Moumoutzakis v Carpino

The Applicant provided a written consent to appointment as Strata Managing Agent from J A Somerville Pty Ltd together with a proposed Strata Management Agency Agreement.

On 21 August 2006, the Respondent made a written submission in response to the application.

The Respondent alleges that the application is part of a personal and nasty campaign against him, initiated by the Applicant, Vincent Carpino. The Respondent believes that Mr Carpino is causing trouble because his cleaning services contract for the parcel has been terminated by the Owners Corporation.

The Respondent states that he blocked an existing door to Shop 6, to prevent water overflowing from the drain in the corridor into the shop. He relocated an existing door 300mm further South on the external wall to facilitate a fire & emergency exit.

An external toilet was erected some 7-8 years ago at the rear of Lot 10, because the existing toilet was filthy and unsuable.

It is obvious that over the years the owners have made and implemented decisions that have not been recorded.

The owners should be allowed to make their own decisions and resolutions based on their needs and legal requirements.

The Respondent would like to seek an order approving all existing alterations at their present location and the registration of an Exclusive-Use By-law, to eliminate future arguments.

On 13 August 2006, the Respondent's lot was vandalised. His external toilet was smashed and doors and walls were painted.

The Respondent requested a common sense resolution of the dispute.

The Respondent submitted a number of e-mails and letters from the Applicant with his submission. I find the content of these e-mails and letters quite disturbing.

On 22 August 2006, the owners of Lots 1, 2 and 3 in SP 13595 made a written submission in response to the application.

The owners of Lots 1, 2 and 3 support the application and object to the Owners Corporation allowing privately held buildings to be built on common property, namely the small toilet and the brick building enclosure.

1. The Applicant is the owner of Lot 4 in SP 13595. 2. The Respondent is the owner of Lots 6, 7, 8 & 9 in SP 13595. 3. The Strata Schemes Management Act 1996 ("the Act") applies. 4. The application for an order by an Adjudicator was made by an interested person, namely the owner of a lot in the strata scheme. 5. The application is incorrectly brought against the Respondent. 6. The application should have been brought against the Owners - Strata Plan No. 13595. 7. On 25 July 2006 the Registrar joined Owners Corporation SP 13595 as another interested party to the application.

The Applicant bears the onus of proving the grounds required to make the order sought on the balance of probabilities.

It is submitted that I should make an order under Section 162 of the Act, to appoint a person as Strata Managing Agent of SP 13595, to exercise all the functions of the Owners Corporation.

An Adjudicator may make an order under Section 162 if the Adjudicator is satisfied that the management structure of the strata scheme is not functioning, or is not functioning satisfactorily.

I have considered all the evidence filed and submissions made in response to the application.

There are 11 lots in Strata Plan 13595, which is a commercial scheme comprised of shops and restaurants.

The Applicant is the owner of Lot 4. Mr & Mrs H Moumoutzakis are the owners of Lots 6, 7, 8 and 9. Milton Moumoutzakis is the owner of Lot 10.

Mr Moumoutzakis controls 423 out of 1000 unit entitlements.

The present strata managing agent, Vincent Montano Strata Management Services, was appointed pursuant to a Management Agency Agreement dated 1 August 2005. It appears that there was no meeting of the Owners Corporation to approve Mr Montano's appointment.

The minutes of meetings of the Owners Corporation have not been accurately recorded.

Over the past twenty years, a number of structures have been erected on common property, without formal approval of the Owners Corporation. Some of these structures are being exclusively used by owners or occupiers of particular lots, in contravention of the Act.

The relationship between the Applicant and the Respondent has completely broken down. The Applicant has made veiled threats against the Respondent that cause me a great deal of concern. Both the Applicant and the Respondent are on the Executive Committee of the Owners Corporation SP 13595. It is obvious to me that they cannot work together in the best interests of all lot owners.

It is in the interests of both parties, and the other lot owners, that an independent Strata Managing Agent be lawfully appointed to manage the strata scheme effectively, and to solve the problem of the structures erected on common property.

Taking into account all the evidence provided, I am satisfied on the balance of probabilities that the management structure of Owners Corporation SP 13595 is not functioning satisfactorily.

It is appropriate in all the circumstances to appoint a compulsory Strata Managing Agent to exercise all the functions of Owners Corporation SP 13595.

It is appropriate in all the circumstances to give the compulsory Strata Managing Agent all the functions of Owners Corporation SP 13595, including all the functions of Chairperson, Secretary, Treasurer and Executive Committee.

Once appointed, the compulsory Strata Managing Agent will have sole responsibility to ensure that the management structure of Owners Corporation SP 13595 begins to function satisfactorily.

The Applicant has provided a written consent to appoint J A Somerville Pty Ltd, the holder of Strata Managing Agent's licence issued under the Property, Stock and Business Agents Act 2002 . The requirements of Section 162(4)(b) have been met.

D Forbes Strata Schemes Adjudicator Consumer, Trader & Tenancy Tribunal 22 September 2006"

The removal of Mr Montano and his replacement by the previous strata management company had little or nothing to do with the matters to be raised at the EGM in July. These problems had to be regularised, whoever the strata manager was.

