Advertiser Newspapers Ltd v Chakravarti

[1999] HCATrans 45

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Adelaide  No A46 of 1998

B e t w e e n -

ADVERTISER NEWSPAPERS LTD

Applicant

and

MANOBENDRO CHAKRAVARTI

Respondent

Application for special leave to appeal

GLEESON CJ
McHUGH J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 12 MARCH 1999, AT 11.09 AM

Copyright in the High Court of Australia

MR D.F. JACKSON, QC:   If the Court pleases, I appear with my learned friend, MR A.R. HARRIS, for the applicant.  (instructed by Lawson Downs)

MR T.A. GRAY, QC:   May it please the Court, I appear with my learned friends, MR P.A. HEYWOOD-SMITH and MR R.J. BRADSHAW, for the respondent.  (instructed by Johnston Withers)

GLEESON CJ:   Yes, Mr Jackson.

MR JACKSON:   Your Honours, may I take a moment to seek to identify what we say is wrong in the Full Court’s decision, because it does involve going to the decision of this court and the court below at first instance.  Your Honours, the primary judge had given an award of $250,000 which consisted of two elements:  one was for, to put it shortly, loss of earnings - I put it that way because that is the way his Honour expressed it – of $175,000 and then general damages of $75,000.  Your Honours will see that at page 24 line 13 to page 25 line 17.

Your Honours, the present applicant’s appeal to the Full Court resulted in the decision on liability in relation to one of the two publications in question being set aside and in consequence there being an award of, I think, some $40,000 for general damages only.  That meant it was not necessary for the Full Court, on the first occasion the matter was before it, to deal with two things:  one was our side’s appeal on the ground that the $175,000 in respect of loss of earnings was too high and, on the other hand, the respondent’s cross-appeal on the ground that the amount for general damages was too low.

The respondent’s appeal to this Court was allowed and the two damages issues to which I have referred were remitted to the Full Court to be dealt with because, as I said a moment ago, they had not been dealt with.  In relation to the claim dealing with economic loss, the Court made some observations concerning it and the principal reasons in that regard were those of Justices Gaudron and Gummow, with Chief Justice Brennan and your Honour Justice McHugh agreeing in relevant respects.  In essence, your Honours, and I will take your Honours to the passage in just a moment, what was said was that a plaintiff in a defamation action who established a loss of earning capacity as a result of the defamation was entitled to damages for that loss of capacity, the loss of capacity, of course, being potentially reflected in loss of past and possible loss of future earnings.

The relevant passages, your Honours, are in 154 ALR – it should be No 1 of the respondent’s book of authorities - and may I take your Honours to page 322 in the joint reasons of Justices Gaudron and Gummow.  Your Honours will see, about lines 14 and 15 on page 322, the introductory observation that:

His second complaint is that the Full Federal Court erred in its approach to his claim with respect to economic loss.

Then, your Honours, if I could go to the bottom of the page to paragraph 95 their Honours say:

It is necessary, in order to understand Mr Chakravarti’s second complaint with respect to damages, to say a little more of the facts. 

And if I could refer your Honours to the remainder of paragraph 95 and also to paragraph 96.

Having said that, your Honours, if I could move then to paragraph 99 and your Honours will see, in the passage that goes through from paragraph 99 through to paragraph 102 on page 325, that their Honours there deal with the ability to obtain damages for loss of earning capacity as a head of damage in defamation law.  But if I could say, your Honours, that if one goes then particularly to paragraph 101, in the last two lines of paragraph 101 on page 325, your Honours will see that what was said was that:

As will later appear, there is an outstanding question whether the sum awarded –

the sum awarded being the $175,000 for loss of earning capacity –

accurately reflects that loss.

That question, your Honours, is adverted to in paragraph 104 further down the page.  From there, your Honours, one sees also in paragraph 105 reference to the fact that there has to be another issue dealt with, and the other issue which was to be dealt with was the issue of general damages to which the Court had referred in, I think, paragraph 103.  Now, your Honours, what is apparent enough – and could I refer particularly in paragraph 103 to the reference to “general damages” and also the last four lines of paragraph 103 to “the imputations” et cetera.

