Chel v Fairfax Media Publications (No 7)

[2017] NSWSC 996

Supreme Court

New South Wales

Medium Neutral Citation:

Chel v Fairfax Media Publications (No 7) [2017] NSWSC 996

Hearing dates:

6 February 2017 to 27 February 2017; 31 March 2017

Date of orders:

28 July 2017

Decision date:

28 July 2017

Jurisdiction:

Common Law

Before:

Beech-Jones J

Decision:

(1)   On or before 24 August 2017 the parties file and serve submissions on interest and costs which are not to exceed 6 pages.

 

(2)   The proceedings be listed for mention on 29 August 2017 at 9.30am.

 (3)   There be liberty to apply.

Catchwords:

DEFAMATION – damages – jury trial – nightclub owner – imputation that she allowed sex on stage – imputation that she was a menace for failing to prevent drink spiking – other imputations not conveyed or substantially true – mitigation – effect of true imputations – reliance on evidence adduced in support of defence of substantive truth – harm to reputation – plaintiff’s evidence of distress addressed both defamatory imputations and other topics – aggravated damages – defence conduct of trial justified – no award of aggravated damages – drink spiking allegation serious – $100,000.00 award

Legislation Cited:

Crimes (Sentencing Procedure) Act 1999 (NSW)
Defamation Act 2005 (NSW), ss 22, 29, 34, 35, 38

Cases Cited:

Ahmadi v Fairfax Media Publications Pty Ltd [2010] NSWSC 702
Aktas v Westpac Banking Corporation Ltd [2009] NSWCA 9
Aktas v Westpac Banking Corporation [2010] HCA 25; 241 CLR 79
Attrill v Christie [2007] NSWSC 1386
Broome v Cassell & Co [1972] AC 1027
Carson v John Fairfax & Sons Ltd; Carson v Slee [1993] HCA 31; 178 CLR 44
Chakravarti v Advertiser Newspapers Limited [1998] HCA 37; 193 CLR 519
Chel v Fairfax Media Publications Pty Ltd (No 2) [2015] NSWCA 379
Chel v Fairfax Media Publications (No 6) [2017] NSWSC 230
Holt v TCN Channel Nine Pty Ltd [2012] NSWSC 770
Holt v TCN Channel Nine Pty Ltd [2014] NSWCA 90
Jones v Pollard [1997] EMLR 233
McMahon v John Fairfax Publications Pty Limited (No 7) [2013] NSWSC 933
Pamplin v Express Newspapers Ltd [1988] 1 WLR 116
Rogers v Nationwide News Pty Limited [2003] HCA 52; 216 CLR 327
State of New South Wales v Riley [2003] NSWCA 208; 57 NSWLR 496
Triggell v Pheeney [1951] HCA 23; (1951) 82 CLR 497

Category:

Principal judgment

Parties:

Lili Chel (Plaintiff)
Fairfax Media Publications Pty Ltd (First Defendant)
Vanda Carson (Second Defendant)

Representation:

Counsel:
C Evatt; R Rasmussen; I Kirgiz; J Hennes (Plaintiff)
T Blackburn SC; L Barnett (Defendants)

  Solicitors:
Beazley Singleton Lawyers (Plaintiff)
Banki Haddock Fiora (Defendants)

File Number(s):

2011/409423

Judgment

1. This judgment concerns the amount of damages to be awarded to the plaintiff, Ms Lilli Chel, who was partially successful in a defamation action. For the reasons that follow I have determined that, although Ms Chel is not entitled to aggravated damages, she is nevertheless entitled to a judgment for $100,000.00. Judgment will be entered in her favour when the issues concerning interest and costs are determined.

Background

2. On 26 December 2010 “The Sun Herald” newspaper published an article concerning Ms Chel entitled “On Stage Sex at City Club Sparks Battle over Licence” (the “Article”). Ms Chel was the owner of the nightclub referred to in the headline and the balance of the Article, namely, the “Moulin Rouge Down Under” in Darlinghurst Road, Kings Cross (“the Rouge”). Fairfax Media Publications Pty Ltd (“Fairfax”), was the publisher of the Sun Herald. The second defendant, Ms Vanda Carson, was the journalist under whose name the story appeared. The defendants will be referred to collectively as “Fairfax”.

3. In 2011, Ms Chel commenced proceedings for defamation against Fairfax. The trial of the proceedings commenced on 6 February 2017 before myself and a jury of four. The jury returned two rounds of verdicts (see Chel v Fairfax Media Publications (No 6) [2017] NSWSC 230; “Chel No 6”).

4. The first round of verdicts was returned on 23 February 2017. The jury found that four of the seven imputations pleaded by Ms Chel were conveyed and defamatory, namely that:

“(a)   The Plaintiff engages in disgraceful conduct by allowing on-stage sex at her nightclub.

(b)   The Plaintiff was a menace to patrons of her nightclub because she did not prevent drink spiking on the premises.

…

(f)   The Plaintiff breached her liquor licence because she hosted a party at her nightclub that involved strippers, dildos, whips and on-stage sex.

(g)   The Plaintiff breached the council’s development consent because she hosted a party at her nightclub that involved strippers, dildo, whips and on-stage sex.”

5. The jury also found that Fairfax had established the substantial truth of imputations (f) and (g). It rejected a defence under s 29(1) of the Defamation Act 2005 (NSW), namely, that the Article was a fair report of court proceedings, specifically proceedings in the Land and Environment Court of New South Wales in which Ms Chel sought an extension of her trading hours provided for in the development consent attached to the Rouge.

6. In the first round of verdicts, the jury also found that a contextual imputation pleaded by Fairfax was substantially true, namely, “that the plaintiff conducted a nightclub which was targeted by police as part of a crackdown on bikie gangs”.

7. After this round of verdicts, the jury was then directed to consider a defence of contextual truth (see Chel No 6). In particular the jury was directed, inter alia, that it should consider whether all of the defamatory imputations which were not found to be true (ie imputation (a) and (b)) did not further harm the plaintiff’s reputation, because of the facts and circumstances surrounding the contextual imputation that was found to be substantially true and the defamatory imputations found to be true (ie imputations (f) and (g)).

8. The second round of verdicts was delivered on 27 February 2017 when the jury rejected the defence of contextual truth. The proceedings were then adjourned to 31 March 2017 for submissions on damages.

9. It follows from the jury’s verdicts that, subject to the assessment of damages, there must be a judgment for the plaintiff. Pursuant to s 22(3) of the Defamation Act, it falls to me to determine the plaintiff's damages in light of the evidence adduced at the trial and my findings as set out in these reasons.

Damages – Relevant Principles

10. Section 34 of the Defamation Act requires the Court when assessing damages to “ensure that there is an appropriate and rational relationship between the harm sustained by the plaintiff and the amount of damages awarded”. Subsection 35(1) specifies a maximum amount that can be awarded for damages for non-economic loss in “defamation proceedings” unless the Court is satisfied that the “circumstances of the publication of the defamatory matter to which the proceedings relate are such as to warrant an award of aggravated damages” (s 35(2)). The maximum amount for this matter is $381,000.00. The significance of the cap was explained by Bell J in Attrill v Christie [2007] NSWSC 1386 at [44] as follows:

“… the maximum damages amount provided by s 35 is to be understood as fixing the outer limit of damages for non-economic loss (in cases which do not warrant an award of aggravated damages) and by analogy with the approach explained by Hayne [J] awards for non-economic loss are to find a place within a range marked out in this way. This is not to say that an award of the maximum damages amount in a case not warranting an award of aggravated damages is to be reserved for the worst defamation imaginable.”

