7.1 Although recommendations in this Report seek to increase the range of alternative remedies, damages will remain a major remedy in defamation litigation in New South Wales. In this chapter we address the question of the reforms (if any) which should be made to the law of damages in the context of actions for defamation. Most of these issues were addressed in some detail in DP 32. However, since the publication of DP 32, a change of major practical significance has occurred in the law of damages in defamation cases in New South Wales - namely, the removal of the jury from the determination and assessment of damages and the allocation of that function to the court in all cases.1 In Chapter 3 of this Report, we explain why we support this change in the law.2
7.2 The allocation of the determination and assessment of damages to the judge rather than the jury means that some of the matters which we raised in relation to damages in DP 32 are no longer live issues. For example, there is no longer any need to consider the nature of the directions which judges should give juries for the purpose of assessing damages.3 Nor is there any need to discuss whether or not the ability of the Court of Appeal to substitute its own verdict for that of the jury should be enlarged.4 Where an appeal on damages comes from a verdict of a judge alone, such an appeal is by way of rehearing5 and the court has the powers of the court from which the appeal is brought including the power to assess damages.6
7.3 The Commission’s recommendation that falsity should form an ingredient of the cause of action in defamation also affects the law of damages. Most immediately, it raises the question of the role which falsity now has in the assessment of damages.7 Its major effect, however, is that vindication will no longer generally be a factor influencing the level of awards of damages, since a successful plaintiff’s vindication will come principally from the court’s finding of falsity.8 This reinforces the compensatory function of damages in defamation cases. The Commission has considered the practical implications of this for the whole of the law of damages in defamation and has come to the conclusion that the change in emphasis will have a beneficial effect on that law. We consider it necessary to comment on the impact of the change in the cause of action on only two aspects of the law of damages in defamation: aggravated damages9 and the award of interest on damages.10
COMPARISON WITH AWARDS IN PERSONAL INJURY CASES
7.4 Section 46A(1) of the Defamation Act 1974 (NSW), which was inserted by the Defamation (Amendment) Act 1994, requires the court, in assessing damages in a defamation case, to ensure that there is “an appropriate and rational relationship between the relevant harm and the amount of damages awarded”. Such a relationship may be determinable with relative ease in the case of economic loss. But in the case of non-economic loss, where the award compensates for losses (injury to reputation and injury to feelings) which have no objective monetary value, that relationship is difficult to establish - especially if the award must also serve to vindicate the plaintiff’s reputation. Section 46A(2) of the Act attempts to provide a standard to which the court must have regard in attempting to set the appropriate and rational relationship between the harm suffered and the damages which it awards. That section requires the court, in assessing damages for non-economic loss, to have regard to the general range of damages for non-economic loss in personal injury awards (including the amounts awarded pursuant to statutes which may regulate the award of damages in particular areas of law). The most important statutes which apply to regulate awards of damages in personal injury cases in New South Wales are the Motor Accidents Act 198811 and the Workers Compensation Act 1987.12
7.5 Section 46A of the Defamation Act reflects developments in case law. In Carson v John Fairfax & Sons,13 a majority of the High Court held that it is legitimate for appellate courts, called upon to consider the quantum of a defamation award, to have regard to the amounts awarded in personal injury cases for the purposes of comparison, the justification being that the scale of awards for non-economic loss in cases of serious personal injury must transcend injury to reputation. The majority also said, obiter, that they saw “no significant danger in permitting trial judges to provide to the jury an indication of the ordinary level of the general damages component of personal injury awards for comparative purposes, nor in counsel being permitted to make a similar reference.”14
7.6 However, in the new trial on damages in the Carson case,15 Justice Levine declined to direct the jury for the purposes of assessing damages on the level of awards in personal injury.16 His Honour thought that there were three insurmountable difficulties in following such a course.17 First, there was the conceptual difficulty which had been forcefully identified in the dissenting judgments in Carson and in a number of English cases. It is that there is no genuine basis for comparison between damages aimed at pain and suffering and loss of the amenities of life in personal injury cases and damages for injury to reputation and feelings and for vindication in defamation actions.18 And even if there were, to which personal injury scale is the comparison appropriate - that provided by the common law or by legislative schemes with their statutory caps?19 Secondly, problems of trial management arise - are all the details of personal injury cases to be put in evidence thereby prolonging, perhaps for substantial periods, the defamation proceedings?20 Thirdly, there are related evidentiary problems - how are details of awards in personal injury cases to be put in evidence?21
7.7 The Commission has carefully considered whether the objections which Justice Levine raised in Carson’s case mean that personal injury awards should never be used as a point of comparison in determining the quantum of defamation damages even where damages are assessed by a judge alone. In our view, for the reasons set out in paras 7.8-7.10, they do not. We do not, therefore, recommend any change to s 46A(2) of the Defamation Act.
