Quest for a fair balance between free speech and defamation law

There’s a high social cost in the clash between free speech and defamation law.

Digital illustration: Greg Sommer

The push by the states to reform defamation law is about much more than freedom of speech. It is about ending a system of injustice in which the hurt feelings of movie stars are worth more than the body parts of ordinary people.

Consider what happened to actress Rebel Wilson. Had she lost a leg after an accident, one of Slater + Gordon’s top public liability lawyers says that sort of injury might result in compensation in Victoria of between $400,000 and $500,000 for pain and suffering.

Instead of causing an amputation, Bauer Media damaged Wilson’s reputation — and that, if the size of the payout is any guide, is far more important. Wilson pocketed $600,000, which is at least $100,000 more than the likely payout to an amputee.

Her payout is more than twice as much as the $250,000 that a Melbourne factory worker might expect for the loss of an eye, and is roughly in line with what ordinary people might receive if they lost a hand and could never work again.

Those estimates do not come from the publishers and broad­casters who have been urging the nation’s governments to reform defamation law. They come from Slater + Gordon’s top public liability lawyer, Barrie Woollacott, who is exasperated by what he sees as an unjust system.

“But I’ve been doing this for so long that I am no longer appalled; I’m just accepting that it is very unfair,” Woollacott says. He cautions that payouts for personal injuries vary across the nation, but he says some of his clients have been shocked when tragic circumstances have forced them to come to terms with the disparity between compensation for defamation and for physical injuries.

This is not what the nation’s governments intended when they put in place uniform defamation laws in 2005. These laws, which operate in every state and territory, were intended to achieve the opposite: to keep defamation payouts for reputational damage, referred to by lawyers as non-economic losses, proportionate to personal injury compensation.

A 2004 report to the nation’s attorneys-general spelled this out: “General damages for non-economic loss should be no greater than general damages available in personal injury actions.”

But the reverse has happened. Just this week, West Indian cricketer Chris Gayle won a $300,000 defamation payout after being accused in print of exposing his genitals to a woman in a change room.

This means the payout for Gayle’s hurt feelings does bear some proportion to personal injury awards — but not in a good way. It is roughly in line with the $200,000 to $300,000 that Woollacott estimates would be paid to those who are permanently impaired by back injuries that fail to respond to surgery.

The reason for the disparity is that damages for personal injuries are still affected by restrictions, known as tort reform, that were put in place after 2002 to ease the cost burden on insurers and public institutions caused by a boom in this form of litigation. But when it comes to defamation, the courts have found ways of sidestepping similar limits that capped payouts in 2005.

The question now is whether defamation needs its own wave of tort reform.

During the past 13 years, the playing field also has been skewed in favour of plaintiffs. This form of litigation is increasingly plagued by forum shopping and ineffective defences that have contributed to a surge in trivial claims generated by neighbourhood disputes and social media.

After being confronted with the risk of almost unlimited financial liability, mainstream media organisations have put aside their differences and are pushing for changes that include restoring the cap on damages.

Governments have taken up the challenge and established a working party of officials from every jurisdiction that is conducting a major review of defamation law. The goal is a new tranche of reforms — the first since 2005 — that could affect laws in place around the nation.

The project is being led by NSW Attorney-General Mark Speakman and that state’s Solicitor-General Michael Sexton SC is expected to play a key role in shaping how the next generation of defamation laws balance two fundamental rights: freedom of speech and personal reputation.

It comes as recent research has found that this form of litigation is no longer merely the bane of the media. Its plaintiff-friendly nature appears to have made it an increasingly popular weapon in neighbourhood ­disputes.

“We are at, or approaching, a turning point, an inflective moment wherein private individuals are increasingly suing each other, and Google and the owners of Facebook pages are sued as the ‘publishers’ of alleged defamatory content,” says a report on digital defamation prepared by the Centre for Media in Transition at the University of Technology Sydney.

Compared with a decade ago, this study found that the overall number of cases was similar but the proportion of digital defamation claims had risen from 17.2 per cent in 2007 to 53.3 per cent last year.

The UTS study also contradicts the common assumption that public figures are the main users of defamation law. It found it was becoming more common for private individuals to be plaintiffs and ­defendants.

That study found that in the four years to last year, more defamation cases were decided in NSW than in all other jurisdictions combined. The tally for NSW was 95 while the next bus­iest defamation jurisdictions were Queensland and Victoria, where just 21 cases were finalised.

But as more people sue each other instead of the media, the UTS study found the proportion of cases in which the media companies were defendants has fallen significantly — from 28.6 per cent in 2013 to 16.7 per cent last year. It says the public space is now a much bigger and wilder place and media companies were involved in just one-quarter of the matters covered by the study.

As the economic base of the media is changing, the reduced proportion of claims against the media is cold comfort for publishers and broadcasters when the size of the claims confronting them has boomed.

Rebel Wilson originally had been awarded $4.7 million before it was slashed on appeal; Toowoomba’s Wagner brothers won $3.7m over broadcasts by Alan Jones; actor Craig McLachlan wants $6.5m from the ABC and Fairfax; and Hollywood star Geoffrey Rush is seeking millions from The Daily Telegraph (published by News Corp Australia, which also publishes The Weekend Australian).

