Scott v Bodley

The plaintiff's identification of serious harm

1. The plaintiff sent a concerns notice on 17 March 2022 which particularised serious harm in the same manner as is set out in the next paragraph; the principal difference between this concerns notice and the revised concerns notice of 10 June 2022 is the removal of the call to take down the publications, which occurred on or about 30 March 2022.
2. The plaintiff's revised concerns notice on 10 June 2022 particularised serious harm in the same terms as the previous notice, namely as follows: "Serious Harm to Reputation The effect of the Defamatory Imputations are that the recipients, and anyone they republish the Defamatory Imputations to, will think less of our client and his business and are likely to: (1) not engage our client to perform any services for them; (2) encourage their associates to avoid engaging our client; (3) for those who are already customers of our client, terminate our client's engagement; and (4) share and further disparage our client's professional reputation and personal social standing. The reputational harm suffered and/or likely to be suffered by our client as a result of the foregoing is real, serious and ongoing. Further, it is exacerbated by the large number of recipients of the Defamatory Publications (which we estimate to be in the realm of hundreds, if not thousands of persons and related businesses), the fact the Publications were made on a forum which is obviously public and accessible to members of the public falling within the usual demographic and geographic area in which our client operates his business, which individuals have a higher than average likelihood of engaging our client to perform services for them - the geographic area in which our client's Google and Facebook listings are attached, being the primary location in which our client trades his business. Moreover, it is clear in this case that the Defamatory Publications and the Defamatory Imputations which they carry are a calculated attempt by you to cause harm to our client and to his business."
3. The concerns notice went on to set out the serious harm as follows: "We are instructed that the number of calls made to our client through his Google listing decreased by approximately 50% in March 2022 as compared t February 2022. The number of calls continued to decline into April 2022. It was not until the Defamatory Publications were removed that the number of calls increased, but they remain lower than they were in February 2022. The obvious explanation for the decrease in enquiries is the existence of your client's review. We are further instructed that the number of interactions with our client's Google listing also decreased substantially in March 2022 as compared to February 2022."
4. The particulars of serious harm pleaded in the statement of claim were as follows: 4 The publication of the matter complained of has caused, or in the alternative is likely to cause, serious harm to the Plaintiff's reputation. Particulars of serious harm 4.1. The seriousness of the defamatory imputations carried by the matter complained of; 4.2. The fact that the Defendant published the matter complained of to actual and potential customers of the Plaintiff by publishing it as a Google Review on the Google listing of Pottsville Painting Services, which the Plaintiff uses to promote his business; 4.3. The fact that the Defendant republished the sense and substance of the matter complained of to actual and potential customers of the Plaintiff by publishing it on the Pottsville Painting Services Facebook page, which the Plaintiff also uses to promote his business; 4.4. The number of calls made to the Plaintiff through the Google listing for Pottsville Painting Services was 50% lower in March 2022 than it was in February 2022. 4.5. The number of interactions with the Google listing for Pottsville Painting Services was substantially lower in March 2022 than it was in February 2022. 4.6. Further particulars will be provided after discovery, subpoenas and interrogatories.
5. It should be noted, however, that no claim for special damages or Andrews (Andrews v John Fairfax & Sons Limited (1980) 2 NSWLR 225) downturn of business were pleaded: "Damages 6. Because of the publication of the matter complained of, the Plaintiff has been brought into hatred, ridicule and contempt, and has been injured in his reputation and has suffered hurt and embarrassment and will continue to suffer loss and damage. 7. The Plaintiff's hurt and the harm occasioned by the publication of the matters complained of is aggravated by his knowledge of the following matters: 7.1. The Defendant's failure to apologise, despite being requested to do so by the Plaintiff's concerns notice dated 17 March 2022, and further concerns notice dated 10 June 2022."
6. The plaintiff operated as a sole trader at the time but in about June 2022 he set up a corporate structure. That may create difficulties, in relation to serious harm, for claims for future loss. If the company is the contractor, "serious financial loss" by the company must be established if it is to claim (s 10A(2)). The plaintiff will not be able to continue to claim for future serious harm in the form of loss of business in the same fashion as is currently particularised.

