Insights into litigation, sports law, media and legal culture

Judgment of Solomon in #HockeyFairfax litigation

PARIS – NOV 07, 2012: Wisdom of Solomon: Judgement of Solomon, stained glass, church is dedicated Gervasius and Protasius is one of the oldest in Paris

In the biblical narrative, King Solomon revealed his wisdom in his resolution of a maternity dispute. By threatening to ‘split the baby’, the true mother (who sought to protect her child by offering it to the other female claimant) was identified.

Thankfully exchanging the literal for the metaphorical, on 30 June 2015, Justice White of the Federal Court also opted for compromise. In the #HockeyFairfax defamation case, he divided fault between the two parties. Treasurer Joe Hockey scored the nominal victory, but not one likely replete with champagne.

The quality of analysis in this lengthy judgment vindicates the parties’ decision to run the case in the Federal Court of Australia. The Federal Court rarely hears defamation cases. Mr Hockey’s decision to file in the Federal Court had therefore surprised some (see my previous post on this issue).

Summary of outcome

Joseph Benedict Hockey sued for defamation in relation to a number of articles published in the Sydney Morning Herald (SMH), the Age and the Canberra Times. He sued for publication on tablet apps. He sued for publication on websites. He sued for publication on mobile electronic devices. He sued for publication of three Tweets. He sued for publication of an SMH poster.

The headline “Treasurer for Sale” was a feature of most of the publications (but not the Canberra Times which regarded itself as ‘more conservative’). The articles were essentially variants of the same story. The story was the product of an investigation into a group called the North Sydney Forum (NSF). Its thrust was that a select group of business leaders were able to gain access to Mr Hockey in return for political donations totaling hundreds of thousands of dollars each year.

Mr Hockey said he was deeply hurt by the publication of the articles. He described his reaction as one of complete surprise, shock, anger, disbelief, disappointment and concern as to the impact they would have on his family. He regarded the articles as conveying the suggestion that he was “on the take” and therefore accusing him of being corrupt. He said that the articles went to “the heart of my integrity – they were about my character and my honesty”. He also thought the articles were a form of “payback”.

Mr Hockey failed in relation to the matters said to have caused him such offence. Justice White found that none of the articles were defamatory.

In fact, Justice White found that none of the publications crossed the line except for three: two of the three Tweets and the SMH poster. He ordered $80,000 general damages in relation to the two Tweets, and $120,00 in relation to the poster, leading to a damages award of $200,000.

According to the judgment, the poster constituted the SMH masthead (about one quarter of the page), followed by the words EXCLUSIVE, and then TREASURER FOR SALE HERALD INVESTIGATION.   The first of the tweets (via The Age) stated “Treasurer for Sale” and contained a link to the article. The second tweet was similar but contained a ‘summary’ of the article as well.

By no means nominal damages, the damages Fairfax Media must pay is a lot less than $1 million. Mr Hockey’s senior counsel had reportedly suggested in closing submissions that damages should be based on a multiple of high general damages for each article (around $350,000 for each) with a sprinkling of aggravated damages on top, leading to a figure at least five times more than that ultimately awarded.

The games lawyers play

At the heart of this decision are some technical games played by lawyers.

Strictly speaking, one can defame someone under defamation law easily, although this is a technical area and technicalities can trip lawyers up. Theoretically, all you need do is show that a statement with defamatory meaning about an identified person was published to someone else. To have ‘defamatory meaning’, the words must be capable of lowering the identified person’s estimation in the eyes of others.

The many defences to defamation law are ‘get out of jail free’ cards. These are the avenues by which free speech is protected. One of these defences, qualified privilege, is discussed at length in the judgment.

For lawyers, the fun begins when trying to spell out the ‘defamatory meaning’ in a Statement of Claim. This requires a lawyer to draft the imputations, namely, the sting of the allegations. This requires a precise and objective examination of what readers likely understood the relevant words to mean.

If lawyers get this wrong, then the imputation will not have been conveyed and the defamation claim will fail at the first hurdle. This is what happened here in relation to the impugned articles.