11. Section 36 requires the Court to disregard any malice or other state of mind on the part of the defendant, except to the extent that the malice or other state of mind “affects the harm sustained by the plaintiff”.

12. In Aktas v Westpac Banking Corporation Ltd [2009] NSWCA 9 (“Aktas”) at [89] to [91], McClellan CJ at CL (with whom Ipp and Basten JJA agreed), summarised the principles governing an award of compensatory damages. His Honour's summary included the following:

“An award of damages in defamation serves three purposes. It provides reparation for the harm done to the plaintiff's reputation; consolation for distress or hurt to the plaintiff's feelings; and vindication of the plaintiff's reputation: Carson v John Fairfax & Sons Ltd [1993] HCA 31; (1993) 178 CLR 44 (at 60). The first two purposes are frequently considered together.

...

The assessment of damages in defamation is necessarily imprecise. Damages are 'at large' in the sense that they cannot be arrived at through calculation or the application of a formula: Carson (at 115) per McHugh J; Rogers v Nationwide News Pty Ltd [2003] HCA 52; (2003) 216 CLR 327 (at 348-349) per Hayne J. This is because much of the harm done to the plaintiff is loss that cannot be quantified in monetary terms: Rogers (at 349) per Hayne J. Consequently, assessing damages is a matter of impression and not addition: Cassell & Co Ltd v Broome [1972] AC 1027 (at 1072). Juries have found it helpful to consider what the defendant, as opposed to the plaintiff, should be liable for in the circumstances to aid this impressionistic task. 'It became ... indisputable that a jury could consider not only what the plaintiff should receive, but what the defendant should pay': Uren v John Fairfax & Sons Pty Ltd [1966] HCA 40; (1966) 117 CLR 118 (at 151) per Windeyer J; Coyne v Citizen Finance Ltd [1991] HCA 10; (1991) 172 CLR 211 (at 228) per Toohey J.”

13. The decision in Aktas was successfully appealed to the High Court (Aktas v Westpac Banking Corporation [2010] HCA 25; 241 CLR 79), however the appeal only concerned qualified privilege. There is no reason to doubt any part of the above summary.

14. The above passage identified three objects of an award of damages, namely, providing reparation for the harm done to the plaintiff's reputation; consolation for distress or hurt to the plaintiff's feelings; and vindication of the plaintiff's reputation. In relation to the harm done to the plaintiff’s reputation, the damages embrace the “effect of the defamation on those to whom it is published, [thus] any diminution in the regard in which the plaintiff is held by others” (Carson v John Fairfax & Sons Pty Ltd; Carson v Slee [1993] HCA 31; 178 CLR 44 at 71 per Brennan J; “Carson”). In relation to the hurt to the plaintiff’s feeling, the award of damages includes the distress caused to the plaintiff from what he “thinks other people are thinking of him” (Broome v Cassell & Co [1972] AC 1027, 1105; “Broome”). In relation to the necessity to vindicate the plaintiff’s reputation, in Carson (at p 70) Brennan J approved a statement by Hailsham LJ in Broome (at 1071) that the award to a plaintiff must enable them “to point to a sum awarded … sufficient to convince a bystander of the baselessness of the charge” should the libel “driven underground, [emerge] from its lurking place at some future date”.

Mitigation

15. Fairfax did not plead that Ms Chel was of bad character. However, it did plead a defence of mitigation by reason of the: “(a) truth or substantial truth of the plaintiff’s imputations”; “(b) truth or substantial truth of the contextual imputations”; “(c) substantial truth of the facts in the particulars of truth” and “(d) substantial truth of the facts in the particulars of contextual truth”. Consistent with this pleading, in the Annexure to its written submissions (the “Annexure”), Fairfax identified seven findings of fact that the Court should make on the evidence adduced in support of its defence of substantial truth to a number of the imputations pleaded by Ms Chel. I address those suggested findings below.

16. In light of the jury’s verdicts and the defence of mitigation two matters of principle need to be addressed. The first concerns the relevance to the assessment of damages of the circumstance that certain defamatory imputations (and a contextual imputation) have been found to be true. In substance, this is not a matter of strict mitigation but instead affects the basis upon which damages are assessed. This is so because in assessing damages the trial judge must put out of their mind any true imputations published at the same time as those found to be indefensible (Chakravarti v Advertiser NewspapersLimited [1998] HCA 37; 193 CLR 519 at [93] per Gaudron and Gummow JJ; Brennan CJ and McHugh agreeing at [1]; and see [183] per Kirby J). Thus, in McMahon v John Fairfax Publications Pty Limited (No 7) [2013] NSWSC 933 McCallum J concluded that it is “wrong” to “contend that the publication of a true statement mitigates, lessens or reduces the reputational damage done by a false imputation” (at [118]). Instead, it simply “means that the plaintiff cannot look to the publisher for all of the hurt and harm he suffered [by reason of the entire publication] that day” (at [118]) but is “entitled only to an award reflecting the discrete harm done by the imputations not established to be true” (at [117]).

17. The second concerns the relevance to the plea of mitigation of evidence adduced before the Court in support of the defence of substantial truth even though it may have been unsuccessful. In Holt v TCN Channel Nine Pty Ltd [2014] NSWCA 90 at [26] (“Holt”), the Court of Appeal accepted the statement in Pamplin v Express Newspapers Ltd [1988] 1 WLR 116 at 120 that “… a defendant is also entitled to rely in mitigation of damages on any other evidence which is properly before the court and jury” and “[t]his other evidence can include evidence which has been primarily directed to, for example, a plea of justification or fair comment”. The right of a defendant to rely on this type of evidence is preserved by s 38(2) of the Defamation Act. There is an outstanding issue as to whether evidence of this kind must relate to the “relevant sector of the plaintiff’s life” (Holt at [28] referring to Jones v Pollard [1997] EMLR 233 at [45] per Keene LJ). It is not necessary to resolve that issue as all the evidence in question in this case concerned the same “sector” of the plaintiff’s life and reputation, namely, her capacity to manage businesses.

18. To apply these principles it is necessary to describe the publication and issues at the trial in more detail. Further, it is necessary to make certain findings of fact, although they cannot be inconsistent with the jury’s verdicts (Ahmadi v Fairfax Media PublicationsPty Ltd [2010] NSWSC 702 at [12] per Rothman J; Holt v TCN Channel Nine Pty Ltd [2012] NSWSC 770 at [39] per Adamson J).

The Article

19. Ms Chel established the Rouge in late 2002. [1] After a lease was signed and the premises renovated, trading commenced on 6 June 2003. [2] The Rouge closed in 2011. [3] Ms Chel did not seek damages on the basis that the closure was a consequence of the publication of the Article. Ms Chel told the jury that the Rouge engaged various forms of entertainers including “singers, bands, DJ’s … burlesque dances and go-go dancers” [4] but denied that it engaged “strippers”. [5] Ms Chel described the Rouge as having an “upmarket clientele, very trendy”. [6]

    1. T 29.30.

    2. T29.35; T31.5.

    3. T 38.5.

    4. T 35.14.

    5. T36.10.

    6. T 44.6.

20. When it opened, the trading hours of the Rouge were from 6pm to 6am, seven days a week. [7] With effect from December 2005, the City of Sydney Council (the “Council”) granted a development consent that permitted trading during that time except that trading between 3am and 6am was only permitted for a trial period of one year. [8] However, the Rouge kept trading during that time after the trial period lapsed [9] until March 2010 [10] when the Council intervened. [11] Ms Chel then applied to the Council to amend her development consent to allow an extension of her trading hours to 6am in the morning. The Council refused the application and she appealed to the Land and Environment Court. [12] Ms Chel’s appeal was heard in the Land and Environment Court on 16, 17 and 23 December 2010. [13] Ms Chel gave evidence during that hearing. [14] Contrary to Ms Chel’s evidence, [15] a significant contention made by the Council to the Land and Environment Court for resisting Ms Chel’s application concerned the events of the afternoon on 26 November 2009, when a construction company hired the Rouge for its Christmas party. Three female adult entertainers attended the party. In the Land and Environment Court, the Council contended that they performed sex acts on stage contrary to the conditions of the applicable development consent and liquor licence.