Separate determination of serious harm

1. Section 10A, adapted from s 1 of the Defamation Act 2013 (UK), was enacted as a reform to discourage the bringing of cases likely to result in modest awards, where the costs were out of proportion to the damages: Newman v Whittington [2022] NSWSC 249 at [30] - [46]; Wilks v Qu (Ruling) [2022] VCC 620; Zimmerman v Perkiss [2022] NSWDC 448.
2. The serious harm element was introduced by the Defamation Amendment Act 2020 (NSW) and the relevant amendments came into force for publications made in New South Wales on 1 July 2021. The statement of claim in these proceedings does not particularise the places in Australia where publication has occurred but, given its very local flavour, it is safe to assume that only publication in New South Wales is relied upon.
3. Section 10A provides: "10A Serious harm element of cause of action for defamation (1) It is an element (the "serious harm element" ) of a cause of action for defamation that the publication of defamatory matter about a person has caused, or is likely to cause, serious harm to the reputation of the person. (2) For the purposes of subsection (1), harm to the reputation of an excluded corporation is not serious harm unless it has caused, or is likely to cause, the corporation serious financial loss. (3) The judicial officer (and not the jury) in defamation proceedings is to determine whether the serious harm element is established. (4) Without limiting subsection (3), the judicial officer may (whether on the application of a party or on the judicial officer's own motion)-- (a) determine whether the serious harm element is established at any time before the trial for the proceedings commences or during the trial, and (b) make any orders the judicial officer considers appropriate concerning the determination of the issue (including dismissing the proceedings if satisfied the element is not established). (5) If a party applies for the serious harm element to be determined before the trial for the proceedings commences, the judicial officer is to determine the issue as soon as practicable before the trial commences unless satisfied that there are special circumstances justifying the postponement of the determination to a later stage of the proceedings (including during the trial). (6) The matters a judicial officer may take into account in deciding whether there are special circumstances for the purposes of subsection (5) include (but are not limited to) the following-- (a) the cost implications for the parties, (b) the resources available to the court at the time, (c) the extent to which establishing the serious harm element is linked to other issues for determination during the trial for the proceedings. (7) Without limiting subsection (5), the judicial officer may determine the serious harm element is not established on the pleadings without the need for further evidence if satisfied that the pleaded particulars are insufficient to establish the element. (8) Nothing in this section limits the powers that a judicial officer may have apart from this section to dismiss defamation proceedings (whether before or after the trial commences)."
4. Serious harm must be established in every defamation action to which s 10A of the Act applies: Rader v Haines [2022] NSWCA 198. However, the structure for seeking such a hearing is extremely flexible, as it is a case management tool: Harcombe v Associated Newspapers and another; Kendrick v Associated Newspapers and another [2022] EWHC 543 (QB) at [4]; Brown v Bower and another [2017] EWHC 1388 (QB) at [5]. A list of these factors, indicating the issues in dispute here, is as follows: 1. Who can bring the application? The hearing may be sought by either party or, as occurred in Bindel v Pinknews Media Group Ltd v another [2021] EWHC 1868 (QB) at [14] - [45], the judicial officer may override the parties' wishes (both parties sought a serious harm ruling, but the judge refused). In the present case, the defendant seeks a separate hearing, but the plaintiff opposes it. 2. When should the application be brought? It should be brought early, because the legislation envisages such a hearing taking place as soon as possible, unless there are "special circumstances" (s 10A(5)) warranting its postponement until a later date, or during the trial. The plaintiff submits that the issue of serious harm should be deferred to the hearing. 