The defendant did make a second application to the CTTT against the plaintiff, seeking orders for the unit 10 toilet and the walls of the store room demolished (exhibit 11). However, this was filed on 17 July 2006, after the motion was sent around, and was in response to its contents.

The other reason given, namely the defendant's wish that persons attend the meeting to vote against the motion, is germane to the occasion of qualified privilege both under common law and pursuant to s 30.

The motions on the agenda should have been framed as a special resolution to amend the by-laws (ss 47 and 52 Strata Schemes Management Act ) and, after a unanimous vote, should be sent to the Registrar-General's office in proper form (s 48). A by-law can, but does not have to, contain conditions. Section 53 provides that a by-law "may confer rights or special privileges subject to such conditions as may be specified in the by-law (for example, a condition requiring the payment of money by the owner or owners of the lots concerned, at specified times or as determined by the owner's corporation").

Most importantly, where a new structure is erected on the common property, this must be done by a special resolution: s 65A.

The purpose of the Strata Schemes Management Act is to create an alternative mode with distinctive requirements to requirements under legislation such as the Conveyancing Act 1919 ( White v Betalli [2007] NSWCA 243 at [30] - [32]). The purpose of the Act was to introduce "more flexibility" into strata title schemes concerning "day-to-day issues" (Minister for Housing, NSW Legislative Assembly, Hansard (no. 254), 13 November 1996 p. 5921).

This information, if contained in the defendant's letter, together with information about the entitlement of the body corporate to seek publication, would have been entirely proper.

However, there is nothing in the matter complained of capable of conveying this kind of information. It is a series of statements which must have been known by the defendant to be false. In particular:

(a) "I am not fully qualified lawyer but I have done a Law course" . This was false. The defendant conceded in cross-examination that he had not completed a Law course of the kind required to become a fully qualified lawyer. He had not studied any relevant course subject containing information concerning strata title law, although he had completed a continuing education course on family law at the University of Sydney.

(b) " Why we want another meeting when we already had one on 29th May 2006???? " This was false, because the defendant well knew that the position had to be regularised, and also because the meeting on 29 May had been the annual general meeting and this issue had not been under consideration.

(c) The plaintiff had taken possession " illegally " and " against the law "; the plaintiff and the strata manager were " law's breakers " and the owners were asked to " punish the LAW' BREAKERS ". This was false to the knowledge of the defendant. He knew there had been approvals given many years ago, that the problem was that this was not properly done, and that the situation needed to be regularised.

(d) " Marrickville Council is investigating this, but they are a bit slow. A Solicitor has been appointed, because we want the LAW to win ". There was no evidence of any investigation by the council or appointment of a solicitor.

(e) " I have put two Applications with the FAIR TRADING …and will be a meeting in the CITY on 25th July (if you wish to come along) and that is why they have called this URGENT MEETING ". However, the notice was sent around on 7 July and reached the defendant some time before 17 July, which is the date of the second of his applications. It was the defendant's complaint to the CTTT that was in response to the notice of meeting, not the other way around. There was only one application to the CTTT, calling for Mr Montano to be removed. This was not an impediment to these resolutions.

(f) The whole premise of the publication was false. If a unanimous resolution was required, then only the defendant needed to vote against the motion. However, it is not clear to me that the defendant actually understood this, so I have not treated this as being knowingly false. It was, however, a reckless statement to make, when the terms of the Strata Schemes Management Act are quite clear, and he had received this advice from the CTTT which he was able to impart more rationally in his letter of 9 December 2007 (Exhibit R).

(g) The plaintiff was not a gangster. The defendant knew this, but used the word " gangster " to entice people to read the publication and vote against the plaintiff.

The matter complained of contained a series of statements known by the defendant to be false. It was, in addition, couched in language of the most extreme kind. The plaintiff is called a "gangster" (three times), a 'LAW'S BREAKERS" (twice) and it is because of "fears that the LAW will take over" that the plaintiff is acting "illegally" (twice) and "against the law". "[G]od knows what will happen next". Finally, the defendant calls on the other owners to "punish" the "LAW'S BREAKERS".

The few truthful statements are that this is a meeting of great importance and that all the owners need to vote.

In Calwell v Ipec Australia Pty Ltd (1975) 135 CLR 321 at 322 - 3, Mason J cautioned against a close textual analysis of the words and that whether the language was extravagant would depend on the facts of the case (cited with approval in Pinniger v John Fairfax & Sons Ltd (1979) 26 ALR 55 at 61 - 2; Shelmerdine v Mewett [1993] SASC 3932 at [15]). Greater violence of language may be expected where someone makes an unexpected discovery, or is party to a hot dispute, and such words should not be weighed in "nice scales" ( Penton v Calwell (1945) 70 CLR 219 at 243). Severe language and wrongheaded criticism is not necessarily evidence of malice: Peterson v Advertiser Newspapers Ltd (1995) 64 SASR 152.