    7. T 38.27.

    8. Ex 1.

    9. T 100.24.

    10. T 46.5.

    11. Ex 12.

    12. T 101.26.

    13. T 45.25; 47.

    14. T 56.

    15. T 113.45.

21. The Article arose out of that hearing. It was published on 26 December 2010 in the Sun Herald. It was agreed that the Sun Herald had a circulation of 1,108,000. [16]

    16. T 31/3/17, p 3.

22. The Article occupied approximately two thirds of a single page of the newspaper. As stated, the Article was entitled “On-stage sex at city club sparks battle over licence” and identified Ms Carson as the author. The Article included an image with the title “The Rouge” which depicted a stage. In the centre of the stage was a woman sitting down wearing lingerie with her back turned holding a fan. Underneath the image was the words “Fighting 3am closure … an image from the Rouge website; (left) Lili Chel, who is seeking to keep her licensing hours”. On the left-hand side of the Article, adjacent to the sixth paragraph, was a small photograph of Ms Chel’s head.

23. The first three paragraphs of the Article stated:

“IT WAS no ordinary Christmas party, and one that Kings Cross nightclub owner Lili Chel now regrets hosting at her club, The Rouge.

The risqué celebration involving strippers, dildos, whips and on-stage sex was in breach of her liquor licence and the council’s development consent, Ms Chel has admitted.

Ms Chel was giving evidence in the Land and Environment Court, where she is fighting the council’s attempts to close her club at 3am.”

24. The next paragraph referred to the Rouge being one of 29 Kings Cross nightclubs “targeted by police as part of the crackdown on bikie gangs”. The next seven paragraphs referred to various submissions put to the Land and Environment Court on behalf of the Council and Ms Chel, aspects of which are referred to below. One of these paragraphs referred to the fact that Ms Chel was married to Scott Orrock, “the former national president of the Nomads motorcycle club”. Two of those paragraphs stated:

“The window from 3am to 6am is one of the most lucrative, as tipsy patrons order more pricey drinks.”

“The [Land and Environment] Court was told there were 68 examples of ‘problems’ with the club, including drink spiking.”

25. The latter part of the Article returned to the topic of sex on stage stating:

“Ms Chel initially insisted there was ‘no sex on stage’ at her club that day, but under cross examination conceded there had been.

Counsel for Sydney City Council … read from a police report that stated closed-circuit television footage of the party showed “a male patron’s trousers were lowered and his buttocks were exposed … the stripper whipped him numerous times with a black coloured whip … a male patron penetrated the female with a dildo.”

26. Two matters should be noted about the Article even though they are not central to what remains of Ms Chel’s defamation action other than her claim for aggravated damages.

27. First, the impression given by the Article was that the Council was taking legal action against Ms Chel whereas, as explained, Ms Chel was appealing the Council’s refusal to amend her development consent.

28. Second, at no stage in her evidence in the Land and Environment Court did Ms Chel concede that there had been “sex on-stage”.

The Issues in the Trial and the Jury’s Verdict

29. In light of the submissions on damages it is necessary to describe the parties’ respective cases concerning Fairfax’s defence of substantial truth as well as its reliance on contextual imputations, and to then make findings consistent with the jury’s verdicts.

Imputations (a), (f) and (g): sex on stage

30. In seeking to justify imputations (a), (f) and (g), Fairfax relied on CCTV footage taken inside the Rouge on the afternoon of 20 November 2009. [17] The footage was taken from various angles and depicted the upper dance floor area of the Rouge. The footage shows the separate arrival of the three female entertainers and their individual performances in front of a group of approximately 15 to 20 males between 2.25pm and 4.15pm. At various times, the male spectators were called onto the dance floor by the entertainers and participated in their performance.

    17. Ex 16 and EX H.

31. Senior Counsel for Fairfax, Mr Blackburn SC, submitted to the jury that various aspects of the entertainers’ performances constituted “on stage sex”. This included an incident at 2:38:20pm where it was contended that the first performer undertook “a handstand in the patrons lap with her groin in his face and the patron “…remove[d] a dildo or is it a lollypop [from the entertainer], does it matter, with his teeth”, an incident at 2:45:05pm where the first performer lay “down in front of the patron and insert[ed] the dildo into herself” and then a “patron move[d] it in and out with his hand” and an incident at 4:01:09pm where, according to Mr Blackburn SC, “the patron appear[ed] to perform oral sex” on the third performer. [18] Having watched the video at the trial I agree with Mr Blackburn SC’s description of the first two of these incidents. I was not satisfied that the third incident occurred as described. It is unclear from the CCTV footage whether the patron simulated or actually performed oral sex on the entertainer.

    18. Summing up 22/217 at p 40.

32. In seeking to justify imputation (a), Fairfax also relied on parts of the CCTV footage which it contended showed Ms Chel watching the relevant parts of the entertainer’s show which included “on stage sex”. It pointed to parts of the footage of the first performance which it contended showed Ms Chel present in the upper bar of the Rouge at around 2.34pm and 2.44pm watching the performance of the first entertainer which included those parts which Fairfax contended constituted “on stage sex”. [19] Similarly, in the Annexure, Fairfax contended that the Court should find that the Ms Chel “witnessed” the first performance which included the first two acts of the entertainer just described.

    19. Ex 15.

33. When confronted with the CCTV footage that Fairfax contended showed her watching an entertainer perform a sex act at 2.34pm and 2.44pm, Ms Chel denied that her vision was directed to that part of the entertainer’s performance. [20] She also said that she spoke to each of the performers and instructed them that there would not be any audience participation. [21] She stated that she recognised at least some of the persons who simulated sexual acts with the entertainers as assistants who arrived at the Rouge with the entertainers. [22] However, Fairfax responded that the CCTV footage showed Ms Chel leaving the premises before the third entertainer arrived so that she could not have spoken to that entertainer before her show. In the Annexure, Fairfax submitted that the Court should find that Ms Chel left the Rouge at around 3.16pm shortly after the commencement of the second performance and returned around 4.22pm after the third performance was complete. [23] I accept that the CCTV footage shows that. I reject Ms Chel’s evidence to the contrary [24] and I reject her evidence that she spoke to the entertainers before they performed and told them that there would not be any audience participation [25] (see [105]).

    20. T 150.3; T 151; T 167.10; T 168; T 171 to T 172.

    21. T 61.29.

    22. T 81.9.

    23. Ex H and Ex 16 at 3:16:09 to 03:16.15 and C01 at 3:17:32 to 3.18:02.

    24. T 174.10.

    25. T 185.15.

34. In seeking to justify imputations (f) and (g), Fairfax relied on the applicable development consent for the Rouge which required compliance with the “requirements of the Liquor Licence applying to the premises” [26] and condition 8 of the Liquor Licence which provided that “[a]udience participation involving sexual activities with contact is prohibited either on the stage or in the Theatre”. [27] In that context, it was Ms Chel’s evidence that all of the males who participated in the “performances” were “part of the entertainment show” [28] and “not part of the audience”. [29] This was attacked by Fairfax on the basis that it was apparent from the CCTV footage that they were patrons who did not attend the Rouge in the company of the entertainers and that, as noted, Ms Chel was not present in the Rouge during the third performance.

