Allen v Johnstone No. DCCIV-01-1824

Allen v Johnstone
[2004] SADC 56
Judge Herriman
Civil

No appearance having been entered by the defendant, this action came on for hearing before me for assessment of damages, with directions that, subject to any further orders by me, the hearing proceed by way of affidavit evidence.
The plaintiff was represented, but the defendant, once again, did not appear.
Put simply, the plaintiff seeks damages for slander arising out of a number of statements uttered by the defendant to members of a joint venture committee (in which venture the plaintiff was then a participant) at a meeting in Adelaide on or about 30 November 1998. All in all, there were some 25 separate statements then made by the defendant which the plaintiff says defamed him and which, on his account, led to dismissal from his employment, shame, distress, embarrassment, damage to his standing in the local community and his marital relationship, and psychological and psychiatric injuries.
I will deal with those matters in more detail later. At this point, it is important that I provide a brief outline of the circumstances leading to these events.
The plaintiff is a middle‑aged man who has, for most of his life, lived in the South‑East of South Australia. He married Jan Patricia Siemelink-Allen on 19 February 1977 and there were two sons born of the marriage, who are now adults. He and his wife separated in early 1999 and were divorced in 2001. Jan Patricia Siemelink‑Allen later remarried.
The plaintiff spent his early life working on farming properties and, in the 1980s, he and his wife acquired and operated their own property at Koppamurra in the South‑East, at first running sheep and later growing potatoes. In the early 1990s, they encountered financial difficulties with the latter enterprise and, at one point, the plaintiff was carting wood to support the family.
His wife had had an early association with the wine industry and, in about 1997, they decided to explore the development of a vineyard on their property. They lacked the expertise and the capital to bring that about, however, and it was in those circumstances that they commenced discussions with an enterprise in Adelaide known as AV Management Pty Ltd (“AVM”). The plaintiff and his wife were at relevant times directors and shareholders of two companies, Jay‑Loch Pty Ltd (“Jay”) and Sageglen Pty Ltd (“Sageglen”), the former entity being the registered proprietor of their farming property.
It is unnecessary for me to describe in detail the nature of the arrangements concluded between the plaintiff, his wife, their companies, AVM and other parties, but broadly, it involved the following plan:
(1)the establishment of three separate joint ventures to develop, as vineyards and in sequence, different parcels of the property;
(2)the transfer of shares in Jay to other joint venturers so that each then held an interest in that company, which was to be the trustee of the joint venture assets. In turn, separate trusts would be established for the operation of each joint venture;
(3)for the purposes of the first joint venture (“JV1”), the appointment, as overall corporate manager, of Folly Farm Vineyards Pty Ltd (“FFV”), a company which later changed its name to Kyby Ridge Estate Pty Ltd (“KRE”);
(4)FFV/KRE in turn agreed to engage the plaintiff and his wife as day‑to‑day managers of the property, to pay an annual salary to the plaintiff of $40,000 and to his wife of $20,000, and to pay certain other benefits and expenses;
(5)subject to market conditions, a second joint venture (“JV2”) would then be developed over another part of the land and, if successful, it would be followed by a third joint venture (“JV3”).
The Joint Venture Deed was executed on 30 June 1997. The parties to it comprised two corporate entities, one of which was Sageglen, and a number of individuals.
Under the general management of KRE, the plaintiff and Jay began the development and planting of a vineyard on the JV1 land and also some adjoining land in the State of Victoria, which land became part of JV2. Otherwise, the plaintiff continued to farm the remaining land in South Australia and Victoria as had been done before.
On 3 July 1998, the joint venture partners appointed five persons to comprise the “Joint Venture Committee” (“the Committee”), which was to review the conduct of the joint venture by KRE and to give it general directions in carrying out joint venture activities.
In about November 1997, KRE employed the defendant to perform general vineyard duties on a casual basis on the JV1 land.