However, in the present case, the insults are so extreme that they actually get in the way of any coherent understanding of the publication, very much in the same way as the publication in Skalkos v Assaf (2002) Aust Torts Reports 81-644.

Both before and after publication of the matter complained of, the defendant wrote approximately one hundred letters and emails to the strata manager and to the plaintiff in which he made serious allegations about the plaintiff.

Counsel for the plaintiff only tendered part of this correspondence. What was tendered was sufficient to show the sarcastic and insulting tenor of this avalanche of correspondence. On some occasions, the defendant sent up to four emails a day, as well as letters.

I have set out extracts I consider relevant. Some of them (as particularised in the Statement of Claim) refer to or repeat the allegations in the matter complained of; this is relevant to the issue of aggravated damages. Others are relevant to the issue of malice because they refer to the letter terminating the defendant's cleaning contract (which the plaintiff submits is the true motive for publication of the matter complained of), or because the defendant boasts about his ability to harass the plaintiff and Mr Montano, this being evidence of hostility and ill will. I have set all of these extracts out together because it is important to read this correspondence in chronological order in order to arrive at accurate findings of fact on all these issues:

(a) "… APOSTOPOULOS MOUMOUTZAKIS has built a shed, ILLEGALLY, as a permanent fixture on the COMMON PROPERTY… [letter to Mr Montano, 5 June 2006];

(b) "… you give them false expectations and illegally [sic] opinions… Do you get FREE kebabs or financial remuneration from him??? … How can you say to the poor ignorant man that an illegally [sic] structure from every corner be adopted!!! [letter to Mr Montano, 17 July 2006];

(c) "The storm pipe was blocked while an illegal CONSTRACTION [sic] was going on and by the negligence of your workmen and not taking care and attention of the environment… I was not consulted by you nor by your cohort the STRATA MANAGER, and that contravene [sic] all the rules and LAWS of the ACT OF THE STRATA SCHEME [letter to plaintiff, 6 August 2006];

(d) "During the months of March, April and part of May I could not park my car in the car park because of his building materials and debris while his ILLEGAL construction in a [sic] COMMON PROPERTY WAS GOING ON. He has usurp my land by 750 cm." [letter to plaintiff's solicitor, 7 August 2006];

(e) "This maybe is Montano and gang style or could be vietnamese or greek [sic] from the mountains of Peleponnesus [sic] but not the CARPINO style… September will be the big decision of the Adjudicator, the ones inefficient and the culpable ones will pay the price." [email to Mr Montano, 15 August 2006];

(f) "When will be Armageddon day??? Very soon." [email to Mr Montano, 16 August 2006, sent at 2.16 am];

(g) "ARMAGEDDON day is coming very soon" [email to Mr Montano, 16 August 2006, sent at 6.58 am];

(h) "The acting committee was ALBATROSS and his cohort Vincent Montano. Give a break! Put your head in a bag." [email to Mr Montano, 16 August 2006, sent at 10.43 pm];

(i) "Until you persist to run my STRATA PLAN ILLEGALLY I will bombard you with these messages until the end of the earth" [email to Mr Montano, 17 August 2006];

(j) "… as long as you persist with force and illegality, to control MY strata plan…" [email to Mr Montano, 18 August 2006];

(k) "… at next meeting do not bring the VIDEO man, because I'll summon you or I'll scream at you very loudly as I have done in the past. MY BEST WISHES TO ALL OF YOU. Vincent Carpino, your best friend" [email to Mr Montano, 19 August 2006];

(l) "Yesterday the 'TRIUMVIRATE' met once again. The only difference was that this time, ONE was ignorant, one spastic and the powerful one can NOT read or write." [email to Mr Montano, 19 August 2006];

(m) "Do you remember the famous and excellent first letter addressed to me??? Dated 27th March 2006. Quote: I VINCENT MONTANO and the executive committee have come to the conclusions that your services are no longer required as [sic] 31 March 2006". Once again the 'TRIUMVIRATE'. Who are they????? One ignorant, one spastic, the other one can not read or write." [email to Mr Montano, 20 August 2006];

(n) "You treat us as pigs. When you are the BIG FAT PIG. When are you going to realise you run MY STRATA PLAN ILLEGALLY?" [email to Mr Montano, 20 August 2006];

(o) "YOU CAN'T ESCAPE THE LAW. Yes, Mr Montano you can call 100 meetings but you are not escaping the LAW, you and your two cohorts and best friends. Money is not the problem, time is the problem. Better go for a confession on Sunday day [sic]. Good luck." [email to Mr Montano, 20 August 2006];

(p) "Mr Moumoutzakis not only is capable to [sic] rob LAND from the OWNERS CORPORATION, also he can see trough [sic] the wall because he has a magic secret power or clairvoyant. A person with many talents." [letter to Mr Montano, 20 August 2006];

(q) "that illegal new construction put up by APOSTOLOS MOUMOUTZAKIS [letter to Mr Montano, 21 August 2006];

(r) "the two stooge's meeting' [referring to the minutes of the Executive Committee] [letter to Mr Montano, 22 August 2006];