    26. Ex 1 at clause 20.

    27. Ex B.

    28. T 336.20.

    29. T 336.23.

35. Overall in relation to imputation (a), Fairfax submitted that the acts of the entertainers shown in the CCTV footage constituted “on stage sex”, that Ms Chel “allowed” that to occur and that her conduct in doing so was “disgraceful”.

36. On behalf of Ms Chel it was contended that “on stage sex” only meant what her Counsel, Mr Evatt, referred to as “conventional” or “procreative sex” that is penile vaginal intercourse between a male and a female and that did not occur. He also submitted that Ms Chel’s denials that she was aware of the full extent of the entertainer’s actions should be accepted, thus she did not “allow” any on stage sex and consequently her conduct was not “disgraceful”.

37. In relation to imputations (f) and (g), there was no doubt that the activities shown in the CCTV footage involved “strippers, dildos [and] whips”. Fairfax submitted, inter alia, that the activities depicted in the CCTV footage constituted a breach of the conditions of the development consent and liquor licence noted above. On behalf of Ms Chel, it was contended that the activities did not involve “on stage sex” and did not involve “audience participation” because patrons did not participate (see [34]).

38. In light of the jury’s verdicts concerning imputations (f) and (g), it must follow that they were satisfied that the activities shown in the CCTV footage constituted “on stage sex” and involved audience participation in breach of the development consent and liquor licence.

39. If the activities recorded in the CCTV constituted ‘on stage sex” for the purposes of imputations (f) and (g) then they must have also constituted “on stage sex” for the purposes of imputation (a). However, the jury were not satisfied of the substantial truth of imputation (a). This is only explicable on the basis that the jury were either not satisfied that Ms Chel “allowed” the on-stage sex or that her conduct in doing so was “disgraceful”. The latter conclusion is very difficult to reconcile with its earlier finding that the Article conveyed a defamatory imputation that she engaged in disgraceful conduct by allowing on stage sex. In the end result, the jury’s verdict in respect of imputation (a) is best reconciled with its verdict in respect of imputations (f) and (g) by concluding that the jury were not satisfied that Ms Chel “allowed” the “on stage sex” at her nightclub on the afternoon of 20 November 2009. In particular the jury was not satisfied that Ms Chel witnessed or watched the on stage sexual activities as contended for by Fairfax. The impact of the publication of the Article on Ms Chel’s reputation and feelings must be addressed on this basis.

Imputation (b): menace to patrons for not preventing drink spiking

40. In seeking to establish the substantial truth of imputation (b), Fairfax only relied on a single instance of alleged drink spiking at the Rouge. It adduced evidence from a serving police officer, Benjamin Chivers, and contended that he was served a “spiked” drink at the Rouge early in the morning of Saturday, 20 February 2010 and that the management of the Rouge was somehow involved. In the Annexure, Fairfax contended that, notwithstanding the jury’s verdict, the Court should find that Mr Chivers received a spiked drink at the Rouge.

41. Mr Chivers gave evidence twice during the trial. On the first occasion, he stated that on the evening of Friday, 19 February 2010 he attended a birthday party in the Botany area. He said that at around “nine, 10’clock” [30] he caught a taxi to a hotel in Coogee and met a friend “and a bunch of other guys”. [31] After having “two to three drinks” he left the hotel with the group of males and went to a “strip club” called “Showgirls” in Kings Cross until 2am. Mr Chivers stated that one of the group (“Mark”) was hostile towards him for the rest of evening. Mr Chivers suspected that this was because Mark knew he was an off-duty police officer. Mr Chivers said that, after they left “Showgirls”, they “went a little bit down the road, it was only a very short walk, 100 maybe 200 metres at most … [and] went into a dingy little night club” [32] which he “was later informed ... was called The Rouge”. [33]

    30. T 371.20.

    31. T 371.47.

    32. T 374.22.

    33. T 374.50.

42. Mr Chivers said that, by the time he arrived at the Rouge, he had consumed somewhere between “six and eight drinks” and was “probably on the low end of moderately intoxicated”. [34] Mr Chivers recalled that Mark told him where to stand and stated that he would “get this round”. [35] He saw Mark have a conversation with a manager at the Rouge and they both went to the upstairs in the Rouge for “probably five minutes”. [36] Mr Chivers recalled that Mark returned and handed him a drink which he said was “vodka, lemonade”. [37] He recalled that it had “powdery texture” which he thought might be ice. [38] Mr Chivers said that he “sculled [the drink] down” and they left the Rouge. Mr Chivers said that, as he walked back towards “Showgirls”, his “intoxication level rapidly increased” and he “went from moderately intoxicated to seriously intoxicated”. [39] He said that he was “seriously intoxicated but [his] physical abilities weren’t inhibited” however “my brain, my mind, my vision and everything was completely warped”. [40] Mr Chivers said that he had “very little” recollection of the next two hours but could recall that his “vision was very warped” and his behaviour at “Showgirls” was different to other occasions when he was intoxicated. [41] He said he was dancing on the tables at “Show Girls”. [42] Mr Chivers said that he travelled in a taxi to a friend’s house at around 4am. [43] He said that during the taxi ride he experienced “severe mood swings”. [44]

    34. T 374.41.

    35. T 375.20.

    36. T 376.1.

    37. T 376.5.

    38. T 376.11.

    39. T 377.5.

    40. T 377.32.

    41. T 378.

    42. T 378.25.

    43. T 379.44.

    44. T 380.29.

43. Mr Chivers reported the incident to his supervisor when he commenced work on Monday, 22 February 2010. [45] He was subjected to a drug test which only returned a positive test to a sleeping tablet he consumed on the evening of Sunday, 21 February 2010. [46]

    45. T 383.

    46. T 384 to 385.

44. In cross examination, it was suggested to Mr Chivers that he did not attend the Rouge, [47] and that he made up his “story at work” because he was concerned that he would be drug tested and it would yield a positive result. [48] Mr Chivers denied each of those suggestions although he agreed it was possible “that [the] sensations he experienced were due to his drinking excessively”. [49]

    47. T 402.35.

    48. T 406.47.

    49. T 403.41.

45. That part of Mr Chivers’ evidence in which he relayed the distance between Showgirls and the club he attended created an issue as to whether the nightclub he attended was in fact the Rouge (see [41]). The Rouge was very close to Showgirls. Ms Chel was called in reply and said that another nightclub called “Porkys” was some 40 metres away from Showgirls in the opposite direction to the Rouge. [50] Mr Chivers was also recalled. He gave further evidence concerning the location of the club he attended after leaving Showgirls. He said the club he attended was not a strip club, that he walked in the direction of the Rouge from Showgirls and that the club he attended was only a “couple of doors down” from Showgirls. [51] If that evidence was accepted, then the nightclub he attended must have been the Rouge.

    50. T 753.23.

    51. T 770.

46. Mr Blackburn SC submitted to the jury that Mr Chivers was a witness of truth, that an inference should be drawn that he attended the Rouge in the early hours of the morning of 20 February 2017 and another inference should be drawn that he received a spiked drunk while at the Rouge. On behalf Ms Chel it was submitted that Mr Chivers was not an honest witness but that, even if his honesty as a witness was accepted, his evidence did not demonstrate that he attended the Rouge much less that he received a spiked drink while he was there.

47. The jury’s rejection of Fairfax’s defence of substantial truth is not inconsistent with an acceptance that Mr Chivers was an honest witness. I accept that he was faithfully recounting the events as he recalled them. It is inherently unlikely that he would bring attention upon himself by approaching his supervisor if he did not believe that something untoward occurred. Further, in light of the evidence he gave when he was recalled, I am satisfied that he attended the Rouge when he left Showgirls.