Now, I am sorry, your Honours, to have taken a few moments to go through that, but what essentially emerges from that, in our submission, is that the Court was expressing the view that the $175,000 to which I referred earlier was a sum which related to past loss of earnings.  You will see that particularly at paragraph 100, the third line of it, and that the future would be dealt with by the award of general damages that would be made.  You will see, your Honours, particularly in paragraph 100, a reference to it being “an award with respect to past loss of earnings”.  One goes over to paragraph 102 which deals with some other matters and then, your Honours, the reference in paragraph 103 to “a very substantial award of general damages” in the light of the observation that:

the imputations were of a kind that could be expected seriously to injure Mr Chakravarti in his capacity as a professional employee in the finance industry –

Now, your Honours, in the Full Court the damages awarded to the appellant were not merely damages for past loss of earning capacity and general damages, but damages for future loss of earning capacity as well and, in our submission, the manner in which the Full Court went about it brought about the result that there was overlapping in the various elements.

McHUGH J:   Does that necessarily follow?  It might be conceded that the approach is unusual – that is the approach of the Full Court in dividing up the damages for general damages and also for future economic loss – but why is it not to be treated as just an identification of the overall general damages awarded?

MR JACKSON:   Your Honour, it may well be that there would be no cause for complaint if one could say, well, the court is arriving in the end at a particular sum, this is the way in which it goes about it.

McHUGH J:   Having regard to the imputations, the amount awarded for general damages is very low.  That is general damages as defined by the court.

MR JACKSON:   Your Honour, could I just say in relation to damages generally that what is apparent, in our submission, is that whatever one might say about the part for general damages, the part for loss of earning capacity is very high but it does seem, from the way in which the court has expressed its judgment, that one arrives at a situation where there has been included, as an element of general damages, matters that would go into the other category of loss of earning capacity.  That is what I was going to seek to demonstrate to your Honours now, and if I could do so by going to, first of all, the summary by the Full Court at page 64 in paragraph 97.  Your Honours will see that they have “General Damages Pre-judgment Post‑judgment” then “Economic Loss” divided up the same way.  That is for the purpose of calculating interest, of course, so far as general damages are concerned.  That is the first thing.

But your Honours will see that the justification for the extra $450,000 by way of post-judgment economic loss, your Honours can see at page 56, in paragraphs 64 through to 66 or 67, and could I say two things in particular.  Your Honours will see the way in which the Full Court goes about it in paragraphs 65 and 66, and the second thing is that the reference to $400,000 at page 57 is an error, it should be $450,000.  So one sees what went to loss of earning capacity. 

One then sees, at page 60, the factors which led to the award of general damages and that is in paragraph 76.  Could I go, your Honours, to the last two lines on page 60 where their Honours say:

We consider the nature of the injury done, and the importance of the need for vindication as well as consolation for personal distress and hurt.  We remind ourselves that the damage to the plaintiff’s reputation was damage of a type to which a person working in the finance industry would be particularly vulnerable, because it was damage to his reputation for honesty.

Now, your Honours, that, in our submission, does involve of its very nature an overlapping with the concept of damages for loss of earning capacity.  If one does separate out the two, the very thing which defamation gives rise to on this assumption is damage to loss of earning capacity for a person working in the finance industry.

McHUGH J:   Yes, but there is some ambiguity about that passage.  Where is it again, Mr Jackson?

MR JACKSON:   It is the bottom of page 60, top of page 61 that I was last referring to.

McHUGH J:   When I read it my first reaction was along the lines of your submission, but I was not sure later that it was not more just a general statement.

MR JACKSON:   Your Honour, it is one of those occasions when first thoughts are best and, in particular, where, in our submission, the Full Court got itself into difficulty was by having a second thought.  Now, you will see the second thought in the opening words on page 61 “We remind ourselves”.  That was something – if one stands back from it, your Honour, and says, “Is there duplication?”, one head of damages which they give in a very large sum is the loss of earning capacity brought about by defamation. 

The other is that they say you get general damages because the damage to your reputation is damage of a type to which you, being a person working in a particular area, would be particularly vulnerable.

McHUGH J:   But is there a special leave point in it, Mr Jackson?  It is arguable that what was described as general damages are too low and what was described as loss of earning capacity was too high, but you have imputations that the plaintiff was involved in criminal or civil misconduct while an executive of Beneficial Finance, that he was a party to a conspiracy within the State Bank in connection with multi-million dollar unauthorised loans.  Having regard to those imputations, a sum of $140,000 for general damages does seem very low.