3. What "special circumstances" warrant a deferral? Sections 10A(5) and 10A(6) require "special circumstances" to be demonstrated if there is to be a postponement of the separate serious harm trial. The nature of "special circumstances" is set out in Wilks v Qu (Ruling) at [40] - [45]. These include costs, court resources and a consideration of the extent to which the serious harm element is linked to other issues for determination (Wilks v Qu (Ruling 2) [2022] VCC 1503 ("Wilks v Qu (Ruling 2)") at [6] - [11]). As Clayton DCJ noted in Wilks v Qu (Ruling) at [23], there is no English equivalent to s 10A(5), so English decisions on the grant or refusal of a serious harm hearing need to be viewed with caution. However, they still provide some guidance; for example, in Ames v The Spamhaus Project Ltd [2015] EWHC 127 (QB) at [101], Warby J found that the case was "not ripe" for a preliminary hearing, as the facts deserved further examination. The plaintiff submits that special circumstances apply here; this submission is discussed in more detail below. 4. Serious harm sought on a summary dismissal basis: A ruling on serious harm may alternatively be sought on a summary dismissal basis: Haviland v The Andrew Lownie Literary Agency Ltd and another [2022] EWHC 1688 (QB) (proportionality was raised as well). In Mueen-Udin v Secretary of State for the Home Department [2021] EWHC 3026 (QB), the claim was summarily dismissed on the grounds of abuse of process as well as inability to demonstrate serious harm. Challenges to the adequacy of the particulars of serious harm may also be brought: Parris v Ajayi and others [2021] EWHC 285 (QB); Mohamed Ali Harrath v Stand For Peace Ltd [2016] EWHC 665 (QB). Although Mr Olson queried the basis upon which serious harm is challenged in these proceedings, it is clear that no summary application is brought here. 5. What about imputation rulings? In the United Kingdom, trials on preliminary issues such as serious harm generally include a ruling on imputations and/or proportionality arguments. There is, however, no such application here. There is no need to have a ruling on imputations if the defendant is prepared to accept the imputations pleaded by the plaintiff, as occurred in Zimmerman v Perkiss [2022] NSWDC 448. However, if there is to be a ruling on imputations for a serious harm hearing, that ruling would have to be on the basis of the imputations as they go to trial. 6. How much evidence is involved and can the application be heard "on the papers"? Where there is a serious harm hearing, there is generally some oral evidence. Affidavits were used in Zimmerman v Perkiss and the evidence took one day Rader v Haines took two days, but this was a full trial, with a defence of qualified privilege. Where a significant amount of evidence is likely, this may be a factor for deferral to the hearing, especially if there is overlap between this evidence and the trial evidence: Wilks v Qu Ruling 2) at [6] - [11]. 7. What if the situation changes? A court may order an early determination of serious harm hearing and then revise its ruling, either of its own motion or at the request of counsel for one party as occurred in Wilks v Qu (Ruling 2).
5. There will be many defamation trials which will proceed without orders being made for a serious harm trial beforehand, generally where serious harm cannot be severed from the issues of the trial, or because the imputations are self-evidently such that serious harm is obvious (Wilks v Qu (Ruling 2). For this reason, as is noted in Alexander-Theodotu v Kounis [2019] EWHC 956, orders for separate early hearings of serious harm are "rather less common" (per Warby J at [35]) than imputations arguments.
6. There has been criticism, in the English courts, of trials on serious harm becoming long and expensive affairs. In Alexander-Theodotu v Kounis, Warby J stated that reducing legal costs was an issue of particular importance, because case management of defamation proceedings in England compulsorily involves mandatory legal costs regulation (at [39]). There is no equivalent costs case management in Australia. However, given the widespread concern about the cost of defamation proceedings in Australia, in terms of public confidence in the court system (see Shane Bazzi, "Peter Dutton suing me for defamation almost ruined me - and it could happen to anyone", the Guardian, 8 October 2022), I have taken this factor into account.