48. Instead, in light of the submissions that were made at the trial, the jury’s verdict reflects a lack of satisfaction that Mr Chivers received a spiked drink at the Rouge. As was submitted to the jury by Mr Evatt, there was no evidence before the jury to explain how long a drug administered to Mr Chivers’ drink may have taken to have an effect on him or whether it would have still been in his blood supply 48 hours later when he was drug tested. In the absence of evidence addressing those matters, both the jury and I decline to draw the conclusion from Mr Chivers’ description of his symptoms that his drink was spiked. For the sake of completeness I would add that, even if it was concluded that Mr Chivers’ drink was spiked, it is doubtful that would have provided a proper basis for demonstrating the substantial truth of the imputation that Ms Chel was a menace to patrons for not preventing drink spiking. She was not working at the Rouge when Ms Chivers attended and there was nothing taken up with Ms Chel in cross examination to suggest that she was either aware of drink spiking at the Rouge or failed to take some step as owner of the Rouge to ensure it did not occur.

Imputation (c): violent incidents at the Rouge

49. Imputation (c) pleaded on behalf of Ms Chel was that she “conducted a nightclub where violent altercations took place”. The jury found that this imputation was conveyed but was not defamatory. Accordingly, it was not necessary for the jury to consider whether the imputation was substantially true. In the Annexure, Fairfax contends that the Court should find that it was substantially true.

50. An exhibit tendered at the trial described a series of incidents at the Rouge over a period of years that involved acts of violence committed by patrons [52] as well as an instance when a security guard at the Rouge punched a patron who spat at the guard while the patron was restrained by the police for being violent. [53] I accept that the incidents as recorded in that exhibit occurred. However, consistent with the jury’s verdict, I do not regard the fact that violent incidents occurred at the Rouge as mitigating Ms Chel’s damages. The jury did not accept that imputation (c) would cause ordinary decent people to think less of Ms Chel. If that is accepted, then it is difficult to see how an award for damage to her reputation should be reduced because of the truth of a statement that does not adversely affect her reputation. Presumably, the essence of the jury’s reasoning in relation to imputation (c) was that violence by patrons per se at nightclubs does not necessarily reflect adversely on their owners. The instances of violence proved by Fairfax do not add to that analysis.

    52. See Ex 10.

    53. Ex P at p 3.

Imputation (e): Ms Chel permitted drunk persons to order more drinks

51. Imputation (e) pleaded on behalf of Ms Chel was that she “permitted drunk persons to order more drinks at her nightclub”. The jury found that this imputation was not conveyed by the Article. Accordingly, it was not necessary for the jury to consider Fairfax’s defence that it was substantially true. Nevertheless, in the Annexure Fairfax contends that the Court should find, as a matter of mitigation, that a number of patrons were served alcohol at the Rouge while they were intoxicated during the time of her management. To demonstrate this, Fairfax relied on some of the evidence it adduced in support of its defence of substantial truth of imputation (e).

52. This evidence included the oral evidence adduced from Nicholas Kabouris who was a police office in the licensing unit at the Kings Cross Area local command from November 2007 to March 2011. [54] Part of his duties included conducting “walkthroughs” of licensed premises during opening hours. [55] He said that “on average” he conducted a walkthrough of the Rouge five to six times a month. [56] He said that he “regularly” encountered intoxicated patrons at the Rouge. [57]

    54. T 593.30.

    55. T 593.46.

    56. T 594.21.

    57. T 595.4.

53. Mr Kabouris created a report for an incident that occurred on or around 12.30pm on 2 December 2007 when police removed two intoxicated persons from the Rouge while conducting what appears to have a routine inspection of the credentials of the security guards on duty. [58] The entry records that the Rouge had 175 patrons in attendance at the time.

    58. Ex 10, tab 22.

54. Fairfax relied on another police computer entry which recorded that on 12.20am on 13 April 2008 police on a foot patrol in Darlinghurst followed an intoxicated female into the Rouge and observed her to be unsteady on her feet. The female told the police officers that she had consumed a bottle of wine before entering the Rouge and consumed three glasses of vodka at the Rouge. [59]

    59. Ex 10 tab 23.

55. Fairfax also relied on the evidence of a patron, Cameron Williams, who attended the Rouge on the evening of 10 July 2009 at around 11pm when he was already “fairly intoxicated”. [60] He said that he consumed two drinks of vodka at the Rouge and was glassed in the ear on the dance floor. [61]

    60. T 573 to 574.

    61. T 574 to 575.

56. Ms Chel did not accept the veracity of these reports although it was not clear if she was present at the Rouge when these events occurred. [62] At the trial evidence was adduced from her son, Alexander Cooper, who managed the Rouge for approximately five years prior to it closing in April 2011. [63] Mr Cooper stated that he did not permit drunk patrons to order drinks at the Rouge [64] and that it was his practice was to have “tipsy or drunk” patrons of the Rouge removed. [65] He accepted that there were incidents of violent behaviour by patrons but “not many” [66] and that they would respond by calling the police and asking the patron to leave. [67] In cross examination Mr Cooper maintained that the policies he implemented were so robust that no drunk person ever ordered drinks at the Rouge. [68]

    62. T 276 to 278.

    63. T 442.34.

    64. T 445.2.

    65. T 444.20.

    66. T 444.45.

    67. T 444.49.

    68. T 446.43.

57. I have no difficulty in accepting the evidence of Mr Kabouras. He was charged with responsibility for monitoring the Rouge’s compliance with the liquor licensing regime and he had no interest in the outcome of the proceedings. I accept Mr Cooper’s evidence to the extent that he was recounting his own experience in serving alcohol at the Rouge. Nevertheless, given the number of patrons who attended the Rouge and the relatively brief opportunity that bar staff have to observe the sobriety of patrons in a busy night club late at night, I do not accept his assertion that the Rouge’s procedures to avoid serving drunk patrons were infallible. Mr Williams’ evidence adds little to this aspect of the case. It is not known how much alcohol his assailant had drunk much less where he had drunk it.

51. Overall, I accept Fairfax’s contention that a number of patrons were served alcohol at the Rouge while intoxicated during the time of Ms Chel’s management. However, I do not accept that finding mitigates the damage to Ms Chel’s reputation occasioned by the aspects of the Article that gave rise to imputations (a) and (b). It seems inevitable that over the years that a nightclub such as the Rouge operated there would be occasions when intoxicated persons were served alcohol. The evidence did not demonstrate that occurred as a result of any management failure on Ms Chel’s part much less a management failure of any kind that would mitigate the damage occasioned by the imputation that she knowingly allowed sexual intercourse to occur on stage at the Rouge or that she was a menace to patrons for failing to prevent drink spiking.

Imputation (d) and Contextual Imputation: Bikie gangs

59. Imputation (d) pleaded on behalf of Ms Chel was that the plaintiff “allowed bikie gangs to frequent her nightclub”. The jury was not satisfied that the Article conveyed that imputation and therefore it was not necessary for the jury to consider whether it was substantially true. As noted the jury accepted that a contextual imputation pleaded by Fairfax was conveyed by the Article and substantially true namely “that the plaintiff conducted a nightclub which was targeted by police as part of a crackdown on bikie gangs”. However, the jury rejected the contextual truth defence. Nevertheless, in the Annexure Fairfax submitted that I should find that members of “bikie” gangs patronised the Rouge during the time of Ms Chel’s management and that mitigates the damages otherwise payable.