MR JACKSON:   Your Honour, one does have to bear in mind – could I just say this – that if you look at the other side of the coin – and it is more than the other side, it is a much bigger side – and that is the amount in respect of economic loss, this was a person who, for quite other reasons, had already left the employment some 18 months before.  Your Honours will see, at the bottom of page 55 through to the top of page 57, what his employment history was and to give him in effect the loss of earning capacity, effectively a further six years at $75,000 a year, it was a very very large sum.

McHUGH J:   But it seems to me that the only special leave point is that there is a miscarriage of justice in the particular case.

MR JACKSON:   Your Honour, there is that and I put that really at the forefront, in a sense, but what does follow, of course, is that if that is not corrected, you end up with a situation where an intermediate appellate court has adopted this course of giving both general damages involving, in effect, loss of earning capacity and then, separately, amounts for loss of earning capacity.  Your Honours, that is a course that is very likely to be followed.  Those are your submissions.

GLEESON CJ:   Yes, Mr Gray.

MR GRAY:   May it please the Court, we would start at page 57 of the application book where the intermediate court drew from the decision in Carson and in particular identified that:

Specific economic loss…..aside, there are three purposes to be served by damages awarded for defamation.

The point of drawing that distinction is that when the court came to approach the matter it segregated the damages into two areas:  one was economic effect or economic loss, and it deals with that discretely from pages 55 to 57, and then separately it dealt with the other head, the other area as to damage, including aggravation.  It deals with those from pages 57 to 61.

The court was at pains to avoid any duplication or overlap.  If the Court pleases, one sees that when one looks at the way in which the court has approached it.  At page 55, when it starts with economic loss, it deals first with – he identifies there is a loss of earning capacity that has both a pre-trial and post-trial or post-judgment effect.  It deals with the pre‑trial effect at the top of 56 and finds that $175,000 cannot be said to be unreasonable in regard to the 2½ years of loss there.  It then addresses the question of the future evaluation of that economic loss.  It did so, having had regard to the High Court’s remarks in the principal decision, identifying that economic loss or economic effects, if they are quantifiable, can be properly characterised, and should be, as special damage for the purpose of defamation law.

Having dealt with, at page 57 paragraph 67, there appears an important sentence.  Having dealt with all aspects of economic loss:

We turn to the award of damages for matters other than loss of earning capacity.  We remind ourselves of the link between the two.

There have been previous references to the possibility of overlap or interlink.  Then there is the reference to Carson.  Over the page at paragraph 70, having referred to Coyne’s Case as well:

We apply these principles in considering the award of damages for loss other than loss of earning capacity in the present case.

So, in our respectful submission, it is quite plain that when the court dealt with the second aspect of damages, it was dealing with consolation, with reputation, both reparation and vindication and aggravation.

McHUGH J:   I accept there is some ambiguity in the passage at 60, 61.

MR GRAY:   Yes.  If I could turn to that passage.  We say that this is a case where the important words to be identified are the words – this is the top of page 61, paragraph 76:

We remind ourselves that the damage to the plaintiff’s reputation was damage of a type to which a person working in the finance industry would be particularly vulnerable –

What the court had in mind there was the difficulties being encountered on dealing with fellow professionals, dealing with customers, when one could expect if there had been a continued currency of the implications, that he would come across that.  And it is specifically in contrast to those matters where seeking employment.  This is postulated on a continuing problem in regard to working in the area.  In that context, and understanding that the court here specifically excluded the loss of earnings component of damages, we say that that is an entirely correct statement and appropriate and my learned friend’s reading of it has failed to give due weight to the way in which the court carefully delineated between the two areas of damage.

McHUGH J:   What about the amount of economic loss, $625,000?  The materials upon which that is built are so thin that if you turn them side on you are flat out seeing them, are you not?  There was not much of a basis for any award of economic loss in this case.

MR GRAY:   The evidence was short on the point and the findings were, with respect, clear.  They are identified by Justice Cox first at page 21 where he identifies the pleading of the matter as a specific head of damage and then at page 24 where he made a specific finding that there could not expect to be a full recovery overnight.  Then those matters were picked up by the intermediate court and identified further.  So the finding was there and the position was that the earning capacity was very great.  At Beneficial, he had been earning with bonuses up to $300,000 a year.

McHUGH J:   Correct me if I am wrong, my recollection has failed me, but he had already left, had he not, at the time of the publication of the article?

MR GRAY:   Yes, he had, and he had obtained ‑ ‑ ‑

McHUGH J:   So he had already lost his job and he was working at a much lower rate of remuneration.