7.8 First, the evidentiary and trial management problems to which Justice Levine draws attention in Carson’s case largely disappear where damages are assessed by a judge alone. The judge’s knowledge and experience will enable him or her to identify more easily and quickly those personal injury cases to which a comparison is appropriate. Further, the judge has control over the proceedings and will be able to indicate what form of assistance is required from counsel on this issue.
7.9 As far as the conceptual problem is concerned, the legislation partially solves this by specifying that the judge must have regard to the range of all personal injury awards in New South Wales, including those regulated by statute. Presumably this requires judges to use only the broadest of brushes, and does not require them to engage in a lengthy analysis of the policies underlying differing levels of personal injury damages and how those differing levels should be reflected in the defamation case at hand.
7.10 It is true that the fundamental objection remains that non-economic harm in personal injury and defamation cases are not comparable. This is particularly so in cases of serious defamation where vindication has been the dominant factor in the award.22 The Commission’s recommendations result generally in the removal of the vindicatory factor from awards of damages. This obviously alleviates the conceptual objection to the extent to which the comparison will now be between species of non-economic loss both clearly concerned with compensation. The Commission accepts that the species of non-economic loss in defamation cases on the one hand, and personal injury cases on the other, are still not comparable. However, bearing in mind that the figure selected as compensation for non-economic loss in any case is necessarily somewhat arbitrary, the Commission does not believe that this in itself justifies a departure from the existing law, the justice and efficiency of which has yet to be put to the test.
CAPPING DAMAGES
7.11 DP 32 raised the possibility of creating a cap on general damages awarded in a defamation action.23 Media submissions to the Commission supported a capping of damages at a figure of $100,000, if juries were retained to determine damages.24 Other submissions considered a cap on damages to be an irrational reaction to the occasional excessive jury verdict.25
7.12 The argument for capping damages is the certainty which the existence of a maximum amount and a scale would infuse into the assessment of damages in defamation cases; this, in turn, would promote settlements. In addition, aberrant “excessive” verdicts would not occur. Capping would also promote freedom of speech since defendants would be aware in advance of their maximum liability.26
7.13 The other side of the coin is that a cap on damages could encourage excesses on the part of the media which could balance expected profits from the sale of defamatory matter against a known maximum liability in damages.27 Another danger of a cap on damages is that it could have the effect of inflating awards if vindication were seen to occur only in cases in which the award was at or near the cap. This danger is obviously reduced where vindication comes, generally, from the finding of falsity in the reasons for judgment.
7.14 The Commission has concluded that a case for capping damages has not been made out, since:
- There is a lack of empirical evidence from which it is possible to conclude that jury awards in New South Wales are, in general, “excessive”.28
- The risk of “excessive” awards is reduced where, by force of the Commission’s recommendations, the vindicatory factor is generally removed from awards of damages.
- The risk of excessive damages awards is reduced where damages are determined by judges alone. This is now the law and the Commission’s view of what the law ought to be.29
The latter change in practice will, the Commission believes, result in the development of consistent awards of damages within a recognisable range, the peaks and troughs of jury awards being flattened. This is strengthened by the consideration that the statutory requirement for a judge to refer to personal injury awards to arrive at a suitable defamation award in effect creates a cap and range of sorts, for a statutory maximum applies to damages for non-economic loss in motor accident and workers’ compensation cases30 (which constitute the bulk of personal injury litigation in New South Wales).
7.15 The Commission is not suggesting that amounts awarded as damages for non-economic loss by judges will necessarily be, or ought to be, lower than those awarded in the past by juries.31 Indeed the average may well rise where judges publish reasons for their awards and focus on the factors which have influenced their decisions on quantum. The amounts that have been awarded as damages for defamation by judges in other jurisdictions seem to support this.32
THE EFFECT OF FALSITY ON DAMAGES
7.16 Under section 47 of the Defamation Act 1974 (NSW) evidence of the truth or falsity of the imputation may be given by either party on the question of the amount of damages: the plaintiff leads evidence of the falsity of the imputation to show the extent of injury to reputation or to aggravate the damages;33 while the defendant leads evidence of the truth of the imputation to mitigate damages. The Commission recommends, in Chapter 4 of this Report, that falsity should be an essential ingredient of claims for damages for defamation. The implementation of this recommendation requires repeal of the current section 47. Quite clearly, the defendant will no longer be able to lead evidence of the truth of the imputation in mitigation of damages, for the imputation will have been found to be false. And section 47 has no further role to play where the plaintiff does not rely on the falsity of the imputation, but proves instead that the imputation does not relate to a matter of public interest. In such cases, even if the falsity of the imputation could be established, that falsity can logically only operate on the extent of damage to the plaintiff’s reputation, and this is not in issue.
