Pettiona v Nationwide News Pty Limited

1. Proceeding NSD1060 of 2019 styled as "Shane Pettiona v Nationwide News and Ors" and proceeding NSD1061 of 2019, styled as "Darren Pettiona v Nationwide News" be consolidated as one proceeding pursuant to r 30.11 of the Federal Court Rules 2011 (Cth), such that there be one proceeding in which Shane Pettiona and Darren Pettiona are applicants, with Shane Pettiona as the first applicant and Darren Pettiona as the second applicant, and bearing the proceedings number 1060 of 2019 (Consolidated Proceeding).
2. The costs of both parties in the proceedings prior to consolidation be the costs of the parties in the Consolidated Proceeding and all steps taken in each proceeding be regarded as steps taken in the Consolidated Proceeding.
3. The applicants in the Consolidated Proceeding file a statement of claim in that proceeding naming both applicants as applicants by 10 October 2019.
4. The respondents file a defence by 16 October 2019.
5. The applicants file a reply by 23 October 2019.
6. The costs of the application for consolidation and the costs associated with bringing two proceedings rather than one proceeding be the costs of each party in the proceedings. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Revised from the Transcript LEE J: 1 In July 2019, two proceedings for defamation were commenced. Mr Shane Pettiona commenced a proceeding (NSD1060 of 2019) against Nationwide News Pty Limited and Mr Ben Butler, a journalist employed by Nationwide News. Shane Pettiona claims that Nationwide News published two articles on 3 June 2019, being a printed article entitled "Island paradise on market comes with slight catch" and an online article entitled "Island paradise for sale comes a snag". 2 Shane Pettiona claims that the publications carried defamatory imputations including that he: (a) misappropriated part of a $20 million insurance payout for damage caused by "Cyclone Pam" and used the money instead to build a casino; (b) knowingly authorised a company to trade while insolvent; (c) acted unlawfully by authorising the company to take possession of corporate assets, including insurance moneys; (d) unlawfully took money from the body corporate of an island resort; and (e) unlawfully authorised his company to enter into uncommercial transactions that led to the insolvency of the body corporate. Shane Pettiona seeks general damages and aggravated damages, permanent restraining orders and orders that the alleged defamatory matters be permanently removed from relevant websites. 3 The other proceeding, NSD1061 of 2019, commenced by Mr Darren Pettiona, makes essentially the same allegations. 4 The matters first came before me in late July 2019. At a case management hearing, I asked the parties why two proceedings were commenced and why the proceedings ought not be consolidated, consistent with the case management objectives identified in Pt VB of the Federal Court of Australia Act 1976 (Cth) (FCAA). 5 It became evident that the only rationale for commencing two proceedings was to safeguard against the prospect that the statutory cap on damages provided for by s 35(1) of the Defamation Act 2005 (NSW) would be construed as applying jointly to multiple applicants in a single set of proceedings. Section 35(1) is in the following terms: 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. 6 For reasons I will explain, I do not consider that the understandable wariness of the applicants was, as it turns out, necessary. 7 It has been remarked that the law of defamation is the Galapagos Islands Division of the Australian law of torts - but defamation is a tort and it is fundamental to the law of torts that each successful applicant in an action is entitled to damages in that action in an amount reflecting the loss suffered, subject to any specific statutory limitation. Put more generally, as noted in Sappideen, C and Vines, P (eds), Fleming's The Law of Torts (2011, 10th ed) at 5, "[t]he purpose of the law of torts is to adjust … losses and afford compensation for injuries sustained by one person as the result of the conduct of another". 8 The general compensatory purpose of the law of torts provides an important contextual background to the task of construing s 35. In my view, it is plain that the statutory cap provided for by s 35 applies severally to each applicant rather than to the proceeding in which the individual claim of each applicant is sought to be vindicated. Not only is this consistent with the proceeding being a form of action by which persons seek damages commensurate with the loss that they have sustained (subject to clear and specifically identified statutory limitations), but such a result is also consistent with the only authority of a superior Court to which I was referred that is directly on point. Moreover, as I explain below, this construction is consistent with the extrinsic material. 9 The authority to which I was referred was Cripps v Vakras [2014] VSC 279, in which Kyrou J noted at [590]-[594]: In my opinion, the statutory cap in s 35(1) of the Act applies severally to each plaintiff in a proceeding involving multiple plaintiffs. I accept that a literal reading of the words 'the maximum amount of damages for non-economic loss that may be awarded in defamation proceedings is …' in s 35(1) of the Act indicates that the cap applies to the proceeding as a whole irrespective of the number of plaintiffs in that proceeding ('Literal Interpretation'). However, other provisions of the Act provide a context which displaces the Literal Interpretation. Further, the Literal Interpretation would have absurd and unjust consequences which could not have been intended by the Act. The statutory context includes ss 8, 34, 38 and 39 of the Act. Section 8 provides that '[a] person has a single cause of action for defamation'. Section 34 requires the court to ensure that 'there is an appropriate and rational relationship between the harm sustained by the plaintiff and the amount of damages awarded.' Section 38 lists five factors in mitigation of damages, four of which refer to 'the plaintiff' and three of them can only apply to each plaintiff individually. Section 39 provides that '[i]f the court in defamation proceedings finds for the plaintiff as to more than one cause of action, the judicial officer may assess damages in a single sum.' These provisions indicate that the