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- 28 October 2003
Supreme Court Act 1970: Disallowance of Supreme Court Rules (Amendment No. 380) 2003
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Mr DAVID BARR (Manly) [4.58 p.m.]: I move:
That this House disallows the Supreme Court Rules (Amendment No. 380) 2003 made under the Supreme Court Act 1970 which was published in Government Gazette No. 145 on 19 September 2003 at page 9425 and tabled in this House on 14 October 2003.
I have moved this disallowance motion to negative an amendment to the Supreme Court Rules made by the court on 19 September that has exempted defamation proceedings from the application of the Supreme Court Rules part 52A rule 33. Rule 33 provides that plaintiffs can recover their costs only in actions brought in the Common Law Division of the Supreme Court if they have been awarded more than $225,000 in damages or can otherwise demonstrate that they have sufficient reason for bringing the action in the Supreme Court.
The purpose of the rule is to encourage plaintiffs to use the lower courts for matters involving lesser amounts of damages. This exemption for defamation now means that any defamation action, no matter how trivial, can be brought in the Supreme Court. The Supreme Court is likely to become the court of first instance for all defamation actions commenced in this State. The court's decision to exempt defamation from the application of the rule appears to have been prompted by the comments of Justice Simpson in the recent case of West and Anor v Nationwide News Pty Ltd trading as Cumberland Newspaper Group, reported in (2003) NSWSC 767.
In that case Justice Simpson noted that the Supreme Court had not been enforcing part 52A rule 33 in defamation cases. Her honour sent a strong message to her colleagues, and stated in paragraph 27 of her judgment, "If the rule makers wish to make a special exception in cases of defamation, they are open to do so." According to Justice Simpson, there were a number of reasons the rule was not being enforced by the court. Her Honour noted that judges are inclined to look more favourably upon plaintiffs due to the complex nature of defamation law, the wide range of defences available, and the way damages are assessed at large in defamation.
The overwhelming tendency of the court has been to find that the plaintiff had a sufficient reason for bringing the action in the Supreme Court, even though the damages awarded were substantially less than $225,000. In fact, if the court had been enforcing this rule, virtually no defamation actions would have been brought in the Supreme Court, as almost all damages awards in defamation cases are far less than $225,000. So far as I am aware, since 1995 there has been only one case in which defamation damages have exceeded $225,000.
In my view these matters should have been kept out of the Supreme Court. We should all be doing what we can to decrease, not increase, the cost of defamation litigation. The court has now responded to Justice Simpson's comments by simply amending the rules so that they no longer apply to defamation actions. In essence, in relation to defamation actions the court has simply tossed the rule out the window. The most obvious problem with the amendment is that it will further clog the Supreme Court with defamation cases that should be heard in the District Court. More importantly, it will expose defendants to much higher costs.
New South Wales already suffers from being the defamation capital of the world. The complicated, convoluted nature of our defamation law has resulted in more defamation cases per capita being litigated in this State than in any other place. Last year the Communications Law Centre at the University of New South Wales produced figures showing that New South Wales has one defamation writ per 79,000 people, compared with England, which has one defamation writ per 121,000 people, and the United States of America, which has one defamation writ per 2.3 million people.
The Supreme Court amendment means that even more time and public money will be wasted on defamation litigations in New South Wales. However, it is not just the extra burden we place on the court system that is the serious problem with this amendment to the rules. If the exemption for defamation is allowed to stand, it will mean that defendants in relatively minor matters may be saddled with enormous cost orders because the Supreme Court is a far more expensive place to litigate matters than the District Court. Plaintiffs will be able to justify bringing virtually any matter to the Supreme Court regardless of how trivial it is, and run up huge cost bills, which a defendant may be ordered to pay if the plaintiff is successful.
The Defamation Act expressly states that there are to be no punitive damages in defamation. However, this requirement is rendered irrelevant by the effect of large cost orders. The cost orders which can exceed the amount of damages by many times are far more significant than actual damages and are extremely punitive in nature. The court could have adopted a position more in line with a bill I have before this House which provides that plaintiffs in defamation actions must be awarded at least $25,000 before they can recover their costs. The motivation behind this change may reflect turf warfare between the District Court and the Supreme Court. The only people who will gain anything from this rule change will be the defamation barristers, who are already dining out on the large fees they can command in defamation cases.