(s) "Do you keep my emails??? They are a bit of fresh air. You must have a big collection by now??" [email to Mr Montano, 24 August, 2006];

(t) "If you think I have initiated a personal and nasty campaign against you - IT IS NOT TRUE. The eternal LAW is: if you do something wrong you should be penalized. You have done wrong in relation to the LAW, and in relation to the STRATA PLAN 13595… Telling blatant lies without evidence means nothing, what it means [sic] stupidity and ignorance. STOP telling LIES and baseless stories, does not advance your excuses." [letter to plaintiff, 25 August 2006];

(u) "The illegal MONTANO AND the illegal ALBATROSS. Do you remember your fatal date 27-03-06?????" [email to Mr Montano, 25 August 2006; the reference to 27 March is to the date on the letter terminating the defendant's cleaning contract for the body corporate];

(v) "Have you been for confession this morning???? Do you remember the international (two lines) famous, excellent, fantastic letter (and maybe stupid) of the 27-3-2006? The first and last letter. If is part of one LAW of physical science: "Every action create reaction." Please, do not write any more reports because they will be more nails in your coffin" [email to Mr Montano, 27 August 2006];

(w) "To the illegal manager of STRATA PLAN 13595, and the secretary of illegal construction, aia [sic] would like to inform you that all the boys and girls are getting ready for and when will be your departure. The big party will go on for weeks, with balloons and stremars [sic]. Please, do not forget to purchase ONE WAY ticket only. Goodby [sic] and bon voyage." [email to Mr Montano, 27 August 2006];

(x) "VOODOO MAGIC OF MONTANO. SIR, I have been shouting at you, I have been outcrying at you - TO GO - Any sane person would have done so, by now. For you, grasping and understanding things is a bit of a problem. The only way is to use the whip, that is the only solution. You and your stuff too inefficient. Your luggage ready yet??? [email to Mr Montano, 28 August 2006];

(y) "I ordered a Notice Board can not [sic] get the most suitable one, orders from Montano LAW and a stooge. You must go, yes you must go. Yes, you will go, yes, you will go." [email to Mr Montano, 28 August 2006];

(z) "when and where montano and albatross (hoping very soon) are gone…" [email to Mr Montano, 29 August 2006; the defendant agreed in cross-examination that references to "albatross" were to the plaintiff];

(aa) "We have plenty of tangible evidence from you, actions of taking possession of COMMON LAND not once but in 3 different times, as you have stated in a document under my possession… You think you are the KING OF THE SHOW… You don't know the LAW, or you don't understand the LAW, or you ignore the LAW. It is impossible to understand the LAW when you don't understand the ENGLISH language." [letter to plaintiff, 14 September 2006];

(bb) "This is my last warning to you, no more mercy… No more warnings, this is final. It took 20 years to move your big rubbish container from my car spot. It took 10 years to move your two 44 gallon drums from my car park… I COULD NOT park in my car park because was [sic] full of timbers and an old sink and plus blue metal, while the illegal construction was going on plus renovations." [letter to plaintiff, 24 October 2006];

(cc) "The respondent has treated us as morons for too long. The illegality of illegal construction has been done in four different times so he is well aware of his actions. NO MERCY FROM ME. Owners of lots 1, 2 and 3 made a submission also. The respondent was well aware of taking possession of portion of LAND that was part of the common property. If there are any other issues or contradictions wild and witless, outside the illegality of the Structures must be solved by an expert in the field or by a COURT." [letter to Mr Sarroff, 19 March 2007];

(dd) "Why the Owner's Corporation has to give an other opportunity for proposal when the TRIBUNAL has already spoken? THE SENTENCE has already been given" [letter to Mr Sarroff, 22 March 2007];

(ee) "There is not one word when ALREADY the land of the owner's Corporation has been taken or better said ROBBED. What is your view? What is your reply? Not one word in the LAW about proposal by Moumoutzakis when the land has been taken already." [letter to Mr Sarroff, 13 April 2007];

I make the following findings in relation to malice concerning the defence of qualified privilege at common law and pursuant to s 30:

(a) I accept the plaintiff's submission that the defendant's sudden concern about these long-standing encroachments on the common property was largely as a result of his anger at the circumstances of the termination of the cleaning contract. The references to this letter in his subsequent correspondence make this quite clear. He admitted in cross-examination he considered the letter terminating his services disrespectful (T 164, 206-7). Whether or not this letter was disrespectful, it was not an excuse for an unwarranted attack on the plaintiff for taking steps to regularise the situation concerning structures on the common property;

(b) I accept the plaintiff's submission that the defendant resented the plaintiff because he thought the plaintiff had become, to use his own words, "king of the show" and that his motivation in opposing the regularisation of the situation was not a legitimate concern as to the plaintiff's activities but a desire for revenge. The defendant's abusive and insulting conduct towards not only the plaintiff but all three managing agents is of significance. After Mr Montano was replaced by Mr Sarroff, the defendant began to attack Mr Sarroff, eventually writing "I thought Montano was bad enough, here history repeats itself" and Mr Sarroff was removed. The current managing agent, Mr Conides, was called by the plaintiff, and gave evidence of continuing complaints by the defendant;

(c) the defendant's failure to consider the matter complained of was capable of conveying serious imputations was reckless;

(d) the defendant admitted in cross-examination that what inquiries he made were selectively used (T 176) and he never made inquiries of the plaintiff;

(e) the defendant did not have any belief in the truth of the imputations and abandoned a plea of truth to (c);

(f) the defendant conceded that some of the language (e.g. "gangster") was excessive.

