Win the battle, lose the war: A Costs Perspective on Litigating Defamation

This article is an overview of the recent defamation actions by The Hon. Joe Hockey MP. The article explores the necessity for publishers to check the accuracy of statements made on social media and the need for plaintiffs to ‘focus’ their lawsuit to avoid cost related issues.

Hockey v Fairfax Media Publications Pty Ltd [2015] FCA 652

Mr Hockey initiated proceedings in response to a series of newspaper articles which were published in May 2014 in hardcopy and online through various social media platforms by the publishers of The Sydney Morning Herald, The Canberra Times newspapers and The Age. The respective articles were headlined “Treasurer for Sale” and “Treasurer Hockey for Sale”. The articles claimed that:

(a)        Mr Hockey provided ‘privileged access’ in consideration of political donations to the Liberal Party via the North Sydney Forum (fundraising body); and

(b)        the forums activities were secretive because they had not been disclosed properly to the relevant electoral funding bodies.

While much of the media discussion of the case surrounded the use of Twitter as one of the social media platforms to ‘tweet’ the article titles, it is significant to note that each characterisation of the statements by the publishers within the media formed a part of Mr Hockey’s claim. Mr Hockey argued that the publications carried the following defamatory imputations

(a)        that Mr Hockey was corrupt;

(b)        that Mr Hockey solicited the sale of privileged access to himself as Treasurer for consideration of political donations to the Liberal Party; and

(c)        that Mr Hockey accepted bribes which were intended to gain influence over his decisions as Treasurer.

Mr Hockey was successful and was awarded general damages in the following claims:

(a)        $120,000.00 in respect of the advertising posters; and

(b)        $80,000.00 for each of the two ‘tweets’.

Mr Hockey was unsuccessful in seeking damages for all other claims. This included claims in respect of the article that appeared in the printed version and other versions of the article which appeared in hard copy.

The approach of the Court in determining which claim should succeed is consistent with the traditional perspective of interpreting defamatory content. The traditional perspective with respect to defamation law is to treat the ‘whole’ identifying source of text as one publication. This is inclusive of pictures, titles and captions associated with the publication. So how did the Court differentiate between ‘tweets’, advertisement posters and newspaper/hard copies?

The Court clearly adopted the traditional perspective when finding that the newspaper articles/hard copies of the publication were not defamatory because their titles were readily capable of being placed in their respective contexts by the reader. However, the Judge considered the ‘tweets’ and advertising poster differently because they only consisted of a headline.

Significantly, the Court found that the lack of readers who would have read the ‘tweets’ would also not have taken the positive step of clicking on a link to gain access to the full article in its true context. The Court therefore found that, when viewed in isolation, the headlines “Treasurer for Sale” and “Treasurer Hockey for Sale” were defamatory.

What constitutes ‘whole’ in terms of the traditional perspective could now require further consideration. It appears that the Court must be satisfied that:

(a)        a majority of readers would be willing to accept the defamatory imputation without recourse to further context; and

(b)        a majority of readers would not take the positive step of adding context to the defamatory imputation if that information were readily available to them.

This appears to be consistent with Justice Elkaim’s view, where in a judgement last year noted that “when defamatory publications are made on social media it is common knowledge that they spread”.[1]

Hockey v Fairfax Media Publications Pty Limited (No 2) [2015] FCA 750

Assessing costs can be a rigorous and often tedious event for clients and law firms. The commercial reality of a competitive legal market demands that plaintiffs and defendants refine their arguments and identify a strategy for achieving a commercially sound result. Defamation proceedings can hold their weight in general damages and/or as a way of ‘rubber stamping’ the reputation of a plaintiff at law and in the eyes of the public.

A majority of plaintiffs in any case will not have the job of running the nation’s finances, as Mr Hockey does. This means that seeking general damages is more likely to be pursued when you do not rely on the public scrutiny associated with high office. So where does that leave those clients who wish to seek general damages in defamation proceedings?

Mr Hockey’s case is somewhat different to most clear-cut defamation cases due to the mixed result, after an unfavourable court order in respect of costs. However, Mr Hockey’s case does provide some useful insight for the rest of us. In Hockey v Fairfax Media Publications Pty Limited (No 2) [2015] FCA 750 (Hockey No. 2), Justice White placed a strong emphasis on the requirement for plaintiffs to ‘focus’ their lawsuit for cost purposes:

“It is much more likely that, had Mr Hockey pursued only a confined claim, the resources expended in pursuing and defending that claim would have been more focused and confined and that the trial itself would have been more confined. It is improbable that a trial concerning only the SMH poster and the two tweets of The Age would have occupied seven days. Put slightly differently, it was the ambit of the claims made by Mr Hockey which defined, and extended, the battleground of the parties’ contest”.[2]

It is important that clients and their legal teams, as a part of proceedings, structure their claims in a way that places a focus on the arguments which are most likely to succeed at trial. The current cap of $366,000.00 for claims of non-economic loss means that defamation proceedings often have to be weighed against the potential legal costs, which are generally not capped.[3] In Hockey No. 2, Justice White accepted the submission that Mr Hockey’s principal concern was the printed version of the article rather than the ‘tweets’ and advertising poster. His Honour went on to state that:

“ … his lack of success on significant matters should be reflected in a reduction of costs to which he is entitled.”[4]

Based on the Court’s assessment of Mr Hockey’s claims, it is important for plaintiffs to “focus”[5]their lawsuit to avoid negative cost orders. A failure to conduct a proper risk assessment can win the battle, but will inevitably lose the war when it comes to legal costs. This risk is often accompanied by the further risk of the plaintiff causing greater damage to their reputation by pursuing legal action and this is why it is necessary for a focussed approach to claims when it comes to litigating defamation. Had Mr Hockey refined his claims, he could have avoided trial altogether. This is particularly important in defamation claims because in court, everything comes out and this is where the reputational damage to the client can be compounded. Parties should take the following into consideration when considering pursuing a defamation pursuit:

(a)        clearly outlining your objectives for pursuing your claim;

(b)        avoid ‘scattergun’  tactics where the reputation of the client is the subject of proceedings (especially defamation lawsuits); and

(c)        seek clear advice as to what claims are more likely to succeed at all stages of the dispute process.

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Cronin Miller Litigation is a Gold Coast based law firm specialising in resolving commercial disputes, and providing effective results for persons who have a claim of a commercial nature.