NSW District Court reminds prospective litigants that they will take a more interventionist approach in case managing “backyard” defamation claims.

Legislative background

The law of defamation in Australia has been governed by mostly uniform legislation in the states and territories since the introduction of the Defamation Act in 2005 (the Act). At its simplest, the Act seeks to ensure that the law of defamation in the adopting states and territories:

a) is consistent;

b) strikes the right balance between protecting reputations and ensuring that the law does not place unreasonable restrictions on freedom of expression;

c) provides fair remedies; and

d) encourages non-litigious methods of resolving disputes.

In 2021, major legislative reform occurred to the Act by way of the Model Defamation Amendment Provisions (Reforms). Amongst other changes, the Reforms introduced an additional “serious harm” element that must be established by a person seeking to assert or bring a cause of action for defamation.

Coming into effect on 1 July 2021, the Reforms have been adopted by most states and territories (including Victoria, New South Wales, Queensland, South Australia, Tasmania and the ACT). The introduction of the serious harm element to a defamation cause of action is intended to discourage “backyard” defamation disputes in which costs are disproportionate to damages.

Under section 10A(5) of the Act (in Victoria, New South Wales, Queensland, South Australia and Tasmania) and s 122A of the Civil Law (Wrongs) Act 2002 (ACT), the court is required, on application by a party, to determine the serious harm element of a defamation claim as soon as practicable, unless special circumstances apply to justify the postponement of the determination.

Scott v Bodley [2022] NSWDC 459

In the recent case of Scott v Bodley [2022] NSWDC 459, the defendant, Bottina Bodley, brought an application against the plaintiff, Dale Scott, under section 10A(5) of the Act. Specifically, the defendant sought Gibson DCJ to provide a ruling prior to trial as to whether the plaintiff’s defamation cause of action satisfied the requirements of s 10A of the Act, in that the complained publication has caused, or is likely to cause, serious harm to the reputation of the plaintiff.

The plaintiff sought to defer the determination of the serious harm element to trial, supported by the existence of alleged special circumstances. Ultimately, Gibson DCJ found in favour of the defendant and granted her application to have the serious harm element of the plaintiff’s claim determined before trial. In making this order, Gibson DCJ noted the importance of case management tools, such as the pre-trial hearing, in providing greater flexibility in court case management in the post pandemic context.

Key players

Role	Name
The plaintiff, who operated as a sole trader as a painter at the time of the publication, being 16 March 2022.	Dale Scott
The plaintiff’s business, which was set up as a corporate structure after the publication in or about June 2022.	Pottsville Painting Services
The defendant and publisher of the matter complained of.	Bettina Bodley

The publication

The matter complained was conveyed as two identical online publications: the first on Google as a review of the plaintiff’s business, Pottsville Painting Services, and the other on the Facebook page of Pottsville Painting Services.

The publications were titled ‘UNFINISHED JOB, OVER 130 DEFECTS AND DAMAGE TO PERSONAL PROPERTY’ and attached 15 photographs. The plaintiff sought to rely only on the earlier Google publication in bringing its cause of action for defamation, treating the Facebook post as a “republication” that went to damages only. The publications were posted on 16 March 2022 and remained online for approximately 14 days (to 31 March 2022) before they were removed.

The plaintiff’s submission

In opposing the defendant’s application, the plaintiff submitted, amongst other things, that special circumstances applied to warrant the deferral of a determination as to serious harm.

The plaintiff provided the following arguments in favour of deferring a preliminary hearing:

It should be the preference of the court that all trial issues be dealt with at the same time. Separate determination of issues should be regarded as an exception to rule, not the rule. In this respect, the plaintiff sought to rely on Spirits International BV v Federal Treasury Enterprise Sojusplodoimport [2011] FCAFC 69 at [148].
It is necessary to identify a clearly severable question to be determined in a preliminary hearing. It is inappropriate for the court to make orders for the separate determination of an issue that cannot be readily separated from other issues in the proceedings.
In circumstances where a witness gives evidence in multiple hearings, there is a possibility of inconsistent findings as to credit.
The evidence relevant to the determination of serious harm is not suitable for a separate pre-trial hearing in the sense that it cannot be readily separated from the issues in the proceeding.
Section 10A(6) of the Act lists several factors which are to be taken into account when deciding whether there are special circumstances. Consideration of these factors (being costs, court resources and whether there is overlap between the serious harm element is linked to other issues for determination at trial), falls in favour of the plaintiff.
There are ‘special circumstances’ pursuant to subsections 10A(5) and 10A(6) of the Act which go to why the pre-trial hearing should not be ordered.