On about 30 November 1998, the defendant attended a meeting of certain members of the Committee, in the course of which he falsely and maliciously uttered the following words (paragraph 10, Amended Statement of Claim dated 16 July 2003):
“10.1that the Victorian block has received more attention than the South Australian block;
10.2that the Victorian block has (had) spent greater time spent on it by the tying up of plants out of sequence with Clare Harvey’s reports;
10.3that the Joint Venturers have paid for (the plaintiff’s) time with respect to his hay‑cutting endeavours;
10.4for the first six months of this year (the plaintiff) has spent a great deal of time planting a crop of oats/barley on the Victorian land;
10.5that (the plaintiff) has used diesel and fuel from the Joint Venture to support his private farming endeavours;
10.6that (the plaintiff) starts at 10.00 am, and often leaves at 3.00 pm, thus not doing any real work in the vineyard;
10.7that upon the supply of a new motor by the Joint Venturers, an old pump disappeared;
10.8that fencing around the crop was paid for by the Joint Venturers, and indeed done by Paneach;
10.9Joint Venture posts were used to fence private farming activities of (the plaintiff’s) including the crop;
10.10a rubbish tip was dug by Gambier Earth Movers on Jay‑Loch land for the use of Jay‑Loch, and billed to the Joint Venturers;
10.11motor bikes were used by (the plaintiff’s) children for some 35 hours;
10.12the Gator was used by the children;
10.13that other fencing on the property was done using both labour and materials supplied by the Joint Venturers;
10.14that (the plaintiff) was responsible for the death of various vines as they were delivered in 100 degree heat, watered, by (the plaintiff) and thus effectively boiled the vines, that (the plaintiff) then panicked and planted the next day, over‑watered them, thus killing them;
10.15that (the plaintiff) ran the pumps excessively through the summer period;
10.16that employees were not working the hours that were signed on the time sheets;
10.17that Karen Johnstone (being the defendant’s former wife) had three days off and was paid for it whilst she looked after her sick child in the last two months;
10.18Karen Johnstone worked for 35 hours, however gets paid for 38 hours;
10.19Ken Yelland did not work on a Friday, however still puts 6 hours down within the last 3-6 weeks;
10.20that (the plaintiff) uses his Pajero vehicle for non Joint Venture business, for example, travelling to Victor Harbor, travelling to Adelaide;
10.21the Joint Venturers are paying some $3,000.00-$4,000.00 wages per month that should not be paid for as a result of overruns, incompetent management of staff and the like;
10.22some 12 months ago various friends of (the plaintiff’s) children worked in lieu of Readyskill staff, who were paid at Readyskill rates and were children that were under 10 years old;
10.23a slasher that the Joint Venturers had paid $400.00 to repair has now broken again and is not suitable for the vineyard;
10.24that (the plaintiff) was authorised to employ a further 10 people to assist with tying up with vines to have the job completed prior to the end of November and this has not been done;
10.25that (the defendant) is owed monies.”
The plaintiff pleads, and in the circumstances I accept, those words are calculated to refer to the conduct of the plaintiff.
He further asserts that in their natural and ordinary meaning, they implied the following (paragraph 13, Amended Statement of Claim dated 16 July 2003):
“13.1That the plaintiff did not carry out his duties as a manager of JV1:-
(a) diligently;
(b) honestly;
(c) competently;
13.2That the plaintiff in managing JV1, utilised certain assets belonging to or utilised by JV1 improperly on an ongoing basis and for his personal benefit or that of his family;
13.3That the plaintiff acted in his own interests and that of his family or certain employees improperly and to the detriment of the Joint Venturers;
13.4That the plaintiff had improperly incurred and/or claimed expenses from the Joint Venturers in respect of the development as management and operation of the joint venture vineyard;
13.5That the plaintiff had stolen assets belonging to the Joint Venturers;
13.6That the plaintiff had improperly arranged for joint venture monies to be spent on assets belonging to third parties;
13.7That the Joint Venturers had suffered serious loss and expense as a consequence of the alleged incompetence of the plaintiff;
13.8That the plaintiff was not a fit and proper person to carry out his duties as a manager of JV1;
13.9That the plaintiff was not a competent, diligent or honest person whom the Joint Venturers should trust with respect to the future operation and management of JV1 JV2 and/or JV3 and further proposed joint ventures.”
In default of appearance and having reviewed the matters alleged, I am satisfied that each and every of the said utterances was made, that they carried the meanings pleaded in paragraph 13 and that each was slanderous of the plaintiff.
On 4 December 1998, the plaintiff’s solicitors wrote to the defendant complaining of his defamatory statements and demanding an apology. No such apology was tendered and, indeed, there has been no response whatsoever made by the defendant to the plaintiff at any time.
In consequence of the defendant’s publication of those words to it, the Committee, on 8 December 1998, terminated the engagement of KRE as overall manager of JV1 and thereby brought to an end the employment of the plaintiff and his wife as day‑to‑day managers of the project. The plaintiff then became unemployed and, despite attempts to obtain work, was unable to access employment for which he was fitted until 13 June 2000.