7.17 Further, there will no longer be a need for a special provision authorising the practice of leading evidence of falsity on the issue of damages in order to show the extent of the harm to the plaintiff’s feelings. The provision is necessary under the existing law to enable the plaintiff, in the absence of a plea of justification, to raise falsity as a factor relevant to damages, there being, in the law of New South Wales, no presumption of falsity arising from the publication of defamatory matter.34 The need for such a provision falls away where falsity is an ingredient of the cause of action so that the plaintiff can, obviously, put in all evidence relevant to the issue.
7.18 Where the defendant’s conduct is improper, unjustifiable or lacking in bona fides and consequently results in increased harm to the plaintiff’s reputation or feelings, the plaintiff may lead evidence of that conduct to augment the damages. Such damages are known as aggravated damages.35 There are aspects of the defendant’s conduct which may aggravate damages and which may be connected with the falsity of the imputation; for example the plaintiff’s awareness of the defendant’s knowledge that the imputation was false, or the defendant’s reckless disregard of the truth or falsity of the imputation. Such factors will continue to aggravate damages under the Commission’s proposals. No legislative provision is necessary to achieve this result.
7.19 We have described aggravated damages in para 7.18. Their essential function is to inflate an award of damages by reason of the increased harm presumed to be suffered by the plaintiff as a result of the defendant’s outrageous conduct. The reference to the defendant’s conduct means that awards of aggravated damages are often seen as containing a punitive element.36 Indeed, their inevitable confusion with exemplary damages has led to a call for their general abolition by the Ontario Law Reform Commission,37 and the Law Commission of England and Wales has tentatively reached a similar conclusion,38 although both recommendations are premised on the general availability of exemplary damages. We have already pointed out that exemplary damages are not recoverable in defamation cases in New South Wales;39 nor do we recommend that they should be.40 Further, our recommendation that falsity should be an ingredient of the cause of action in defamation results inexorably in an emphasis on the compensatory role of damages. We have, therefore, considered whether or not we should follow the path suggested by the Ontario and English Commissions. Our conclusion is that we should not.
7.20 The Commission continues to regard aggravated damages as performing a valuable role in the law of damages in the context of defamation. First because such damages are reconcilable with the compensation principle - they compensate for the increased harm to the plaintiff’s reputation and feelings which flows from the defendant’s bad conduct.41 Secondly, because, by isolating aspects of the defendant’s conduct which will give rise to aggravated damages, they not only provide some objective yardsticks for the assessment of damages in cases which essentially involve matters of impression, but also alert defendants to the sort of conduct which will increase the award of damages against them. It is not to the point that, incidentally, awards of aggravated damages may operate as restraints on defendants’ conduct. All awards of compensatory damages may have this effect.
INTEREST ON DAMAGES
7.21 Both the Supreme Court and the District Court have power to award interest on damages.42 The object of an award of interest on damages is to compensate successful plaintiffs for the detriment they suffer by the delay in receiving the damages to which they theoretically become entitled at the time of the defendant’s wrong.43 The court has a wide discretion in any case to determine whether or not an award of interest should be made, and if so, for what period of time, on what heads of damage and at what rate.44 It is established that, generally, the power to award interest extends to the award of interest on both economic and non-economic losses,45 but not to losses whose practical effect will only be felt in the future.46
7.22 The decision of the New South Wales Court of Appeal in Kelly v John Fairfax & Sons Ltd47 establishes that, in defamation cases, the plaintiff is entitled, in principle, to an award of interest on the whole of an award of damages (that is, for injury to reputation and injury to feelings, and for vindication) between the date of publication and the date of trial.48 The Commission is conscious that interest can inflate awards significantly in defamation cases. In Kelly’s case, the interest was $25,875 on a damages award of $115,000, while in Australian Consolidated Press v Driscoll49 the interest was $36,000 on a damages award of $100,000. We agree with the comment of Justice Mahoney in Driscoll’s case50 that awards of interest on damages in non-commercial cases probably now operate beyond what Parliament intended when provision was first made for them. We have, therefore, considered whether or not we should recommend the abolition of awards of interest on damages in defamation cases. We have come to the conclusion that we should not.