The law of defamation is already out of step with community values, and it is a serious impediment to free speech. Nowhere is the pomposity of the legal profession more evident than in this area of law. Centuries-old notions of reputation, which have more to do with feudal values than modern values, have been puffed up by the hyperbole of bewigged barristers to become a lucrative revenue stream for them and, in the process, inhibit free speech. Nowhere is the gap between ordinary people and the bewigged pompadours presiding over the justice system more apparent than in this move by the Supreme Court to remove costs as a constraint on plaintiffs. Defamation becomes even more the domain of the wealthy, who can afford to have a reputation. I urge all members to support this disallowance motion.
Mr BOB DEBUS (Blue Mountains—Attorney General, and Minister for the Environment) [5.05 p.m.]: The Government opposes the disallowance motion moved by the honourable member for Manly. Supreme Court Rule part 52A rule 33 provides that where a plaintiff recovers a sum of not more than $225,000 the plaintiff shall not be entitled to payment of the costs of the proceedings unless the plaintiff had sufficient reason for commencing or continuing proceedings in the court. Part 52A rule 33 (3) provides that a sufficient reason for the commencement or continuation of the proceedings is the existence of reasonable grounds for the plaintiff to expect that he or she would recover more than $225,000. The rule of court referred to in this disallowance motion does not apply to proceedings in defamation. The purpose of the general proposition in part 52A rule 33 of the Supreme Court Rules is to deter plaintiffs from commencing small or uncomplicated cases in the Supreme Court, and this is a very sensible rule for the court to have adopted.
However, given recent developments in defamation legislation and case law, there are strong reasons for making an exception in these cases. It is true that in the past the damages awarded in defamation cases have been generous indeed. For example, $2.5 million was awarded in Erskine v Fairfax in 1998, almost $700,000 was awarded in Nugawela v Crampton in 1996, and more than $1 million was awarded in Hartley v Nationwide News in 1995. However, successive amendments to defamation law have brought damages awards in much closer alignment with awards for general damages in personal injury cases.
Section 46A of the Defamation Act now provides that in determining the amount of damages for non-economic loss the court is to take into consideration the general range of damages for non-economic loss in personal injury awards in the State, including awards made under, or in accordance with, any statute regulating the award of any such damages. While the size of the damages awards has been significantly reduced, this does not necessarily mean that the cases heard by the Supreme Court are simple and straightforward. Very often, even relatively minor defamation cases raise complex issues about the right to freedom of expression, and the need to strike a balance between the free flow of information of matters of public interest and importance, and the protection of reputation. These are matters that sit at the very heart of our democracy. It is for this reason that defamation cases such as Lange were appealed all the way to the High Court.
The Supreme Court has modified part 52A rule 33 so that it does not apply automatically in defamation cases. The amendment to part 52A rule 33 is an acknowledgement that the rule has not generally been enforced in relation to defamation proceedings. More importantly, it is an acknowledgment that while the majority of defamation matters decided in the Supreme Court result in a damages award of less than $225,000, the Supreme Court may well be the appropriate jurisdiction in which to hear the matter because of the complex legal issues raised.
The circumstances surrounding the decision of Her Honour Justice Simpson in West and Anor v Nationwide News demonstrate that there is no justification for continuing the application of part 52A rule 33 of the Supreme Court Rules to defamation proceedings. In that case Her Honour had awarded the first plaintiff damages in the sum of $20,000 and the second plaintiff $30,000. The defendant had successfully defended some of the imputations sued upon, and, obviously, failed in its defence to the imputations in respect of which damages were awarded.
The plaintiffs then sought an order that the defendant pay their costs of the proceedings. Her Honour held that it would be unjust for the plaintiffs to be deprived of any costs of their successful litigation. The defendant was ordered to pay three-quarters of the plaintiffs' costs of the proceedings. As Her Honour pointed out in her judgment, if rule 33 were strictly applied it would be all but impossible for plaintiffs to commence defamation proceedings in the Supreme Court. A plaintiff would be unable to anticipate whether the court would exercise its discretion in favour of the ordering of costs if successful, but where the verdict is less than $225,000.