Mr Olson's submissions

1. Mr Olson provides the following reasons for deferring a preliminary hearing: 1. As a general rule, all trial issues should be dealt with at the same time, separate determination being generally undesirable, and regarded as an "exceptional course": Spirits International BV v Federal Treasury Enterprise Sojusplodoimport [2011] FCAFC 69 at [148]. 2. There is a "need to identify a clearly severable question" (submissions, paragraph 17) 3. The possibility of inconsistent credit findings as well as on quantum issues such as mitigation could lead to injustice. 4. The evidence is not suitable for a separate hearing of the issue of serious harm. 5. The s 10A(6) factors of overlap, costs and resources are asserted all to favour the plaintiff. 6. There are "special circumstances" why no separate trial should be ordered (ss 10A(5), 10A(6)). 7. At the very least, if there is to be a preliminary hearing on serious harm, the defendant should be ordered to file a defence.

Undesirability of separate determination

1. Section 10A is built on a presumption that serious harm will be dealt with sooner rather than later in appropriate cases, namely "the 'neighbourly disputes' and 'backyard defamation' claims whereby ordinary citizens sue each other for comments made on digital platforms", to quote the Council of Attorneys-General Review of the Model Defamation Provisions Background Paper (December 2019, p. 25). Relevant factors in such determinations are the nature and extent of the publication, the period of time the matter is online, the seriousness of the imputations and the degree to which harm can be demonstrated.
2. Mr Olson is correct to say that Australian courts have long urged caution in relation to separate determination of issues. The footnotes to Ritchie's Uniform Civil Procedure NSW ("Ritchie's") setting out the Civil Procedure Act 2005 (NSW) s 62(2) and Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") r 28.2 set out a summary of many of the judgments expressing concern about separate rulings, either pursuant to UCPR 28.2 or pursuant to the incidental power to determine issues separately" (at p. 7559). More recent calls for courts to take a "more interventionist approach" (Todd Hadley Pty Limited v Lake Maintenance (NSW) Pty Limited [2019] NSWCA 262; Reid v Hartcher [2017] NSWSC 1274 at [54]; J Annan v FSS Trustee Corporation [2017] NSWSC 1453 at [4]) suggest that change may be on the way, but slowly.
3. Separate trials of issues are not a "one size fits all" phenomenon. The following features stand out: 1. First, these separate preliminary hearings are conducted as such pursuant to specific legislation. Where the legislation specifically provides for the separate determination of an issue, the statute will prevail. In Wilks v Qu (Ruling) at [37] - [39], Judge Clayton held that the general principles applicable to the determination of separate questions were not relevant to s 10A. This factor alone is enough to answer Mr Olson's submissions. I shall, however, answer his remaining arguments. 2. The next reason for not accepting that these concerns about separate trials should be given their full weight is that the separate determination of questions has long been a feature of defamation law, as Ritchie's notes at [14.30.55] and [28.4.30]; the authors specifically cite s 10A as an example. Separate trials may occur in relation to capacity, identification and (where there is a jury determining liability) damages. 3. Third, as the English authorities cited above acknowledge, separate trials are an important case management tool, and the increasingly important role of case management since the enactment of the Civil Procedure Act 2005 (NSW) and its overarching requirement of "just, quick and cheap" (s 56) means that many if not most of the cautiously worded judgments prior to the enactment of that legislation, or from jurisdictions where it does not apply, should be viewed with caution. 4. Fourth, profound changes to access to justice have arisen from technological innovation and over the past decade have been the subject of extensive debates between courts, legislators and the profession. In "The Modernisation of Access to Justice in Times of Austerity", The Rt. Hon. Sir Ernest Ryder, Senior President of Tribunals, spoke of a future where there was "no single trial or hearing in the traditional sense". That paper was given on 3 March 2016, long before the impact of the pandemic accelerated these reforms to the conduct of court hearings and case management. As a result of the impact of the pandemic on court case management, greater flexibility in case management has been increasingly required. 5. Fifth, the kind of material led in evidence has similarly profoundly changed. For example, proving how many fewer phone calls the plaintiff received, or how many people read the matter complained of, would be difficult matters to prove if it were not for modern technology. This has, to a degree, shifted the balance away from subjective factors such as credibility (the big question in pre-online litigation), which was often the only basis upon which factfinding could occur. Factfinding is now increasingly determined in a framework of contemporaneous electronic records.
4. When determining the issue of whether a separate trial is to be ordered, the starting point is the legislation. Section 10A clearly speaks of a procedure for such a trial to take place early if a party or even the judicial officer case managing the proceedings considers it necessary. The approach taken by Judge Clayton in Wilks v Qu (Ruling) at [39] is correct and should be followed.

The "need to identify a clearly severable question" (submissions, paragraph 17)

1. Mr Olson submits that the mere ordering of a hearing on serious harm would not be enough. A "clearly severable" question must be determined, because it would be inappropriate to order the separate determination of an issue if that issue could not readily be separated from other issues in the proceedings".
2. Again, the language of s 10A must prevail. The term "serious harm" is a well-recognised legislative term. It is not necessary to formulate a question for the determination of this issue in Australia, any more than it has been in England.