7.23 First, we note that the trend in the law is to treat plaintiffs as prima facie entitled to an award of interest on all heads of damage between the date of the accrual of the cause of action and the date of judgment51 (the court’s discretions in the matter of interest being reduced to a series of prima facie rules).52 In principle, we can see no reason why defamation plaintiffs ought to be in a different position once the Commission’s recommendation that falsity be an ingredient of the cause of action is put in place. Since the award will then clearly provide for compensation for detriments already experienced by the plaintiff, an award of interest will accord with the general practice of awarding interest on past non-economic loss. It would be otherwise if the award is intended to serve principally as a demonstrative mark of vindication. Here, the award does not compensate the plaintiff for being kept out of money which represents a “detriment” whose impact is suffered before trial. “Vindicatory damages” cannot, therefore, easily be accommodated within the general purpose of awards of interest on damages,53 any more than can exemplary damages.54 But vindication will generally be a less relevant factor in the award of damages once falsity becomes an ingredient of the cause of action.
7.24 Secondly, although Parliament has, for policy reasons, excluded awards of interest on damages in some cases - such as in workers’ compensation cases55 and on non-economic loss in motor accident cases56 - the Commission is not aware of any arguments of policy which would compel the same conclusion in the context of the law of defamation.
FOOTNOTES
1. Defamation Act 1974 (NSW) s 7A(4)(b), which was inserted by the Defamation (Amendment) Act 1994 (NSW).
2. See paras 3.24-3.29.
3. DP 32 at paras 4.71-4.87.
4. Supreme Court Act 1970 (NSW) s 107. See DP 32 at paras 4.88-4.101.
5. Supreme Court Act 1970 (NSW) s 75A(5).
6. Supreme Court Act 1970 (NSW) s 75A(6)(c).
7. See paras 7.16-7.18.
8. See paras 2.9, 2.14.
9. See paras 7.19-7.20.
10. See paras 7.21-7.24.
11. Motor Accidents Act 1988 (NSW) Part 7.
12. Workers Compensation Act 1987 (NSW) Part 5.
13. (1993) 178 CLR 44.
14. Carson (1993) at 59.
15. Carson v John Fairfax & Sons Ltd (1994) 34 NSWLR 72.
16. See also Carson v John Fairfax & Sons Ltd (1993) 178 CLR 44 at 72-73 per McHugh J dissenting.
17. Carson (1994) at 87-91.
18. See especially Carson v John Fairfax & Sons Ltd (1993) 178 CLR 44 at 111-112 per McHugh J dissenting.
19. Carson (1994) at 90-91.
20. Carson (1994) at 88-89.
21. Carson (1994) at 89-90.
22. See Carson (1994) at 77 per Brennan J dissenting.
23. DP 32 at paras 4.53-4.64.
24. See Nine Network Australia, Consolidated Press Holdings: Submissions.
25. M G Sexton, Submission (1 November 1993).
26. DP 32 at paras 4.57-4.58.
27. DP 32 at para 4.63.
28. See para 3.25.
29. See paras 3.24-3.29.
30. See Workers Compensation Act 1987 (NSW) s 151G; Motor Accidents Act 1988 (NSW) s 79.
31. See Peter Bartlett, Evidence to the Legislation Committee, quoted in Parliament of New South Wales, Legislative Assembly, Report of the Legislation Committee on the Defamation Bill 1992 (October 1992) at 13.
32. In particular the Commission refers to the Australian Capital Territory, where in 1993 there was one award of $25,000 (plus $3,000 in lieu of interest) (Humphries v TWT Ltd (1993) 120 ALR 693 (Full Federal Court increasing trial judge’s inadequate award of $8,000)) and another of $40,000 (Packer v ABC): see (1994) 27 Gazette of Law and Journalism at 2-3; in 1995, there has been an award of $75,000 (plus interest of $5,500): Hewitt v Queensland Newspapers Pty Ltd (Supreme Court, ACT, Higgins J, 5 June 1995, SC283/93, unreported). Compare the level of awards in New South Wales set out in para 3.25.