60. Although “bikie” gangs were sometimes referred to in the evidence as Outlaw Motorcycle Gangs (“OMCG”) it was not suggested by Fairfax that membership of such gangs was per se illegal or that it was illegal for such persons to enter or remain at the Rouge. Nevertheless, it was clear that the police witnesses regarded them as a cause of anti-social and violent conduct in the Kings Cross area. [69] In October 2010, the Office of Liquor, Gaming and Racing wrote to the licensee of the Rouge and other licensees in the Kings Cross area advising them of an application made by police to impose a condition on liquor licences precluding persons from wearing OMCG “related clothing, jewellery or other accessories” inside licensed premises. [70] At some point a condition to that effect was included on all liquor licences in the Kings Cross area. However, this appears to have occurred sometime after or around the time that Ms Chel ceased trading. It was not alleged by Fairfax that Ms Chel breached that condition. Instead, its case on mitigation was, at least implicitly, that the repeated presence of OMCG members at the Rouge reflected poor management by Ms Chel.

    69. T 612.40 and T 613.13.

    70. Ex 8.

61. Ms Chel married Scott Orrock in 2008. [71] Mr Orrock operated a tattoo parlour across the road from the Rouge. [72] According to Ms Chel, by that time Mr Orrock had retired as national president of the “Nomads” [73] but he was still a member. [74] Ms Chel denied that the Nomads was a motorbike “gang” but was instead a motorcycle club. [75] Ms Chel told the jury that by the time of the trial problems had developed in their marriage and she was intending to divorce him. [76] Mr Orrock was incarcerated at the time of the trial. [77] Ms Chel agreed that Mr Orrock came to the Rouge at least a “couple of times”. [78] She denied Mr Orrock wore his Nomad “colours” in the Rouge. [79]

    71. T 32.35.

    72. T 32.

    73. T 33.8.

    74. T 199.15.

    75. T 197.27.

    76. T 33.

    77. T 33.

    78. T 180.44.

    79. T 208.50.

62. Fairfax relied on the evidence of Luke Robinson, a police officer stationed at Kings Cross police station between 2006 and 2011. [80] He regulaly conducted foot patrols within the vicinity of the Rouge. He said that he frequently saw “bikies” within the Rouge on weekends, [81] He identified them through their clothing. [82] Mr Robinson also recalled attending the Rouge on 9 September 2007 and observing “approximately 15 members of the Loan Wolf outlaw motorcycle gang” at the front of the Rouge and “15 to 20” members inside the Rouge. [83] He recognised their shirts and tattoos. [84] He said he spoke to Ms Chel and told her that there were Lone Wolf members inside the Rouge. She did not ask him to remove them and he did not observe her to take steps to have them removed. [85]

    80. T 548.

    81. T 551.20.

    82. T 550.25.

    83. T 552.5-15.

    84. T 552.18.

    85. T 552 to 553.

63. Officer Robinson recorded the events of 9 September 2007 in a police intelligence report. [86] The report records the “event” as having occurred around 2.20am, that the Lone Wolf members left the Rouge around 20 minutes after the police arrived and that the “owner” of the Rouge stated that she knew one of the members. Another police report concerning the same incident prepared by a different officer records the owner stating that she did not want the group in the Rouge and was about to ask them to leave. [87] This report states that she asked them to leave which they did. In cross examination Mr Robinson denied that Ms Chel told him she was about to ask the gang members to leave. [88]

    86. Ex 21.

    87. Ex O.

    88. T 564.33.

64. Mr Robinson also stated that he regularly saw Mr Orrock at the Rouge on weekends [89] with other people who believed were also “members of the Nomads outlaw motorcycle gang”. [90] A police intelligence report recorded that on 8 November 2008 police observed Scott Orrock to enter the Rouge wearing a “Nomad’s T-shirt”. The recorded time of the observation was 8.20am.

    89. T 551.30.

    90. T 554.37.

65. Mr Robinson also stated that he saw “two brothers from the Rebels outlaw motorcycle gang[’s] Penrith chapter” at the Rouge, a member of the Hells Angels [91] and on two occasions another member of the “Nomads”. [92]

    91. T 555.37.

    92. T 556.23.

66. In cross examination Mr Robinson agreed that there were approximately 40 licensed clubs in Kings Cross and agreed he saw “bikies” in “all, or nearly all, of those clubs”. [93] He said that on occasions he asked bikies to leave various clubs in Kings Cross because they were aggressive but he never had the occasion to ask any bikies to leave the Rouge. [94] He denied exaggerating the number of OMCG members that he observed at the Rouge and the number of occasions he saw Mr Orrock at the Rouge. [95]

    93. T 560.19.

    94. T 559.

    95. T 571.

67. Leaving aside Mr Orrock, Ms Chel denied that patrons wearing bikie gang colours or who were clearly identifiable as members of such gangs attended the Rouge. [96] She said that on 9 September 2007 she became aware of the presence at the Rouge of a number of persons whom a police officer told her were members of a bikie gang and she then asked them to leave. [97]

    96. T 208 to 211.

    97. T 212.35.

68. Ms Chel’s son, Alex Cooper, denied seeing any persons wearing bikie colours or “paraphernalia” at the Rouge. [98] Mr Cooper denied ever seeing Mr Orrock attend the Rouge or even having knowledge of Mr Orrock attending. [99] Ms Chel’s younger sister, Sylvia Voss, worked in the cloak room at the Rouge [100] and also attended every weekend. [101] Ms Voss denied seeing Mr Orrock at the Rouge and said she “never saw any bikies in her club”. [102]

    98. T 445.15.

    99. T 447.5.

    100. T 453.27.

    101. T 453.41.

    102. T 457.17.

69. I accept Mr Robinson’s evidence about the occasions he saw members of bikie gangs including Mr Orrock attending the Rouge. In relation to the attendance of Lone Wolf members, I accept that Mr Robinson did not hear Ms Chel ask the members to leave but, consistent with the second report described in [63], I accept that she did. I also accept the evidence of Mr Cooper and Ms Voss that they never witnessed the attendance of bikie gang members at the Rouge.

70. Even though it follows from my acceptance of Mr Robinson’s observations that on some occasions members of bikie gangs attended the Rouge, I do not accept that this mitigates the damage to Ms Chels reputation from those parts of the Article that gave rise to imputations (a) and (b). The occasions that bikies attended were relatively isolated. There is no evidence to suggest that they attended the Rouge in any greater numbers than any other licensed premises in Kings Cross, much less that their attendance was due to any management failing of Ms Chel. There is no suggestion that they engaged in anti-social conduct when they did attend the Rouge.

Conclusion

71. I am not satisfied that any of the matters relied on by Fairfax in the Annexure mitigate the damage to Ms Chel’s reputation occasioned by the publication of the Article conveying imputations (a) and (b) when considered in the context of the analysis in [39].

Plaintiff’s Evidence on Damages

The Plaintiff

72. I have already summarised Ms Chel’s efforts in establishing and operating the Rouge. Ms Chel told the jury that she was 59 years of age. She had left school at 17. She studied fashion and design at TAFE. She worked as a model and said she had some minor acting roles in films and commercials. [103] She changed her surname from Vozila to Chel “in the early 90’s”. [104]

    103. T 30.7.

    104. T 30.33.

73. The day after the Article was published Ms Chel wrote three letters to the Editor of the Sun Herald. [105] One letter simply enclosed the other two and, of those two letters, one was an abridged version of the other. In the longer letter, Ms Chel complained that: the title to the Article suggested that the “3am closure” of the Rouge was due to the events on 20 November 2009 which Ms Chel stated was not true; that the Article falsely stated that the Rouge sold more expensive drinks to “tipsy patrons” between 3am and 6am; and falsely implied that some connection between her and the Rouge on the one hand and Mr Orrock and bike gang members on the other was an issue in the Land and Environment Court proceedings. Ms Chel also complained that the Article mislead the public by falsely asserting that, in her evidence to the Land and Environment Court, she initially insisted that there was “no sex on stage” but later conceded there was. Ms Chel (correctly) stated that she made no such concession. The letter also complained that overall the incident in 2009 “sparked” a battle over her liquor licence when it was her seeking an extension of her trading hours. She concluded by recounting her belief that the Article was “unfair, misleading and partly untrue” and that it “taint[ed] [her] image in the public domain”. She asked for a reply. None was forthcoming.