He seeks recovery of the salary he would have continued to earn until then, had he not lost that employment.
In addition, he asserts he has suffered injury to his personal and professional reputation and has been brought into public scandal, odium and contempt. All this, he says, has caused him “severe personal anxiety, shame, distress and embarrassment, together with long periods of depression, loss of motivation and inactivity” and it has also had a major impact on his social and community life in the South‑East. Finally, he contends that the impact of these events damaged his relationship with his children and brought his marriage to an end. He seeks damages in respect of these matters.
In assessing the damages to which the plaintiff is entitled, I remind myself of the following principles:
(1)If the words used impute to the plaintiff unfitness for or misconduct in his trade or calling, they are actionable without proof of special damage (Jones v Jones [1916] 2 AC 481 at 500). In McCarey v Associated Newspapers (No. 2) [1965] 2 QB 86, Diplock LJ observed (at p.108):
“No evidence was led that the attitude shown to the plaintiff by any persons with whom he came into social or professional contact was any different as a result of the libel. I agree that the jury was perfectly entitled to infer, even without specific evidence, that some change in that attitude would be bound to occur.”
(2)Mitigation of the plaintiff is an essential part of the remedy in a defamation action (see Broome v Cassell & Co. Ltd [1972] AC 1027 at 1071).
(3) A plaintiff’s good reputation is assumed (see “Australian Defamation Law and Practice”, Butterworths 2002, para. 21,085).
(4)A plaintiff may prove damage to reputation by reference to particular remarks made to him, social ostracism and the like (Taylor v Beere [1982] 1 NZLR 81 at 83). Otherwise, evidence can be led by the plaintiff about his response to defamatory conduct (Bogusz v Thomson (1989) 95 FLR 167 at 177-78), it may be supported by evidence from others (Bogusz, supra) and by medical evidence.
(5)A more serious defamation will attract a greater damages award (Greville v Wiseman [1967] NZLR 795 at 800) and the seriousness of harm is directly proportional to the number of persons who become aware of it (Dingle v Associated Newspapers [1961] 2 QB 162 at 190).
(6)Aggravated damages may also be awarded.
These principles are usefully discussed in “The Law of Defamation in Australia and New Zealand” (Michael Gillooly, 1998, Federation Press).
To the extent that it might be argued that special damage must here be proved, I should say that I am satisfied that the plaintiff’s dismissal from his employment and the resulting financial losses to him were a direct and immediate result of the slander, and special damage has thus been established. In any event, I am satisfied that the circumstances of this case would be such as to fall within one of the exceptional situations where proof of special damage is not required. Here, slanderous statements were made imputing to the plaintiff unfitness for and misconduct in his role as venture manager and alleging he committed serious criminal offences – that is to say, stealing or fraud (both being indictable offences) (see Gray v Chilman (No. 2) [1935] SASR 359) .
The plaintiff is entitled to be compensated in monetary terms to the extent required to restore him to the position he occupied before the defamation. Such damages will be by way of compensation for the loss of his employment (see Rubenstein v Truth & Sportsman [1960] VR 473 at 478) and general damages. Within general damages there will be provision for damage to his reputation, his emotional and physical distress and, if I am so persuaded, damage to his marriage.
In considering these factors, I may take into account the gravity of the defamatory statements (here, I am satisfied that they were, indeed, grave accusations) and the extent of publication (here, I am satisfied that the publication of the slanders was limited to the members of the Committee, albeit that the fact of the dismissal of the plaintiff from his employment itself affected his reputation in his local community).
The final question is whether the plaintiff is entitled to exemplary or aggravated damages. So much was urged upon me by his counsel, but I am not persuaded that the circumstances here make it appropriate for such an award to be made. Admittedly, the defendant failed to respond to the plaintiff’s request for an apology, and that of itself might in certain circumstances be a matter of aggravation, but I am not persuaded that it is such here (see Mirror Newspapers v Fitzpatrick [1984] 1 NSWLR 643 at 660, Carson v John Fairfax & Sons (1993) 178 CLR 44, Clark v Ainsworth (1996) 40 NSWLR 463). Otherwise, I can find no basis for such an award.