Individually each of these is capable of amounting to evidence of malice. When viewed collectively, these matters paint a very clear picture of a defendant motivated by malice to publish serious allegations which he knew to be false, out of anger and a desire for revenge. Accordingly the defences of qualified privilege both must fail.

It is a defence to the publication of defamatory matter if the defendant proves that the circumstances of publication were such that the plaintiff was unlikely to sustain any harm."

The particulars provided under cover of a letter dated 27 February 2007 were to the effect that the matter complained of was delivered to not more than eight persons excluding the plaintiff, that each of those persons had a special interest in the matter and was in a position to verify the facts therein.

The defence of triviality under the new Act is explained by Simpson J in Holmes v Fraser at [77].

The extent of circulation of the matter complained of in Holmes v Fraser was 629, a far greater number than the handful of people who read these publications. However, the potential for damage was high. Each of the members of the body corporate could vote against the plaintiff ( Holmes at [80]) and apart from Mr Tranh did in fact do so. The use of the very strong word "gangster" had potential for harm and the defendant admitted as much in the witness box.

Limited extent of publication, by itself, is insufficient for the defence to succeed. The defence of triviality has failed even where the publication is only to one person: Jones v Sutton (2004) 61 NSWLR 614.

The defence of triviality may be made out where there is publication 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 of any substance in the imputation conveyed: Doelle v Bedey [2007] QCA 395 at [10]. The circumstances in which the publication was placed on the electricity cabinet for any passers-by going to use the toilet could not hope to satisfy such a test. Nor could it be said that the plaintiff was "unlikely to suffer any harm" following publication of a letter containing legal advice from a person purporting to have legal training which accused the plaintiff of conduct of a very serious nature.

Section 13 Defamation Act 1974 (NSW) required only that the plaintiff was "not likely to suffer harm". Section 33 Defamation Act 2005 requires that the plaintiff be "unlikely to suffer any harm". Whether this is a mere restatement of the same provision, or places the bar higher, may be a matter for debate, but on any test the likelihood of harm flowing from such a publication, given the extreme gravity of the imputations and the circumstances in which it was made, is very high. Accordingly the defence under s 33 fails.

All defences having failed, I now consider the issue of damages.

The matter complained of was addressed to four persons, who were fellow shop owners in the strata plan. However, the additional copy of the matter complained of which was pasted on the electricity cabinet for several days was read by other persons, such as Mr Hai, the tenant of shop 6, and also, I find, by one or more of the persons who called out "a gangster" at the plaintiff over a period of time commencing shortly after the notice was placed on the front of the electricity cabinet.

A plea of "grapevine effect" is made in reliance upon this evidence. The relatively small number of readers is comparable to the extent of publication in Trantum v McDowell [2007] NSWCA 138. The facts in that matter was very similar, in that a defamatory publication was circulated to approximately one dozen owners in a strata title complex. However, that case was decided in accordance with the principles relevant to the Defamation Act 1974 (NSW). It is necessary for me to examine the provisions of the Defamation Act 2005 (NSW).

Provisions of the Defamation Act 2005 (NSW) relating to the award of damages

" 34 Damages to bear rational relationship to harm In determining the amount of damages to be awarded in any defamation proceedings, the court is to ensure that there is an appropriate and rational relationship between the harm sustained by the plaintiff and the amount of damages awarded.

35 Damages for non-economic loss limited (1) Unless the court orders otherwise under subsection (2), the maximum amount of damages for non-economic loss that may be awarded in defamation proceedings is $250,000 or any other amount adjusted in accordance with this section from time to time (the "maximum damages amount") that is applicable at the time damages are awarded.

(2) A court may order a defendant in defamation proceedings to pay damages for non-economic loss that exceed the maximum damages amount applicable at the time the order is made if, and only if, the court is satisfied that the circumstances of the publication of the defamatory matter to which the proceedings relate are such as to warrant an award of aggravated damages.

(3) The Minister is, on or before 1 July 2006 and on or before 1 July in each succeeding year, to declare, by order published in the Gazette, the amount that is to apply, as from the date specified in the order, for the purposes of subsection (1).

For orders under this subsection, see Gazettes No 84 of 30.6.2006, p 5043 (amount declared: $259,500); No 80 of 15.6.2007, p 3793 (amount declared: $267,500) and No 72 of 20.6.2008, p 5482 (amount declared $280,500).