    105. Ex C1, C2 and C3.

74. In her evidence at the trial, Ms Chel said that she learned about the Article from her brother Victor. He told her that the Article “misconstrued everything she said”. She recalled that her brother came to the Rouge and showed her the Article. [106] She told the jury that she was “quite horrified” when she read the Article believing that her business, which had consumed her “blood, sweat and tears”, was “going to be ruined” because of the Article. [107] She explained this reaction as follows: [108]

“… I knew that millions or perhaps over a million people would read this article and usually a business like mine relies upon its own reputation and what happened on that particular night after the article came out, I had people coming up to me saying things to me like, on the first night it was pretty horrible.  They were coming up to me and asking me things like, ‘Is there live sex on stage?’  And they were saying things to me like ‑ like, ‘Do you allow sex to ‑ you know, to happen on stage,’ and ‘Is this article true?’ and I'd explain myself that ‑ that this article isn't true and because it wasn't true and ‑ and then people were coming up to me saying things to me ‑ to me like ‑ and this went on for months, mind you.  …  And they were saying other things to me, like, ‘Do I allow drugs to be here?’  ‘Do I allow bikies to be here, to come into the club?  They were saying things like to me, ‘Who got their drink spiked?  When did it happen?  Are we safe?’  And they were saying other things to me at various times.  Things like, ‘Is there going to be a stabbing here or shooting?’ and they were also saying things to me as well, besides letting the drug addicts in, they were saying to me things like, ‘Do bikers run this place?  Are you having ‑ are you running a sex club?’ and the whole ‑ then I had family ‑ or, sorry, parents ringing me up from ‑ who said that their ‑ that their children or their teenager ‑ teenagers actually attended my business and they wanted to know is there live sex on stage, are their children going to be exposed to that?  Are they in danger.  And ‑ and I just knew then that my life was never going to be same again.  I come from a very ‑ very, very strong background where my parents taught me that you have to work hard for what you get in life and I worked hard for that club.” (emphasis added)

106. T 57.30.

107. T 78.15.

108. T 78.20.

75. Later in her evidence, Ms Chel referred to a number of people that spoke to her about the Article [109] specifically the reference to “sex on stage”. [110] This included numerous harassing telephone calls [111] and telephone calls from parents who were concerned that if the children attended the Rouge they might witness “sex on stage” [112] or be in danger from “bikies”. [113] She also described being shunned by shop owners in King Cross. [114] She stated that the Article and people’s responses to it as conveyed to her made her feel “very depressed … and at one stage it made me feel suicidal because it just made me feel like that I was worthless ...” [115] and that “a lot of the times I had to go and hide in my office to get away from people”. [116] Although no claim for economic loss consequent upon the closure of the Rouge was made, Ms Chel’s subjective belief is that the Article caused the closure of the Rouge. [117] Ms Chel stated that she “put my heart and soul into the business and then an article comes along and just destroys everything that I fought for”. [118]

    109. T 82 and T 83.

    110. T 82.40; T 84.9.

    111. T 87.45.

    112. T 84.9.

    113. T 88.8.

    114. T 88.27.

    115. T 81.48.

    116. T 83.41.

    117. T 90.42.

    118. T 95.15.

76. Five matters should be noted about Ms Chel’s evidence on this topic at this point.

77. First, one aspect of Ms Chel’s distress was that she received telephone calls from a parent concerning that their daughter would be exposed to “live sex on stage”. [119] As noted, the jury found that there was live sex on stage at the Rouge on the occasion referred to in the Article.

    119. T 84.9.

78. Second, Ms Chel said she was upset by the lack of an apology from Fairfax and experienced great stress from the conduct of the litigation including Fairfax’s assertions that the pleaded imputations were true. [120]

    120. T 97.

79. Third, Ms Chel said stated that the “Article just trashed my name” and as a consequence she “had to change [her] name” to her married name, Orrock. [121] She stated that she ran for an elected position on a local council using the name Cassie Orrock because she did not want persons searching her name on the internet and discovering the Article. [122] In cross examination, it emerged that Ms Chel used the name Orrock on an occasion in 2009. [123] I accept that, after the publication of the Article, Ms Chel used the surname Orrock on occasions but I do not accept that she did so on every occasion or that she in effect “change[d] [her] name”.

    121. T 82.5.

    122. T 94.

    123. T 288 to 289.

80. Fourth, save for the matters just noted I accept that the evidence given by Ms Chel on this topic as summarised above was honestly given. Ms Chel was deeply affected by the publication of the Article and has been very much burdened by the conduct of this litigation.

81. Fifth, much if not most of Ms Chel’s evidence of the distress she suffered as a result of the publication of the Article, related to aspects of the Article that were either not found to be defamatory or were substantially true. In particular, much of this evidence records Ms Chel’s distress about the publication of an Article that suggested that the Rouge was a sex club that hosted sex on stage (although it is implicit that she was upset about any suggestion that she “allowed” sex on stage). However, the jury found that the Rouge and Ms Chel did host sex on stage. In both her letter to the editor of the Sun Herald and her oral evidence, Ms Chel recounted that she was upset that persons who attended the Rouge might be in danger from encountering “bikies”. This does not reflect any defamatory imputation found by the jury and, in any event, bikies did attend the Rouge. Her letter to the editor also complained about the reference to “pricey drinks” and the suggestion that the Council was trying to restrict her trading hours as opposed to it being her appeal. Again, these complaints do not reflect any of the defamatory imputations.

82. The most serious defamatory imputation found against Fairfax was that the Article conveyed that the Ms Chel was a menace to patrons for failing to prevent drink spiking at the Rouge. Ms Chel’s letter to the editor of the Sun Herald made no mention of this topic at all. It was mentioned in her oral evidence although it was not her major complaint (see [74]).

Plaintiff’s Witnesses on Damages

83. Ms Chel’s step daughter, Crystal Orrock, witnessed Ms Chel’s reaction to reading the Article. She recalled that Ms Chel was “upset” and “crying”. [124]

    124. T 305.2.

84. Ms Chel’s brother, Victor Vozila, regularly banked the cash receipts of the Rouge for his sister. [125] He said that prior to the publication of the Article his sister enjoyed a good reputation. [126] He recalled reading the Article on the morning it was published. He said he was “shocked”. He rang his sister and took the Article to her. [127] He said that after Ms Chel read the Article she was “speechless” and that she said “[m]y lawyer told me that the newspaper was going to make a sex article out of it”. [128] He said her voice was “cracking up” and she was “trying hard not to cry”. [129]

    125. T 307.1.

    126. T 310.34.

    127. T 308.17.

    128. T 308.34.

    129. T 308.36.

85. Mr Vozila said that locals in Kings Cross came up and spoke to him about the Article. [130] He passed on their statements to Ms Chel. He described what they said as follows: [131]