For example, when Mr Hockey referred to his hurt and upset, he said he was upset by the suggestion in the articles that he was “on the take” and that he was corrupt. This general sentiment then found expression in the pleaded imputations said by his legal team to have been conveyed by the articles and the SMH poster:

Imputation (a): He accepted bribes paid to influence the decisions he made as Treasurer of the Commonwealth of Australia;

Imputation (b): He was prepared to accept bribes paid to influence the decisions he made as Treasurer of the Commonwealth of Australia;

Imputation (c): He corruptly solicited payments to influence his decisions as Treasurer of the Commonwealth of Australia;

Imputation (d): He is corrupt in that he was prepared to accept payments to influence his decisions as Treasurer of the Commonwealth of Australia;

Imputation (e): He corruptly sells privileged access to himself to a select group which includes business people and business lobbyists in return for donations to the Liberal Party. [Emphasis added]

Justice White noted that imputation (e) was at the forefront of Mr Hockey’s submissions.

Justice White also found that this imputation was not made out from a contextual reading of the articles. He acknowledged that the headline and opening paragraphs of an article are “valuable real estate” because of their capacity to inform the reader of the essence of the article and to induce the reader to continue through the remainder of the article. However, in his view, the ordinary reasonable reader should be regarded as someone likely to read the whole article, not just the headline.

With this in mind, Justice White found that, read as a whole, the ordinary reasonable reader would have understood that they were being informed (from the SMH article in particular) that Mr Hockey was engaging in a practice regarded as undesirable and inappropriate, but not corrupt. That is, readers would have understood the articles “to be conveying that Mr Hockey was engaged in a non-corrupt form of fundraising which used the allure of his office”: at [125].

In other words, by alleging that the articles imputed corruption rather than undesirable and inappropriate conduct, Mr Hockey set the bar too high.

Justice White criticized Mr Hockey’s claim for its overly simplistic focus on corruption

In many respects, much of Mr Hockey’s claim was based on a simple syllogism: politicians who can be bought are corrupt; the statement that Mr Hockey was for sale meant that he could be bought; therefore the SMH articles conveyed that Mr Hockey was corrupt. It is not axiomatic, in my opinion, that ordinary reasonable readers would have accepted that the first part of the syllogism (many are likely to have wanted to know the sense in which politicians can be bought).

 …the ordinary reasonable reader would have understood on reading the articles as a whole that the SMH was reporting on a method by which access to Mr Hockey in his important role as Treasurer could be obtained by the payment of significant sums, but not that Mr Hockey himself, or his judgment or discretion, could be bought. This was so despite the “strong and eye-catching” headline “Treasurer for Sale”: at [141 – 142]

Does this mean that Mr Hockey’s legal team made a mistake? Does it mean that if they had set the bar a bit lower, by alleging that the articles would be understood to mean that Mr Hockey engaged in an undesirable and inappropriate practice, that Mr Hockey could have succeeded on his primary case too?

No it doesn’t, and this is where we get to the games lawyers play. Imagine that Mr Hockey’s team did plead this imputation. Let us assume the imputation then passed Justice White’s laser-eyed filter. This is where we would get to the defences.

One defence is truth. The defence of truth found no expression in this case for obvious reasons. There was no basis whatsoever on which to allege the Treasurer was corrupt. The articles did not suggest this, and there was no evidence of corruption whatsoever.

However, the position might have been different had Mr Hockey’s claim suggested the articles imputed that Mr Hockey engaged in an undesirable and inappropriate practice. Then, it is possible Fairfax Media might have gone to town attempting to prove that this imputation was true. Imagine the cross-examination then! That is likely why Mr Hockey’s legal team kept the ‘imputation bar’ so high. However, by doing so, Mr Hockey’s claim became caught in a Catch 22.

The defamatory poster and tweets

Imputations

Justice White upheld the poster and tweets as defamatory because they lacked the context of the articles.