Potential credit overlap

1. Mr Olson submits that if the same witnesses give evidence in the serious harm determination, that may lead to potentially inconsistent findings as to credit, a factor considered as significantly weighing against the ordering of a separate hearing. This could extend to quantum issues such as mitigation.
2. This objection is largely illusory. The fact that a witness may give evidence on issues in both hearings would not be a difficulty at all for courts with docket systems, where the same judge case-manages the whole trial. However, even where a different tribunal of fact hears the later evidence, the likelihood of different credit findings, if the evidence is the same, is remote.
3. The principal reason why there would be no credit issues arising is, however, the nature of the evidence to be led.

Is the scope of the evidence suitable for a separate hearing?

1. Mr Olson submits that a separate hearing could well be a protracted affair; just how protracted is difficult to say, as the defendant has not filed a defence. He did not, however, set out what evidence would be likely to be led, which makes evaluation of his submissions on this point difficult.
2. Mr Senior set out the way he saw the serious harm hearing running, in terms of evidence and witnesses, as being a straightforward exercise of document tender and some limited cross-examination if the plaintiff chose to give evidence. This can be summarised as follows: 1. Extent of publication: The matter complained of was removed on 30 March 2022, meaning it was available for download for a period of 14 days. This will be an agreed fact. 2. Evidence of downloading and views: The only basis on which the Plaintiff alleges that an inference can be drawn that the matter complained of was downloaded and viewed by someone (beyond the mere fact that the material has been posted on the internet, which Mr Senior points out is inadequate: Sims v Jooste (No 2) [2016] WASCA 83) is the fact that the matter received three "like" responses. This will be established by tender of the online material. 3. Evidence of loss of work: The claim of serious harm sets out a very simple claim of a modest decrease in calls made to the plaintiff through the Google Business Profile for Pottsville Painting Services between February 2022 (10 calls) and March 2022 (5 calls) (i.e., a decrease of 5 calls). The information provided by the Plaintiff indicates that the number of calls increased to 19 in June 2022 but then dropped to 7 in July 2022 (a decrease of 12 calls). The drop in calls between June and July 2022 was over double the drop in calls between February and March 2022. There was also a modest decrease in interactions with the Google Profile page for Pottsville Painting Services between February 2022 (34 interactions) and March 2022 (24 interactions) (a decrease of 10 interactions). The information provided by the plaintiff indicated that the number of interactions apparently increased to 37 in June 2022 but then dropped to 22 in July 2022 (a decrease of 15 interactions). Again, the drop in interactions between June and July 2022 was more than the drop in interactions between February and March 2022. To the extent that the Defendant relies upon the drop in calls and interactions between February and March 2022, it is not apparent from the particularisation that that any downturn was caused by the publication of the matter complained of on the reviews page of the Google Business Profile for Pottsville Painting Services. Nor is it clear how the matter complained of is alleged to cause serious harm to the reputation of the Plaintiff, including as opposed to the corporate entity (Pottsville Painting Services Pty Ltd) through which the business is now operated. The plaintiff can establish this evidence by tender of business records. One or both of the parties may seek to call expert accounting evidence; if so, reports may be prepared and may be expensive. It seems unlikely that experts will be retained, however, as the plaintiff has not actually brought any claim for special damages or even an Andrews business downturn and his business has been run by a company since shortly after publication of the matter complained of. 1. Oral evidence: The plaintiff may give evidence. He has not particularised any specific lost contracts or termination of existing or future work, or indicated that he is calling evidence from persons who did not hire him. If such evidence was led, it would take less than a day.
3. This is very different from the evidence which is likely to be led at trial is defences of justification and/or honest opinion are pleaded. That would require evidence about the adequacy of the work and could involve expert evidence. As Mr Olson did not set out the kind of evidence he would lead, it is difficult to say more, but analysis of the evidence as carried out by Mr Senior suggests that this matter is highly suited for a serious harm determination.