assessment of damages must be undertaken by the court for each successful plaintiff separately. Section 39 cannot be given effect where there are multiple plaintiffs because, if a single amount is awarded to all plaintiffs, the parties will not know to what amount each plaintiff is entitled. Further, payment by the defendant to one of the plaintiffs would result in a release of the defendant's obligations under the judgment to all of the plaintiffs. In such a case, no mechanism would be readily available to determine the extent to which the plaintiff receiving the whole amount of the judgment must pay any part to the other plaintiffs. Apart from the practical difficulties set out at [593] above, the Literal Interpretation would create injustice and absurdity and would be contrary to modern litigation practice as reflected in the Civil Procedure Act 2010. That Act directs the court and the parties to conduct litigation in a manner that facilitates 'the just, efficient, timely and cost-effective resolution of the real issues in dispute.' (emphasis added, citations omitted) 10 With respect, I agree. 11 Section 35 cannot be put into some sort of hermetically sealed box separate from s 34, which requires the court to ensure that "there is an appropriate and rational relationship" between the harm sustained by an individual (being the applicant), and the amount of damages awarded. 12 A construction of the provision which would have the effect of placing a cap on an award of damages in a single proceeding, without any reference to the number of applicants who bring their individual cause of action in that proceeding, would not only be in tension with the fundamental purpose of an award for damages in defamation, but could lead to arbitrary and absurd results. As the respondents point out, interpreting the phrase "defamation proceedings" as applying to proceedings as a whole, could result in unintended consequences: for example, in a case involving two applicants where one is successful but the other is not, if "defamation proceedings" means the case as a whole, then the Court would be required to make an indemnity costs order against the defendant pursuant to s 40(2)(a). 13 The purpose of the provision also suggests the construction for which the parties jointly contend is correct. It is unnecessary for the purposes of this ex tempore judgment to explore the reasons why some have described the fact that damages are the principal remedy for defamation as being a mixed blessing. Nor is it necessary to detail the controversy in contrasting defamation awards (which were previously at large), with damages awarded to persons who suffered serious personal injury or other wrongs which were subject to statutory caps, or which were perceived generally as being less generous. 14 These considerations have been debated and addressed under the national uniform defamation laws. In this context, it can be seen that provisions such as s 35 were introduced to give effect to a legislative intention that there be an appropriate and rational relationship between the harm sustained and the amount of damages. This is evident from the second reading speech of the Defamation Bill 2005 (NSW) in both the Legislative Assembly dated 13 September 2005 and the Legislative Council dated 18 October 2005, where the rationale of ss 34 and 35 was explained as follows: In defamation actions, once a court determines that a publication is defamatory, damage to reputation is presumed and does not have to be independently proved by the plaintiff. While economic loss may also be compensated, it is not usually claimed in practice. Recent changes to New South Wales civil liability law have imposed both thresholds and caps on awards of general damages in personal injury cases. In order to be eligible for the maximum award of damages for non-economic loss, which currently stands at $400,000, it is likely that a plaintiff would need to show that they have been rendered quadriplegic or severely brain damaged and will be highly dependent on the care of others for the rest of their life. By way of contrast, in the recent case of Sleeman v Nationwide News Ltd [2004] NSWSC 954, a journalist from the Sydney Morning Herald was awarded $400,000 in damages basically because an article in The Australian conveyed the impression that he was a dishonest journalist. While I have no doubt that false and defamatory statements are harmful, the fact is that reputations may be restored and injured feelings may pass after a time. The pain and suffering associated with an affliction like quadriplegia, on the other hand, will last a lifetime. The bill ensures that this glaring discrepancy in the way damages are awarded is addressed. The bill proposes an indexed cap of $250,000 for general damages, retention of aggravated damages and abolition of exemplary damages, but no cap on economic loss. Aggravated damages may be awarded where the injury to the plaintiff has been exacerbated by the conduct of the defendant, for example, if the defendant has acted maliciously. 15 As can be seen, the objective for introducing a statutory cap on damages had nothing whatsoever to do with limitation of the amount multiple applicants could receive if they sought to vindicate their claim in the same proceeding. Rather, as I have indicated above, the objective was to reduce the disparity between the damages an individual can obtain for injury to their reputation as compared to physical injury. 16 There is nothing about this objective that is achieved by a construction which mandates a joint cap in the one proceeding, while the objective is facilitated if a separate cap is applied to each applicant who commences a defamation proceeding. Moreover, unless a contrary construction was required by a text which was considered to be unambiguous and intractable (which I do not consider to be the case), the contrary conclusion should be avoided on policy grounds, as it would lead to unnecessary duplication inconsistent with overarching purpose provisions (such as s 37M of the FCAA) requiring proceedings in the Court to be dealt with in a cost effective and efficient way. 17 For these reasons, in my view, damages are severable under s 35(1) of the Defamation Act. Having reached that conclusion, there is no reason why the proceedings ought not be consolidated. I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lee.