(4) The amount declared is to be the amount applicable under subsection (1) (or that amount as last adjusted under this section) adjusted by the percentage change in the amount estimated by the Australian Statistician of the average weekly total earnings of full-time adults in Australia over the 4 quarters preceding the date of the declaration for which those estimates are, at that date, available.

(5) An amount declared for the time being under this section applies to the exclusion of the amount of $250,000 or an amount previously adjusted under this section.

(6) If the Australian Statistician fails or ceases to estimate the amount referred to in subsection (4), the amount declared is to be determined in accordance with the regulations.

(7) In adjusting an amount to be declared for the purposes of subsection (1), the amount determined in accordance with subsection (4) is to be rounded to the nearest $500.

(8) A declaration made or published in the Gazette after 1 July in a year and specifying a date that is before the date it is made or published as the date from which the amount declared by the order is to apply has effect as from that specified date.

36 State of mind of defendant generally not relevant to awarding damages In awarding damages for defamation, the court is to disregard the malice or other state of mind of the defendant at the time of the publication of the defamatory matter to which the proceedings relate or at any other time except to the extent that the malice or other state of mind affects the harm sustained by the plaintiff.

37 Exemplary or punitive damages cannot be awarded A plaintiff cannot be awarded exemplary or punitive damages for defamation."

The statutory cap under s 35(1) has been adjusted to $280,500.

The manner in which these sections should be applied to defamation proceedings had only been considered in a handful of cases. In Attrill v Christie [2007] NSWSC 1386 Bell J awarded damages of $110,000. In Martin v Bruce [2007] NSWDC 264 I awarded damages of $25,000 for a limited publication to members of a club, where the extent of publication was four persons. Neither of these proceedings was defended as to liability.

There have been two recent awards of damages under the new Act in the Supreme Court of New South Wales in proceedings which were contested as to liability. In Holmes v Fraser damages were awarded for publication of a letter to 629 recipients. However, Simpson J noted at [110] that there was "little material on which to base an award of damages", and that "doing the best I can" her Honour assessed the damages at $70,000.

In Davis v Nationwide News Pty Ltd [2008] NSWSC 693 McClellan CJ at CL explained the working of s 35, rejecting a submission that there should be two "caps" on damages, one in respect of the Daily Telegraph publication and the other in respect of the Sunday Mail publication, for a total aggregate cap of $561,000 prior to any consideration of aggravation.

The nature of defamation means that each letter posted by the defendant, as well as the copy placed on the electricity cabinet, is capable of constituting a separate publication.

The plaintiff submits, and I accept, that I should assess the damages in the same fashion as that explained by McClellan CJ at CL at [8] of Davis .

Section 35(2) provides that damages for non-economic loss may exceed the maximum damages amount applicable if and only if an award of aggravated compensatory damages is warranted.

The operation of s 35(2) has been the subject of debate. In a seminar paper provided to the New South Wales Bar Association on 24 June 2008, Mr T K Tobin QC, who was the Queens Counsel for the plaintiff in Davis , made the following points concerning s 35(2):

"23. The section produces a very strange result unless interpreted to apply to separate defamatory publications and not to proceedings generally. That is, in the Davis case there would be two caps, one in respect of the Daily Telegraph and another in respect of the Sunday Mail for a total aggregate cap of $535,000 prior to any consideration of aggravation.

24. While section 35(1) refers to 'proceedings', section 35(2) refers to 'defamatory matter to which the proceedings relate', in the singular.

25. By section 4 'matter' is defined to include '(a) an article, report, advertisement or other thing communicated by means of a newspaper, magazine or other periodical'. It is significant that it is defined in the singular not plural. This is consistent with the effect of section 8.

26. By section 8, there is a single cause of action for defamation in relation to the publication of defamatory matter about the person even if more than one defamatory imputation about the person is carried by the matter. Thus, the cause of action relates to the particular defamatory matter not to all defamatory matter that may be included in the proceedings or to which the proceedings relate. Thus, in this case there is a separate cause of action in respect of two separate matters. To say that there is a global cap relating to all causes of action, even if they are separate and distinct publications, seems inconsistent with the effect of sections 4 and 8. Moreover, if that is the case then the cap could be circumvented by the procedural device of starting separate proceedings for each publication.

27. Alternatively, by operation of the discretion in section 35(2), damages in excess of the cap may be awarded if the circumstances of the publication warrant such an award of aggravated damages. If the two defamatory publications are regarded as being governed by the one cap on damages, in that relief is sought in the same proceedings, then by operation of section 35(2), the Court may exercise the discretion in favour of increasing damages because of effectively the doubling of the extent of publication, which is a matter in aggravation of damages. This approach ensures that section 35 is not interpreted so as to permit a defendant to avoid pay damages for more than one defamatory publication.

28. Finally, the interpretation of section 35(2) needs to be considered. The literal wording of the subsection means that once the pre-condition is satisfied (i.e. that the circumstances of the publication were such as to warrant an award of aggravated damages) the judge may award damages above the cap. Moreover, there is no limitation on the type of aggravated damages available, such as aggravating factors which arise post-publication."