The special damage claim relied upon by the plaintiff is the loss of his salary, at the rate applicable at the time of dismissal, from then until when he was able to secure alternative employment, some 79 weeks. There is a measure of corroboration for his assertion about this in the affidavit filed by his former wife, in which she states that in consequence of the defamation and until about mid‑2000, the plaintiff suffered from a loss of motivation and an inability to prepare himself for interviews with prospective employers. He appeared to her to be humiliated, anxious, shamed and distressed.
I am satisfied on the evidence that that income loss has been established and the question is how it might be assessed. He has sought to calculate it on the basis of a loss of gross income at the rate of $40,000 per annum, which translates to a weekly loss of $769. His counsel argued, but there was no evidence of it placed before me, that his income was or would have been, over the relevant period, non‑taxable because of certain primary producer’s concessions. I cannot regard a mere assertion as evidence and find myself obliged to assess special damages as though he were a taxpayer in the ordinary sense. In that respect, I note that the weekly tax payable by him would like have been in the order of $188. Projected over 79 weeks, a nett loss of $581 calculates at $45,899 and that is the amount I will award by way of special damages.
The plaintiff is also entitled to an award of interest or moneys in lieu of interest to take account of the loss of access to that income during the period of his unemployment and since he regained employment. Doing the best I can, I will allow a sum of $12,500 in lieu of interest.
As to that aspect of the claim relating to the plaintiff’s anxiety, shame, distress and embarrassment and consequent depression, loss of motion and inactivity, I accept his evidence as to this, as it is supported by the report of his psychiatrist, Dr A Davis, and the affidavit of his former wife.
Dr Davis does note, however, that the plaintiff suffered an episode of depression in 1995 as a result of the difficulties he and his wife were having in their potato farming enterprise and that there were problems in their marriage at that time.
He comments that following the plaintiff’s dismissal as manager, over a period of several months he became very depressed and found himself in financial trouble. He would not seek assistance from his wife, became reclusive and lacked the motivation to attend to work and financial matters. Dr Davis considers this conduct was symptomatic of depression and it continued until 2002, when it gradually resolved. He does not think there was any ongoing depression or anxiety as of April 2003, but concludes that, in consequence of the slander and the termination of his employment, the plaintiff suffered a major depressive disorder with melancholic features. He says the symptoms were moderately severe and likely to impair the plaintiff’s social and occupational functions. He also considers that the plaintiff’s depressive state “had a significant effect on the marital relationship and contributed to the breakdown of the marriage”, albeit against a background of earlier difficulties.
Otherwise, his former wife observes that he ceased to communicate with her or other parties relating to the management of the property and financial matters, and frequently failed to open mail.
As to the plaintiff’s claim that he has suffered a loss of reputation and standing as a property manager and community member in the local area, I accept that assertion. I am mindful that there is no evidence of publication of the slanderous utterances to that community, but I am satisfied he has suffered such a loss as an indirect result of those statements, in the sense that they caused him to lose his employment and status as a local property owner and manager. That claim is to some extent corroborated by the fact he was subsequently unable to obtain alternative employment of any kind in the district and had to leave there to obtain work on a property in the Adelaide Hills. I note his former wife says she was herself aware of his ostracism by members of the local community and she thought this had affected him.
Were I satisfied that the slanderous statements had themselves been widely published or disseminated within the local community, I would have regarded the consequences of the slander as much more serious.

Whilst thus taking account of what I consider to be the indirect impact of the defamation, I record that I have also taken account of the direct impact, that is to say, the publication of the false and defamatory material to the members of the Committee, people to whom he was known and with whom he was in a business relationship.
Finally, the plaintiff has contended that the slanderous statements and their consequences have also contributed substantially to the break‑down of his marriage. There is a measure of conflict here between the plaintiff’s evidence and that of his former wife. Even on his case, the impact of the slander was not the sole cause and his former wife considers that, whilst it contributed, their parting might possibly have been averted had he been prepared to discuss their problems. I note from Dr Davis’ report that there appear to have been problems in the marriage in about 1995. All in all, I cannot say that I am satisfied that the defendant’s conduct was the prime or effective cause of the break‑up of the marriage and the damage to his relationship with his children, albeit that I am satisfied that it contributed in some measure to these matters. I will make some allowance for that.
Having made those findings and doing the best I can, I assess the plaintiff’s general damages in the sum of $15,000.
SUMMARY
Special damages  $45,899
In lieu of interest  $12,500
General damages  $15,000
______
$73,399
I assess the plaintiff’s damages in the amount of $73,399.

[2004] SADC 56

7 April 2004