I believe it is essential that the Supreme Court continue to hear defamation matters that give rise to complex legal issues. The rule change will ensure this to be the case. I am also confident that sufficient safeguards exist to prevent the Supreme Court presiding over shorter, less complex matters that ought rightly be tried in the District Court. Clear common law principles exist in relation to the jurisdiction of the courts in defamation matters. In a number of decisions, Justice Levine, the defamation list judge in the Supreme Court, listed the factors relevant to whether defamation proceedings ought to be transferred to the District Court or retained in the Supreme Court.
These factors include the status of the plaintiff and the circulation of the newspaper involved, or other media; the quantum of damages that is likely to be obtained; whether the imputations are serious or of the utmost gravity; whether there are any major matters of principle that would warrant the consideration of the Supreme Court; and the prospects of the matter being dealt with more quickly in either the Supreme Court or the District Court. I am confident that these principles enunciated by Justice Levine in Hoser v Hartcher, Cohen v Nationwide News, Murrihy v 2UE, and Ieremia v Skalkos will ensure that only the most complex defamation matters are litigated in the Supreme Court. The disallowance of this rule would, in effect, discourage parties from bringing smaller cases in the Supreme Court, even where they may involve complex questions of law.
The Government has also taken legislative steps to encourage the early resolution of defamation disputes and to actively discourage parties who do not co-operate in achieving early resolution. This is a matter of considerable significance in this context. Late last year the Government introduced a new settlement procedure into the Defamation Act. The new procedure provides for a publisher to make an offer of amends to a person aggrieved by a defamatory statement. The offer must include a number of elements, including an offer to publish a reasonable correction and apology, and an offer to pay the expenses reasonably incurred by the aggrieved person. The publisher may also decide to include an offer to pay compensation in appropriate cases. Any offer must be made within 28 days of the publisher being told by the aggrieved person that the matter in question is or may be defamatory, or after the publisher has served a defence to an action for defamation on the aggrieved person. Once a publisher performs its part of a settlement offer, including paying any agreed compensation, the aggrieved person cannot begin or continue a defamation action.
Further, it is a defence to an action in defamation if the publisher made an offer of amends that was not accepted, that the offer was reasonable in the circumstances, that it was made as soon as practicable after the publisher became aware that the publication in question may have been defamatory, and that the publisher was ready and willing to perform the offer before the trial. As a further incentive to settle defamation proceedings before they reach the courts, costs penalties apply to an unreasonable failure to resolve a matter. The speedy and public vindication of a person's reputation, through a revised and strengthened offer of amends procedure, is the preferable way to resolve defamation cases. I am confident that the new offer of amends provisions in any event will significantly reduce the need for parties to refer to the amended Supreme Court rule, as defamation matters will be settled before they reach trial. Therefore, the Government opposes the motion.
Mr BRAD HAZZARD (Wakehurst) [5.12 p.m.]: At the outset I indicate that the Opposition opposes the motion by the honourable member for Manly. Whilst we understand that the honourable member for Manly is trying to reach what he considers to be an equitable outcome for people who may not achieve certain levels of damages, that is, in the context of the award of costs that might or might not follow, we believe that the whole issue in relation to the defamation law is currently not going to benefit from the removal of this particular regulation. Defamation law in New South Wales is extremely complicated. When I first came into this House in 1991 there were reviews proposed for the Defamation Act. Defamation legislation throughout the country has a very difficult history. I think in Queensland and Tasmania there are codified systems and in Victoria, South Australia and Western Australia there are common law systems. Here in New South Wales we have a hybrid common law system with statutory modifications. The 1974 legislation and the 2001 legislation impact on the law of defamation.
The problem with plaintiffs bringing defamation proceedings to the relevant jurisdictions is that it is quite often not until the plaintiffs get to the courts that they are able to determine the level of complexity and difficulty in addressing the defamatory imputations. In New South Wales the individual imputations rather than the contextual material give rise to very complex pleadings in the various jurisdictions. The honourable member for Manly said that it was something new that action might only be able to be taken in the Supreme Court if certain consequences flowed. In reality, defamation proceedings used to be entirely in the Supreme Court—certainly that was the case when I was practising in that jurisdiction—whereas in more recent years there have been amendments to allow proceedings to be brought in the District Court.
Pursuant to sessional orders business interrupted.
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