However, even in the case of the poster and tweets, imputation (e) (said to have been at the forefront of Mr Hockey’s submissions), did not succeed.

Rather, Justice White upheld Mr Hockey’s claims in relation to the SMH poster and one tweet only on grounds (c) and (d), which were variants of the corruption theme. He was not satisfied that the term Treasurer for Sale conveyed ‘bribery’ which is why imputations (a) and (b) also failed.

Justice White upheld Mr Hockey’s claims in relation to the second tweet on the grounds of an additional imputation: That he corruptly sold privileged access to himself to a select group of business leaders in return for political donations totaling hundreds of thousands of dollars each year.

Because the defamatory meaning of the poster and tweets was upheld, Justice White was required to turn his attention to the defences. He conducted an extensive analysis of the defence of qualified privilege with an eye to a possible appeal.

Qualified privilege defence

Qualified privilege is a concept recognized both by the common law and statute. The defence recognizes that when a publisher has an interest or duty, legal, social or moral, to make a statement and the recipient of the statement has a corresponding interest or duty to receive it, then the publisher should be legally protected even if the reputation of a targeted individual is harmed in the process.

This allows media organizations to engage with subject matter which is in the public interest (e.g. political and governmental matters).

However, the final limb of the statutory defence is often where media organisations fall down. That is, section 30(1)(c) of the Uniform Defamation Laws requires the conduct of the publisher to have been reasonable.   Assessing reasonableness involves a broad-ranging inquiry.

In relation to the poster, Justice White did not consider it reasonable for Fairfax Media to publish a poster with a defamatory meaning to promote interest in the underlying (non defamatory) article.

Justice White’s ideas for alternative, acceptable poster headlines suggest he will not be seeking the sub-editor role at the Northern Territory News any time soon. His suggestions, which do not appear to have been developed with an eye for sales were: “Hockey: donations and access. Herald Investigation” or “Hockey: membership, donations and access: Herald investigation” or “Access to Treasurer can be bought, Herald investigation”.

Discussing the concept of reasonableness generally, Justice White also considered that Mr Hockey was not given a sufficient opportunity to provide his side of the story. He identified the most obvious shortcoming in the questions put to Mr Hockey to be that none of the questions raised:

  • The question of payment;
  • Sale by Mr Hockey of his time; or
  • Sale by Mr Hockey of access to him in return for political donations or knowledge by Mr Hockey of the payments made by individual NSF members.

This was so despite the “angle” of the articles, almost from the time of their initial conception, being the exchange of money in exchange for access, which was acknowledged as a “big part” of the story.

Qualified privilege can be defeated by an improper purpose such as malice. Here, in an effort to cover all bases, Justice White found that if his analysis of reasonableness erred, he would have found the defence to be defeated on this basis. The source of this ‘animus’ was said by Justice White to be the SMH Editor in Chief, Mr Goodsir. According to Justice White’s findings, Mr Goodsir sought a headline intended to hurt or damage Mr Hockey following, amongst other things, the manner in which Mr Hockey had secured an apology in relation to an earlier unrelated story. These findings were not made in relation to any other Fairfax Media protagonists.

Damages

There were 2.466 posters distributed outside locations at which the SMH was for sale. Most of them were in NSW. Justice White stated that it was not possible to be precise about the numbers who saw the SMH poster but did not read the SMH printed articles. However, he estimated that the figure well exceeded 1,000,000 people and probably twice that number.

In relation to Twitter, Justice White noted that while The Age had some 280,000 followers on its Twitter account, only 789 downloaded the article headed “Treasurer for Sale: Joe Hockey offers privileged access”. Justice White was therefore skeptical of the submission by Mr Hockey’s senior counsel that 279,000 people read the tweets. As he said:

Many, if not most Twitter users receive daily large numbers of tweets. It is unrealistic to suppose that they read every tweet. Ordinary experience suggests that many do not read all the tweets they receive and, of those who do, many will glance at a tweet only fleetingly to see if it contains anything to attract their interest. That may, for example, be because they are interested only in tweets dealing with a particular subject matter or particular subject matters. Readers of this kind do not “take in” the subject matter of every tweet. It should not be supposed therefore that the tweets were read and understood in the same way as the SMH poster.” at [432]

Nevertheless, Justice White accepted that it was appropriate to proceed on the basis that there would have been a large number of persons, perhaps in the tens of thousands, who read the bare tweets and who did not read further.

