant factor to take into account on the issue of aggravated as well as general compensatory damages.

Publication of the matters complained of with malice

Malice or vindictiveness may be a basis for the award of aggravated compensatory damages. The decisions need to be read with some caution, because in some jurisdictions, such as Canada, malice is a pre-requisite for the award of aggravated damages: Hill v Church of Scientology of Toronto (1995) 184 NR 1 (SCC), whereas Australian courts have taken the view that where punitive damages are not permitted by statute (as is the case in New South Wales) malice is not relevant to the assessment of aggravated damages except insofar as the malice affects the harm suffered by the plaintiff: Carson v John Fairfax & Sons Ltd (1993) 113 ALR 577; s.46A Defamation Act 1974. In addition, there is a requirement that the plaintiff be aware of the defendant's state of mind: Waterhouse v Broadcasting Station 2GB Pty Ltd [1985] 1 NSW 58.

It is clear from the facts in this case that the plaintiff and defendant detested each other. Prior hostility and ill will is evidence of malice. There is evidence of malice in relation to each publication.

Filing and then withdrawing a defence of truth; conduct of the litigation

Filing a defence of truth recklessly will inflame the damages: Herald and Weekly Times Ltd v McGregor (1928) 41 CLR 254 at 262. Withdrawing the defence does not cure the problem. Conduct of the litigation, including excessive or prolix cross-examination, can be evidence relied upon for aggravation of damages.

The filing of a defence of partial justification in these proceedings was foolish, because the truth of these lesser imputations would never outweigh imputations of bankruptcy. There was, however, some evidence of the truth of the imputations about Fish & Sons, in that Mr Hasler agreed that the imputation about Fish & Sons was true. Again, while that may be an appropriate matter to raise in relation to a claim for aggravated compensatory damages, it did not warrant the filing of a defence of truth. This is an appropriate ground for claiming aggravated damages.

The conduct of the litigation (excluding the filing of the justification defence) is a more difficult issue. The law concerning whether a claim of aggravated damages entitles a defendant to lead evidence of falsity is settled. I note that in Elliott v The Age Company Ltd [2006] VSC 52 appears to be in contradiction to the explanation of s.47 by McHugh J in Singleton and Anor v Ffrench (1986) 5 NSWLR. Nevertheless, the defendant is entitled to lead such evidence.

Courts have always been slow to draw inferences from the conduct of proceedings by counsel. Litigation is by definition adversarial in nature in our legal system and parties should be entitled to put and plead their cases without fear of additional claims for damages. Only when a party has crossed the line in some way should such a claim be considered.

The conduct of this case by the solicitors and barristers retained on behalf of the defendant has been entirely proper and, in my view, does not warrant any claim for aggravated compensatory damages.

I have had regard to the principles of law and the evidence in this case referred to above. I have given particular weight to the competing considerations referred to by Young A-JA and Giles JA in Bristow v Moit. I have also had regard to recent appellate decisions concerning the extent of damages to be awarded in publications of a limited nature.

Defamation actions about publications to one person only are very rare. In the present case, all four publications were made to the same person, over a period of some years. Three of them occurred in circumstances where the defendant was affected by alcohol and was insulting the recipient of the publication as well as the plaintiff. I appreciate that the plaintiff is upset by these publications, but they must, on any fair minded and objective analysis of the facts in this case, fall at the bottom of the range of damages, particularly when having regard to the comparative degree of seriousness of these imputations.

Accordingly, it is my view that the assessment of damages should be as follows: (a) The first publication - Taking into account the long period of delay prior to commencement of these proceedings and the other factors referred to above, and considering the publication was a few words giving rise to a single imputation, this is an appropriate matter for an award within the range referred to by the Court of Appeal in Jones v Sutton (No 2) and, accordingly, I award $1,000. (b) The second publication - This is a more serious publication in that it contains a number of imputations. In addition, there are aggravating features of a more considerable nature than the first publication. Taking all of the above factors and the circumstances of publication into account, I award $5,000.

(c) The third publication - I have found for the defendant in relation to this publication but I consider, particularly taking into account the three year gap and the circumstances of the defendant's intoxication and bad language on both sides, that the damages for this imputation would fall at the bottom of the range and, if I were to award damages, I would have awarded damages in the sum of $1,000.

(d) The fourth publication - This is the most serious publication. There are quite substantial aggravating features, including the repetition of the libel in circumstances where the defendant had been put on notice as to the falsity of the imputations and where (unlike the third publication) there was no provocation. The presence of a number of aggravating features would put the damages towards the top end of the range for a publication to one person of imputations of this level of seriousness and I award the plaintiff damages in the sum of $10,000.

The parties have liberty to bring in short minutes of order reflecting mathematically agreed sums for the calculation of interest.

The plaintiff has succeeded in three out of four of the publications. The parties may wish to raise some of the costs issues discussed by the Court of Appeal in Jones v Sutton. The defendant's senior counsel indicated as much in the course of submissions. It is my view that it is preferable for me to make no order for costs for the time being, but to reserve costs, in anticipation of receiving submissions from both parties on this issue. For me to express a provisional view may be considered to be a prejudgment of the matter in circumstances where I have not given both parties adequate notice of my findings and listened carefully to their submissions in relation thereto.

Orders (1) Judgment for the plaintiff in relation to the first publication (on or about 6 October 2001) in the sum of $1,000. (2) Judgment for the plaintiff on the second publication (on or about 14 October 2002) in the sum of $5,000. (3) Judgment for the defendant in relation to the third publication (on or about 18 December 2005). (4) Judgment for the plaintiff in relation to the fourth publication (27 March 2006) in the sum of $10,000. (5) Parties have liberty to bring in short minutes of order containing the mathematically agreed interest payable on the judgment of $16,000. (6) Issues of costs reserved, and the parties to have liberty to apply. (7) Exhibits remain with the file for 28 days.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.