The court’s findings

In the court’s judgment, Gibson DCJ addressed each of the plaintiff’s above submissions. Ultimately, the court found in favour of the defendant, granting her application for the serious harm element to be determined before the final trial. The plaintiff was ordered to pay the defendant’s costs of the application.

The court’s response to the plaintiff’s submissions are as follows:

The undesirability of a separate determination	Despite acknowledging existing precedent which conveys concern about the separate determination of issues, Gibson DCJ took care to direct the parties to the statute as the starting point. Where the legislation specifically provides for the separate determination of an issue, the statute will prevail.
Clearly severable question	Once again, Gibson DCJ reiterated that the language of section 10A of the Act must prevail. Moreover, the term “serious harm” is well-recognised and it is not necessary for the court to formulate a separate question for the determination of this issue.
Potential credit overlap	Gibson DCJ held that the plaintiff’s objection with respect to issues of credit was largely illusionary. Her honour continued that inconsistent findings as to credit relate to the actual evidence led, and would not arise merely because a witness gives evidence in two trials.
Suitability of evidence for separate hearing	In substantiating their claim of serious harm, the plaintiff sought to rely on a decrease in client enquiry phone calls between February 2022 (10 calls) and March 2022 (5 calls). To this extent, it was not apparent that the downturn was caused by the publication of the matter complained or how the matter complained is alleged to have caused serious harm to the plaintiff. In this respect, Gibson DCJ assumed the view that the evidence likely to be led at the pre-trial hearing was different from the evidence which would be led at trial.
Other section 10A(6) factors	Contrary to the plaintiff’s position, Gibson DCJ suggested that the section 10A(6) factors were weighted in favour of ordering a pre-trial hearing. This is because, whilst a full hearing might last for five days, absorbing court resources and causing parties to incur significant costs, a one-day trial (which is what was estimated for the pre-trial hearing) is far less onerous.
Special circumstances	Special circumstances require something usual, uncommon or out of the ordinary to arise on the facts. The publication was published on a review site where negative reviews from dissatisfied customers are commonplace. Gibson DCJ determined that none of the factors which make a serious harm hearing unsuitable were present in this case, and as a result, there were no special circumstances.

Other factors

The court also noted that whilst the plaintiff was a sole trader at the time of publication, he set up and began operating the Pottsville Painting Services business from a corporate structure in June 2022. This creates further difficulties in assessing who has suffered the serious harm to their reputation: is it the plaintiff in his personal capacity, or the corporate entity through which the business has operated through since June 2022? Whilst the plaintiff can establish this evidence by the tender of business records and expert reports, such an exercise is likely to be burdensome and cost prohibitive.

Key Takeaways

Prospective litigants are reminded that “backyard” defamation claims will not be given legs in circumstances where serious harm cannot be established from the outset.
Whilst special circumstances are relevant as to whether a determination of serious harm might be postponed to trial, they require something usual, uncommon, or out of the ordinary to be present on the facts. Special circumstances are unlikely to apply where:

i. there is a not a high likelihood serious harm being established at trial and / or serious harm is not obvious on the facts; and

ii. a matter complained of has been published on a platform where it is generally accepted that, from time-to-time, dissatisfied customers might post negative reviews.

The legislation makes pre-trial hearings in defamation proceedings to determine the serious harm element the rule, not the exception.
The early determination of serious harm is an important case management tool which furthers the purpose of section 10A of the Act, that is, to discourage the bringing of cases which are likely to result in modest awards only.

Merton Lawyers are experts in bringing and defending defamation claims. If you would like specialist advice in this area, please reach out to one of the members of our team at hello@mertonlawyers.com.au for an initial consultation.

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