Assessing general damages for defamation involves a scientific exercise akin to waving a finger in the air. It is very hard to calculate general damages, because they are designed to compensate for hurt feelings in the absence of an adequate apology. The concept of calculating a dollar number to substitute for a person’s hurt feelings is an almost impossible exercise. Each person has different attributes and characteristics.

All a judge has to work with is a statutory ceiling, currently $366,000.

Therefore, if one reflects on the damages awarded, on their face they seem rather low. Imagine if something defamatory is said about you which a judge accepts has been read by up to 2 million people. Not to mention a few tens of thousands of people on Twitter. To be awarded a total sum of $200,000 seems on its face paltry in this context.

However, the figure was discounted for three reasons. First, Mr Hockey’s primary claim had failed:

Mr Hockey’s evidence indicates that much of the hurt and harm in respect of which he seeks compensation is attributable to the publications which I have found not to be defamatory. I refer in particular to Mr Hockey’s evidence that it was “the articles” which offended him because they went to the heart of his integrity; that with advance notice he would have sought to have the articles corrected; that it was the reading of “the articles” which made him think they were a form of “payback”; that it was the availability of the printed articles which led him to avoid contact with others on the morning of 5 May 2014 when having his morning cup of coffee; and that it was front pages of the SMH and The Age which he had seen displayed on televisions that morning and which were the subject of public discussion.” [emphasis added] at [469]

Secondly, Mr Hockey’s position as Treasurer meant that people likely had firm views about Mr Hockey even before the publications, which Justice White described as “an ordinary incident of political life”.

In other words, to be defamatory the publication has to cause a person to think less of the targeted individual. Justice White’s conclusion was that, in the case of Mr Hockey, there was unlikely to be any material alteration to many readers’ views.

Thirdly, Mr Hockey remained the Treasurer. It was not as if the publications had led to any apparent suggestion that Mr Hockey step aside.

Justice White’s acceptance of Mr Hockey’s testimony was not unqualified, although he did not consider this affected the reliability of his evidence about the hurt Mr Hockey said he felt:

It was obvious in this case that Mr Hockey did have difficulty at times in recognizing that the way in which questions should be answered in a courtroom differs from that to which he may be accustomed in the political environment.” at [496]

Finally, Justice White declined Mr Hockey’s invitation that he award aggravated damages.

Next steps

There will hear submissions from the parties with respect to injunctions, interest and costs and as to the form of orders to make in light of the findings.

Typically, the winner takes all, in that the losing party must pay costs in accordance with a court scale. Therefore, one possibility is that Fairfax Media will be required to pay costs, but at scale these can often be about two thirds of costs incurred (which I loosely call the two thirds rule).

Scenario 1: Fairfax Media to pay damages of $200,000 plus two thirds of Mr Hockey’s costs at scale. If Mr Hockey’s actual costs were $600,000, scale costs might be $400,000. This would lead to a total payment to Mr Hockey of $600,000. With this scenario, even with damages Mr Hockey would finish with a net neutral outcome, but no extra money in his pocket.

However, in circumstances where Mr Hockey’s primary claims failed, this might be a case for apportionment. In this scenario, the Federal Court would order that Fairfax Media only pay a proportion of Mr Hockey’s costs, if any.

Scenario 2: Fairfax Media to pay damages of $200,000 plus (hypothetically) only 70% of Mr Hockey’s costs. If Mr Hockey’s actual costs were $600,000, 70% of this would be $420,000. However, one then has to apply the two thirds rule: $277,000   This would lead to a total payment to Mr Hockey of $477,000. With this scenario, even with damages Mr Hockey would finish with a net negative outcome of $123,000.

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