This helps explain why some of the industry’s strongest competitors have made common cause to prosecute the case for reform. It also helps explain why James Chessell, executive editor of The Sydney Morning Herald and The Age, made himself available at 7am yesterday to talk to The Australian.

That the litigation risk now extends into the general community as well as the media also may explain why Labor’s Mark Dreyfus, who could be attorney-general after next year’s federal election, has embraced parts of the reform agenda. He has promised to have more to say on this subject.

breakout panel for Inquirer defamination

Attorney-General Christian Porter also appears to be leaning towards more procedural consistency — a move that could put an end to forum shopping and stymie plaintiffs who sue in the Federal Court to avoid juries in state Supreme Courts.

Chessell argues that the push for reform is not aimed at “letting journalists off the hook”, even though some may see it that way.

“The problem is that these laws were formulated a long time ago. Facebook had just started and other forms of social media were not in common use and they did not anticipate the technological changes that were to sweep through the media industry.

“The second issue is the application of those laws has become, in my view, reasonably one-sided.

“It has got to the point where it is very difficult for media organisations, whether it is the ABC, whether it is News Corp, whether it is The Sydney Morning Herald and The Age, to pursue serious, public interest journalism without the risk of being sued in a vexatious way,” Chessell says.

In his view, the risk of crippling damages is forcing media companies to spend more of their budgets on legal services at a time when thousands of jobs for journalists have disappeared.

“You have a fixed budget … and if your legal budget is taking up more and more of it, it’s hard to spend that money on journos,” Chessell says.

But the risk of litigation also has triggered fears of a more insidious danger when editorial teams are deciding where to allocate reporters.

“As an editorial team, you sit there and think: what is the financial impact of this? That’s a really dangerous thing because the temptation sometimes is that maybe this investigation, or this subject, is very risky from a legal point of view.

“We have a couple of ongoing cases, so perhaps we don’t pursue that. It hasn’t got to that point, but it is certainly something that sits in the back of people’s minds and has a direct impact on the higher-risk calls that people make when they are editing mastheads,” Chessell adds.

Because the defamation acts take the form of uniform state and territory legislation, the direct responsibility of the federal government might be limited to the proposed introduction of jury trials in the Federal Court to eliminate inconsistency with some state Supreme Courts.

Porter seems attracted to that idea. He says one of the purposes of the review is to “allow for a process which has some hope of producing, if not uniformity, far more consistent and aligned rules in this area across Australia”.

The review’s terms of reference have given the officials undertaking this work responsibility for ensuring their recommendations do not place unreasonable limits on freedom of expression — and particularly on the publication and discussion of matters of public interest and importance.

This seems broad enough to cover the proposals from the media coalition. But if the review goes awry, responsibility for keeping the reform process on track may again fall to the commonwealth, as it did when former attorney-general Philip Ruddock threatened to introduce a federal defamation act if the states failed to reach agreement on uniformity.

Ruddock says he took legal advice and found that the federal government had the constitutional power to “cover the field” with a federal defamation act that would cover all publications “except for pamphleteering and community noticeboards”.

The threat worked.

Writing in May for an international media law blog, defamation expert Patrick George noted that the current law was a compromise that had been reached after years of debate.

“The quickest route to reform is by the federal commonwealth government legislating its own defamation act, which by virtue of the Australian Constitution would override the current uniform state and territory acts to the extent of inconsistencies, under the constitutional power over communications,” writes George, who is a partner in Sydney law firm Kennedys.

He adds that the experience in Britain raised doubts about whether the introduction of a “serious harm” threshold test — which has been proposed by the media coalition — would live up to expectations.

However, Dreyfus already seems to favour some of the media’s proposals, particularly the introduction of a “single publication rule” to overcome an early internet ruling by the High Court.

“It is clear that defamation law is ripe for reform — and, in fact, has been for some time,” he says in a statement.

“There are clear indications that the law is not working as intend­ed, and that it has not kept up with the age of social media and digital technology. The possibility of multiple ­actions based on the same publication, and the effective removal of limitation periods because of continuous republication on the internet, are two obvious examples,” he points out.

“Given the clear risk of defamation law impeding free speech and journalistic freedom, there is no room for inertia.

“Labor welcomes the work that has been done by NSW to review the operation of existing law, but believes that national reconsideration is also warranted.”

The starting point for the review is a system that many in the media and the law believe is skewed towards plaintiffs.

David Rolph, a professor of law at the University of Sydney, puts it this way: “Looking at things overall, I think it is still true to say that it is better to be a plaintiff than a defendant in a defamation case in Australia.

“The balance is probably still firmly on the plaintiffs’ side so I think we could even up the balance a bit and have a look at the law reform processes that other countries throughout the Commonwealth have undertaken,” Rolph says.

He says it is worth taking note of recent reforms in Britain “that have made the law more friendly to defendants and protective of free speech”.

Paul Murphy, chief executive of the Media Entertainment and Arts Alliance, believes the restrictive approach to defamation in Australia is increasingly out of step with international practice and is limiting the ability of the media to do its job.

The law, he says, is giving the media an incentive “to settle, or not to publish for fear of the costs involved”.

The test confronting the governments is whether they will leave in place a system that means the arms and legs of ordinary people are worth less than someone else’s hurt feelings.