MR GRAY:   The position was that he had left Beneficial before the publication.  He had obtained other employment at something just under $100,000 a year, and then that is the job he lost following publication of the article and he was then unemployed and effectively has remained unemployed.

I might say, if the Court pleases, that we contended for a different approach in the intermediate court.  We contended the proper approach was for the court to treat the date of the assessment as the date of the appeal hearing, allowing for six years of pre-trial loss and we sought to lead fresh evidence – it is identified in the judgment ‑ ‑ ‑

McHUGH J:   Yes, I know.

MR GRAY:    ‑ ‑ ‑to deal with a six year period, and the court rejected that approach.  We say that that approach is the correct approach.  Had that approach been taken, the damages for loss of earning capacity would have been greater.  But equally, we contended for a much larger sum in regard to the reputation damages.  We argued there the amount should be $500,000 and we say that the award for $125,000 on that head, with the greatest respect, remains parsimonious in regard to the reputation aspect of the case.

The court made it plain, because of its division of damages, that it was not allowing any earning capacity component in the $125,000 and that is why it is, with respect, extraordinarily low.  We would say the correct approach was to look at the overall assessment, leave aside the labelling.  The court made it very plain how it has arrived at its assessment.  Overall, the award cannot be said to be unreasonable and that is our short submission.

McHUGH J:   That may be your strongest point, that looked at overall, it is not sufficiently erroneous on its face to indicate that it should be the subject of a grant of special leave.

MR GRAY:   That is our position, if the Court pleases.  When one considers, for example, Andrews’ Case in 1980, an award I think of about $400,000, and other awards of the larger awards, it cannot be said that just in excess of $700,000 in 1999 is going to be manifestly excessive in any way.  We would respectfully contend that there are very many arguments in this case as why it could be said to be modest, but part of that does look at looking at what has happened in the six years, rather than just the three.  May it please the Court.

GLEESON CJ:   Thank you, Mr Gray.  Yes, Mr Jackson.

MR JACKSON:   Your Honours, may I say a couple of things by way of response to our learned friends.  If one looks at what the court said at first, and then what the court said it did when it was doing it, it is apparent, in our submission, that the court has not in fact separated out the items. 

May I just say this, your Honours, if one goes to Chakravarti at page 325 in this Court, it is No 1 of the cases that your Honours have, and in particular to paragraph 101 at the top of page 325, your Honours will see the way in which it is referred to by the Court in the second line:

it was open to his Honour to conclude that the articles resulted in a loss of earning capacity productive of actual loss.

If one goes to see what the Full Court did, at the top of page 61, it is exactly that, in our submission:

damage of a type to which a person working in the finance industry –

et cetera.

McHUGH J:   Yes, but it may – my second view of it was that they were really referring to the aspect of honesty as opposed to the consequences for that financially.  That is in the way people would deal with him, if he is a dishonest person; I am talking socially and otherwise in the industry, as opposed to the actual losses that would flow to him.

MR JACKSON:   Well, if one is speaking about consolation for the personal distress and hurt which has been already covered by it, your Honour, one sees that one of the things - that reputation is ephemeral, of course, and whatever occupation or profession one has is capable of being lost, but that is what really is the loss of earning capacity by reference to defamation.

McHUGH J:   But, Mr Jackson, supposing you took the view that although some of the reasoning may be unsatisfactory, that overall you cannot be satisfied that the whole award is too high, why should special leave be granted in those circumstances?

MR JACKSON:   Your Honour, no doubt the Court would not, but no doubt equally it would express its view, saying that they are not satisfied the result was sufficiently attended by doubt, without perhaps endorsing the reasons.  But, your Honour, may I just say in that regard it is very very difficult, we would submit with respect, to arrive at the view that the amount of the award could be justified so far as it is allocated to special damages and if one takes whatever might be awarded, perhaps more than the $140,000 in fact awarded for general damages and considers that in the light of the amount that should be removed, as it were, from the other, we would submit one has to arrive at the result that the ultimate result was far too high.

GLEESON CJ:   Thank you, Mr Jackson.

In this matter, the Court is not persuaded that there is sufficient prospect that the result that followed from the decision of the Full Court of the Supreme Court of South Australia would be overturned on appeal to warrant the grant of special leave.  The application is dismissed.

Do you resist an order for costs, Mr Jackson?

MR JACKSON:   No, your Honours.

GLEESON CJ:   The applicant must pay the respondent’s costs of the application.  The Court will adjourn to reconstitute.

AT 11.36 AM THE MATTER WAS CONCLUDED