Other s 10A(6) factors:

1. This court has the resources to hear a one day trial at short notice. It has already done so in other defamation proceedings. A full hearing could go for five days, which is more of a strain on resources, as well as a greater cost to the parties, both emotional and personal, as the observations of Mr Bazzi, referred to earlier in this judgment, demonstrate.

Special circumstances

1. In Wilks v Qu (Ruling) [2022] VCC 620 at [40]-[45], Judge Clayton made the following observations about "special circumstances": "40 Like the phrase "as soon as practicable", the phrase "special circumstances" is commonly used in legislation and regulation.[14] Sometimes, but not always, what constitutes special circumstances is also specified.[15] Elsewhere, as in this legislation, the definition of special circumstances is left open, though some guidance is provided by s10A(6)." (Citations omitted)
2. Her Honour noted that special circumstances was very fact-specific, citing the likelihood that very serious imputations might not be suitable for such a determination: "44 For example in a claim where serious harm is highly likely to be established, the costs involved in having a preliminary hearing might constitute special circumstances, even if the costs themselves are not excessive. Similarly, using Court resources to determine an element separately that would simply add to the Court's burden and have no potential to reduce the issues in dispute, or the time taken at trial, could constitute special circumstances. 45 In this ruling I make no findings about the likelihood of the plaintiff establishing the element of serious harm. However, I do consider the parties' arguments that touch on the prospect of serious harm being established, because it factors into the analysis I am required to undertake. "Special circumstances" must be based on "the facts at hand"[20] and those facts must be unusual, uncommon or out of the ordinary.[21] This is not a case in which it is so obvious that serious harm will be established that having a separate hearing will be a waste of time, costs and Court resources. Nor is it so obvious that serious harm will not be established so as to enable a determination of the element on the pleadings."
3. These were prescient remarks; her Honour's concerns about these very matters later led her to revoke this earlier ruling: Wilks v Qu (Ruling 2). The fact that she did so does not mean that s 10A trials do not work or that the legislation is a waste of time; as the English courts have noted (Alexander-Theodotu v Kounis at [35] - [39]; Ames v the Spamhaus Project Ltd at [101]), a preliminary hearing on serious harm may not be suitable for a wide range of defamation proceedings, including those identified by Judge Clayton in Wilks v Qu (Ruling 2).
4. None of those factors are present here. These publications are made on review and business sites where the expectation of a dissatisfied customer posting critical comments is very much part of the nature of social media and online reviews generally.
5. There are no "special circumstances" warranting the refusal of a preliminary hearing.

Should a defence be filed before the preliminary hearing question is determined?

1. In Bindel v PinkNews Media Group [2021] EWHC 1868 (QB) at [30], Nicklin J noted the difficulties faced where no defence had been filed and declined to order a preliminary hearing. The defence in question was one of offer of amends. That was, however, only one of several reasons for doing so; the principal problem was the "significant uncertainty as to the parameters of the litigation" (at [4]).
2. That is not the case here. Mr Senior has confirmed that his client will plead defences of honest opinion and justification. He submits, however, that the pleading of these defences with the kind of meticulous detail necessary for such pleas (which would also require a Reply from the plaintiff) would be a substantial burden and contrary to the intentions of s 10A.
3. The key to this (and to most of the other objections) is the contents of the matters complained. Each of these identical publications is a long and careful account of the defendant's complaints, accompanied by 15 photographs of what is asserted to be faulty workmanship.
4. Whatever defence is pleaded to this claim, the fine detail of the objections to the work performed by the plaintiff should not need to be set out extensively for the purpose of determining whether there should be a separate preliminary hearing in relation to the publication of these adverse reviews over a two-week period did in fact cause serious harm to the plaintiff's reputation.

Concluding orders and costs

1. For the reasons set out above, pursuant to s 10A(5), I grant the defendant's application for the serious harm element of the plaintiff's claim to be determined before trial.
2. I direct the parties to bring in Short Minutes of Order for a preliminary hearing of the issue of serious harm.
3. Costs should follow the event. I grant liberty to apply.

Order: 1. Defendant's application for the serious harm element to be determined before the trial for the proceedings commences is granted; plaintiff's application to defer this to the trial refused. 2. Plaintiff pay defendant's costs, with liberty to apply.

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. Decision last updated: 10 October 2022