Mr Tobin QC noted there was as if no authority on the point and that in the absence of any express provision to aggregate or limit existing common law right as to aggregated damages of the kind provided for relating to punitive damages (in s 39) this interpretation should be accepted.

McClellan CJ at CL has, however, rejected this approach at [18]-[20] in Davis .

Having made these preliminary comments, I now turn to a consideration of the evidence on damages.

The plaintiff has lived in Marrickville since 1973 or 1974. He regularly attends the Greek Orthodox Church there and his customers include customers from other shops in Marrickville. He has worked in the take-away food business for all of his professional life.

Prior to publication of the matter complained of, nobody had ever called him a gangster or a criminal (T 38). However, after the matter complained of was left on the electricity cabinet, the plaintiff said that:

"There are drivers that drive outside my place, my shop, and they keep on shouting at me, 'Gangster. You are a gangster' et cetera, and I have reported the case to the police, but they have not been caught as yet."

He was asked how many times this had happened and he said:

"Many times. Even last night, they passed through three times." (T 38)

He had seen the vehicles but he was unable to write down the registration number as the word "gangster" was shouted when the car was moving. The plaintiff went on to say:

"…even people from the units, nearby units, they have complained to the police because of this."

This evidence was not the subject of challenge.

The plaintiff said that he suffered upset when he saw the notice on the noticeboard. He later torn it down and threw it in the rubbish bin (T 34). He said (T 35):

"I see the letter again. I'm shy and I think about it. I was scared to take it off or leave it there. And because maybe I think no good to take it off, not take, to leave there. But not - and then we - me take it off and threw it the rubbish. The time we seen them."

In addition, since these events, the other tenants have stopped talking to him. This made him feel "very awful" (T 37). He said that at the meeting which occurred after the publication:

"Everybody was looking at me as a kind of criminal. We did not reach any agreement in this meeting. That's the reason I found a lawyer, Alex, to continue my case, to take care of my case."

This was identified as the lawyer who looked after the "strata corporation issues" (T 37).

The plaintiff was somewhat inarticulate, and did not give very extensive evidence about hurt to feelings. Nevertheless, it is clear that his hurt to feelings was considerable.

A number of the factual statements made by the defendant were wrong. These included not only the wrong statement that the meeting had been called illegally, but also the false statements made by the defendant about his having studied law to the extent that, while not being a qualified lawyer, he was not far short of this standing. This was a serious misrepresentation. In fact the plaintiff had completed some kind of continuing education course on family law at The University of Sydney. While the defendant was entitled to point out that there needed to be a unanimous resolution and a by-law if parts of the common property were to be appropriated in the manner proposed, and some form of compensation could be sought, this did not entitle him to misstate the situation in the way he did, particularly since the defendant well knew that prior to these changes had all been made a considerable number of years beforehand and that what was being sought to be done was to regularise the situation.

In determining issues relating to award of damages I must have regard to:

(a) The quantum of damages, which must be proportionate sustained by the plaintiff (s 34); (b) The maximum amount of damages for non-economic loss, namely $280,500 (s 35(1)); and (c) I must disregard the state of mind of the defendant, including any malice of the defendant, except to the extent that it affected the harm suffered by the plaintiff (s 36).

I am satisfied that the plaintiff should be awarded general damages. I now turn to a consideration of the award of aggravated compensatory damages.

The plaintiff submits that I should have regard to the following aggravating factors:

(a) The publication was actuated by malice and a desire to harm the plaintiff, and malice may remain an aggravating factor in the assessment of general damages and in particular hurt to feelings, notwithstanding s 36 of the Act.

(b) The defendant repeated the defamatory allegations in subsequent material published to others, including the strata manager.

(c) The falsity of the imputations to the knowledge of the plaintiff increased his hurt.

(d) The conduct of the defence, including the reliance on a defence of justification to the third imputation pleaded, which was dropped at the end of evidence.

(e) The defendant's wrong refusal to apologise to the plaintiff or otherwise retract the matter complained of.

There is substantial evidence of malice, and a feature of the matter complained of and for that matter subsequent publications was an intent to "mock and ridicule" (to borrow the expression used in Davis at [37]) the plaintiff. As it was the case in Davis , although the matter complained of purported to be about a body corporate meeting, the letter was framed in such a personal manner as to amount to malice.

In Davis McClellan CJ at CL rejected a submission that the defendant was running a campaign against the plaintiff. However, the evidence here which I have set out in detail above, indicates to the contrary.

The defendant's affirmation of the defamatory imputation in subsequent material published by the defendant can be seen from correspondence he sent to Mr Montano.