33. In practice, objective falsity has been treated in New South Wales as a matter going to aggravated damages (eg Waterhouse v Broadcasting Station 2GB Pty Ltd (1985) 1 NSWLR 58 at 75), though it is more accurate to regard it, in itself, as a factor relevant to the extent of the harm to the plaintiff: see Singleton v Ffrench (1986) 5 NSWLR 425 at 443. We deal with falsity as aggravated damage in para 7.18.
34. See Singleton v Ffrench (1986) 5 NSWLR 425 at 441-444 per McHugh JA.
35. See Carson v John Fairfax & Sons Ltd (1993) 178 CLR 45 at 65-66 per Mason CJ, Deane, Dawson and Gaudron JJ, 103-104 per McHugh J dissenting. See also M J Tilbury, Civil Remedies Volume 2 (Butterworths, Sydney, 1993) paras 11012-11023.
36. Uren v John Fairfax & Sons Pty Ltd (1966) 117 CLR 118 at 151-152 per Windeyer J; Carson v John Fairfax & Sons Ltd (1993) 178 CLR 44 at 101-110 per McHugh J dissenting. See also J Stone, “Double Count and Double Talk: the End of Exemplary Damages?” (1972) 46 Australian Law Journal 311.
37. Ontario, Law Reform Commission, Report on Exemplary Damages (1991) at Chapter 5.
38. England and Wales, Law Reform Commission, Aggravated, Exemplary and Restitutionary Damages (CP 132, 1993) at para 6.54.
39. Defamation Act 1974 (NSW) s 46(3)(a).
40. See para 2.23.
41. See especially Carson v John Fairfax & Sons Ltd (1993) 178 CLR 44 at 50-51 per Mason CJ, Deane, Dawson and Gaudron JJ.
42. Supreme Court Act 1970 (NSW) s 94; District Court Act 1973 (NSW) s 83A.
43. Haines v Bendall (1991) 172 CLR 60 at 66 per Mason CJ, Toohey and Gaudron JJ, at 79 per McHugh J (dissenting); MBP (SA) Pty Ltd v Gogic (1991) 171 CLR 657 at 663; Batchelor v Burke (1981) 148 CLR 448 at 455 per Gibbs CJ; Ruby v Marsh (1975) 132 CLR 642 at 652 per Barwick CJ; Thompson v Feraonio (1979) 24 ALR 1; Pheeny v Doolan (No 2) [1977] 1 NSWLR 601 at 604 per Moffitt P, at 613 per Reynolds JA.
44. Eg Pheeny v Doolan (No 2) [1977] 1 NSWLR 601 at 618 per Mahoney JA.
45. Eg Cullen v Trappell (1980) 146 CLR 1 at 20-21.
46. Fire and All Risks Insurance v Callinan (1978) 140 CLR 427; Thompson v Feraonio (1979) 24 ALR 1; Pheeney v Doolan (No 2) [1977] 1 NSWLR 601; Bennett v Jones [1977] 2 NSWLR 358 at 363 per Moffitt P, at 377 per Samuels JA; John Fairfax & Sons Ltd v Kelly (1987) 8 NSWLR 131 at 137-140 per Samuels JA dissenting, at 142-143 per McHugh J.
47. (1987) 9 NSWLR 369. See also Australian Consolidated Press v Driscoll (1988) Aust Torts Reports 80-175; David Syme Ltd v Maher [1977] VR 517.
48. John Fairfax & Sons Ltd v Kelly (1987) 8 NSWLR 131; Australian Consolidated Press v Driscoll (1988) Aust Torts Reports 80-175.
49. (1988) Aust Torts Reports 80-175.
50. (1988) Aust Torts Reports 80-175 at 67,653.
51. Haines v Bendall (1991) 172 CLR 60 at 67.
52. The clearest example of such an approach is the decision of the Court of Appeal in Marsland v Andjeli (No 2) (1993) 32 NSWLR 649 which dealt with the award of interest under s 73 of the Motor Accidents Act 1988 (NSW) and which led to Parliamentary intervention to restate the law in the Motor Accidents (Amendment) Act 1994 (NSW).
53. See Kelly v John Fairfax & Sons Ltd (1985) 1 NSWLR 462 at 469-471 per Hunt J; John Fairfax & Sons Ltd v Kelly (1987) 8 NSWLR 131 at 135-141 per Samuels JA dissenting.
54. See Murray v Commonwealth (1986) 5 NSWLR 83.
55. Workers Compensation Act 1987 (NSW) s 151M.
56. Motor Accidents Act 1988 (NSW) s 79(2).