The conduct of the defence, including the late abandonment of the defence of justification, is conduct which may aggravate the plaintiff's damages: Harbour Radio Pty Ltd v Tingle [2001] NSWCA 194. Such conduct was held to justify an award of aggravated compensatory damages in Davis at [32]-[33]. Finally, the defendant's refusal to apologise, when an apology was sought at an early stage of the proceedings, may be relevant not only to ordinary compensatory damages but also aggravated compensatory damages, for the reasons explained by McClellan CJ at CL at [36]. The defendant asserted that he did in fact apologised. The text of his apology is as follows:

RE - APOSTOLOS MOUMOUTZAKIS - YOUR REF. AA: AN: MISC. LETTER 26-07-2006

Please, give me the opportunity to describe the incivility and the bad manners of the odd times I have met APOSTOLOS MOUMOUTZAKIS by the following events:

1. Three years ago he pushed me in a physical way out of his shop because I asked him to move his car from my car park. 2) He has used my two car parks on and off for the last 10 years. Too much kindness. NO THANK YOU, YET!! 3) Two years ago I asked to move his car from my car park once again his reply was: "I can park wherever I like". 4) Last year a big mixing machinery was left in my car park no 4 for at least 3 months. NO THANK YOU - NOR APOLOGIES YET!! STILL WAITING. 4) Forget years ago. 5) Up to this moment he has 2 (two) 44 gallons drums sitting still in my car park - photos have been taken - after numerous requests not only from me but also from the STRATA MANAGER his cohort, and even was mentioned at the AGM May 2006. 6) During the months of March, April, and part of May I could not park my car in my car park because of his building materials and debris while his ILLEGAL construction in a COMMON PROPERTY WAS GOING ON. He has usurp part of my land by 750cm.

If he is able and capable in his Own writing to apologize six times to me I will apologize for my alleged comments, if he can prove it. I shall wait until the pigs will start flying - maybe - APOSTOLOS is the worst offender in the car park of STRATA PLAN 13595, for uncleanness and disorderly parking. Every tenants every owners can testify his bad manners."

The terms of this letter are such that the plaintiff relies on it in seeking aggravated compensatory damages.

Counsel for the defendant (written submissions, p 2) submitted that damages, if reached, would be "minimal", on the basis that the only harm since publication was that the owners of shops 1, 2 and 3 (in other words, all other owners except the defendant and Mr Tranh) were not so friendly towards him. It is asserted that the minutes of nearly all the meetings since do not evince opposition to the plaintiff's proposals as these other owners either support the plaintiff's proposals or are indifferent to them.

In oral submissions, counsel for the defendant submitted that there was no basis for the award of aggravated damages, particularly since the number of persons who had read the publication was so small. Counsel for the defendant did not address the issue of the impact of the abandoned plea of truth on aggravated compensatory damages.

The purpose of damages for defamation is consolation for the distress caused by the publication, reparation for the harm done to reputation and vindication of the plaintiff's reputation: Carson v John Fairfax & Sons Ltd (1993) 178 CLR 44. As the Court of Appeal has emphasised in Ali v Nationwide News Pty Ltd [2008] NSWCA 183, a solatium for injured feelings forms a large element in the damages awarded for defamation. The award must show that the plaintiff has been vindicated in his reputation and should reflect the high value the law places upon reputation, so the plaintiff can point to the sum awarded to convince a bystander of the baselessness of the charge.

The defendant's submissions fail to address the evidence of the plaintiff concerning the ongoing problems he has had not only with his fellow owners but also with members of the public. Nor do they address his hurt to feelings not only resulting from the original publication but from repetition of the imputations in subsequent correspondence to the strata manager.

The plaintiff should be awarded damages which take into account all of the matters referred to by the Court of Appeal in Ali, but in the context of the cap on damages imposed for the 2005 legislation, and paying particular regard to the limited extent of publication.

As a matter of general observation, publications to a handful of persons rarely if ever attract substantial damages. The impact of the cap on damages must mean that awards of damages at the lower end of the scale is appropriate for such publications.

In awarding damages, I should include an amount for aggravated compensatory damages. The bringing of a hopeless defence of partial justification, which was abandoned after the defendant had to make concessions in the witness box is but one of a series of matters which individually and collectively constitute grounds for such an award.

I have had regard to the manner of assessment of damages under the new Act by Simpson J in Holmes v Fraser at [103] - [110]. In particular I note that s 36 provides that I am to disregard the malice of the defendant at the time of publication or at any other time except to the extent that the malice affects the harm sustained by the plaintiff. In Holmes there was no evidence that the malice affected the harm but in the present proceedings the saga of correspondence following the publication and the defendant's conduct of the litigation has affected the harm sustained by the plaintiff. In Holmes there was only the matter complained of but in these proceedings the plaintiff has had to live with these allegations on a daily basis because they have been repeated.

I have also taken into account that pursuant to s 38 evidence of an apology or other mitigation is admissible. The defendant in cross-examination claimed that he would apologise to the plaintiff and said he had already done so (see the text of the letter set out above). The tenor of his offer to apologise in the witness box was much the same as his letter, and far from amounting to apology was a further cause of distress to the plaintiff.

Taking all of the above factors into account, I assess the plaintiff's damages at $50,000.

The parties have asked me to reserve on questions of interest and costs.

1. Judgment for the plaintiff in the sum of $50,000. 2. Costs and interest reserved. 3. Liberty to apply. 4. Exhibits retained 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.