“I told her everything.  I told her that locals were coming up to me, and this guy came up to me, he said that he was concerned about his two daughters.  He used to go to the club on a regular basis, and he said to me he didn't want to see his two daughters seeing people fucking in the club.  He didn't want his daughters to experience drink spiking, you know.  And other locals used to come up to me, because they knew me, they knew who I was because I sat in a café across the road on Friday and Saturday nights, right, and they said to me, “What the hell is going on?  I thought this place was above board.’” (emphasis added)

130. T 311.12.

131. T 311.15.

86. Mr Cooper recalled his mother discussing the Article with him and that when she did so she was “devastated, upset”. [132] He said that other people questioned him about whether the Article was true. He told his mother about their inquiries and recalled she was “upset, disappointed, distraught”. [133] A barman at the Rouge, Mr Mostyn, recalled people at other nightclubs asking him about the Article. [134] He said that he mentioned their interest to Ms Chel and recalled that she was “pretty down about it”. [135]

    132. T 445.36.

    133. T 445.47.

    134. T 432.45.

    135. T 433.2.

87. Ms Chel’s sister, Ms Voss, discussed the Article with her sister. She recalled her sister being “upset … devastated”. [136] Ms Voss recalled that Ms Chel “went from a confident business woman to somebody that was quite demoralised”. [137] Ms Voss recalled that Ms Chel was “embarrassed” when she passed on comments from her friends about the Article. [138]

    136. T 454.37.

    137. T 454.46.

    138. T 455.15.

86. Mr Jack Singleton inspected the Rouge in 2003 as possible venue for his sister’s twenty-first birthday party. [139] He introduced himself to Ms Chel and thereafter became a regular patron of the Rouge. He considered the Rouge was “well run” and “well managed”. [140] He became aware of the Article and received messages from friends stating that they “better no go back there again”. [141] He said he was told by “family and friends that they didn’t want to go back if it had turned into that type of place”. [142] In cross examination, Mr Singleton said that he did not believe what was stated in the Article about “strippers, dildos, whips and on-stage sex”, [143] although he stated that because the Article was published “in the Sydney Morning Herald … there must be some truth in it”. [144]

    139. T 366.17.

    140. T 366.43.

    141. T 367.8.

    142. T 367.14.

    143. T 368.34.

    144. T 368.20.

87. Ms Chel also called Mr James Saleam to give evidence on her damages claim. Mr Saleam was not asked to state his occupation. Instead he agreed that he was “a Doctor of Philosophy”. [145] Mr Saleam has known Ms Chel since she was sixteen years old. He said that he met Ms Chel at poetry recitals and meetings organised by Ms Chel’s mother. [146] Mr Saleam said he had known Ms Chel continually since that time. He attended the Rouge when it opened and on another occasion. [147] Mr Saleam said that, prior to the publication of the Article, Ms Chel had a good reputation amongst the people he knew and that she was regarded as “a credible business woman … who conducted her affairs and her life in an appropriate way”. [148] Mr Saleam said people he knew who read the Article did not have their regard for Ms Chel affected because “they rejected it as false journalism or to use President Trump’s phrase, ‘fake news’”. [149]

    145. T 361.8.

    146. T 361.30.

    147. T 362.1.

    148. T 362.48.

    149. T 363.17.

88. The cross-examination of Mr Saleam provided a fuller picture of him than merely a philosopher and lover of poetry. Mr Saleam agreed that he is the current chairmen of the “Australia First Party” and in 1982 co-founded a political party called “National Action”. [150] Mr Saleam accepted that he advocated the “barring of further immigration to preserve ‘a predominantly white nation resistant to [a] watering down of its culture’.” [151] He also accepted that he was convicted of organising a shotgun attack on a representative of the African National Congress in 1989 and served “almost four years” in prison, although he maintained he was “falsely convicted”. [152]

    150. T 363.35.

    151. T 365.17.

    152. T 364.15.

89. I accept that Mr Saleam’s evidence concerning Ms Chel and reputation was honestly given. However, a white supremacist convicted of a serious crime involving political violence who disregarded the Article because it was “fake news” was a curious choice of reputation witness. In the end result I derived little assistance from Mr Saleam’s evidence.

90. I accept the balance of the evidence from Ms Chel’s family and associates summarised above concerning her response and hurt feelings as a result of the publication of the Article. However this evidence suffers from the limitation noted in [81] namely that much of it related to Ms Chel’s distress concerning aspects of the Article that were not found to be defamatory or were substantially true. Thus, Mr Vozila referred to comments from others about their concern about “people fucking in the club”. The jury accepted that happened. That said, Mr Vozila did recall that one parent conveyed a concern about his daughter experiencing “drink spiking” (see [85]).

Aggravated Damages

93. Ms Chel makes a claim for “aggravated damages” that is she contends that the Court would assess compensatory damages by “aiming towards the upper limit of the wide range of damages which might conceivably be justified” (State of New South Wales v Riley [2003] NSWCA 208; 57 NSWLR 496 at [131] per Hodgson JA). These are usually awarded where the conduct of the defendant lacks bona fides, is improper or unjustifiable (Triggell v Pheeney [1951] HCA 23; 82 CLR 497 at 514). It can include conduct from the “time of publication to the eventual verdict” (Carson at 69 per Brennan J).

94. Ms Chel pleading identified five matters that were said to justify an award of aggravated damages namely: her knowledge of the falsity of the imputations; Fairfax’s failure to apologise (Rogers v Nationwide News Pty Limited [2003] HCA 52; 216 CLR 327 at [138]); the continued publication of the Article on the internet; the “sensationalist and excessive quality” of the Article and Fairfax’s conduct of the trial.

95. I accept that Ms Chel believed that imputations (a) and (b) were false, ie that she did not allow on stage sex or was a menace to patrons of the Rouge because she did not prevent drink spiking. Further, Fairfax’s failure to even respond to Ms Chel’s letter to the editor of the Sun Herald does not reflect well on it. However, her letter did not address the defamatory imputations that were not found to be substantially true. It did not make any reference to drink spiking or make any express complaint to the effect that it asserted she allowed on stage sex when she did not. It was not disputed that the Article has been published on the internet. However, the ease of access to the Article and the extent to which it has been downloaded was not addressed. While Ms Chel cannot recover damages for the separate publications constituted by downloading on the internet, the anguish to her arising from the knowledge that Fairfax has continued to publish the Article can be considered.

96. In suggesting that the Article had a “sensationalist and excessive quality”, Ms Chel referred to the headline and the “risqué photograph of the nightclub’s website to illustrate the sex-on-stage theme that spiced the entire article”. [153] The difficulty with that contention is that the jury found there was “sex-on-stage”. The Article was undeniably “sensationalist” and was primarily focused on the sexual activities of the entertainers. However, the only aspect of that which was found to be defamatory was the suggestion that Ms Chel allowed sex on stage. In emphasising the sex on stage, the Article was nevertheless reporting on the hearing in the Land and Environment Court and what happened during the afternoon of 20 November 2009.

    153. Plaintiff’s outline of submissions at [41].

97. The written submissions in support of the claim for aggravated damages also refer to that part of the Article which inaccurately suggested that the proceedings in the Land and Environment Court concerned a dispute over Ms Chel’s liquor licence, when the proceedings were in fact an appeal by her seeking an extension of her trading hours. As stated, this was inaccurate. However, the alleged breaches of the liquor licence and development consent conditions were central issues on her appeal. Both the Land and Environment Court and the jury found they were breached.

98. The written submissions also contend that the Article incorrectly stated that in her evidence in the Land and Environment Court Ms Chel admitted the matters set out in the second paragraph extracted in [23] and that there was on stage sex. It is correct that Ms Chel did not admit that on stage sex took place at the Rouge on the afternoon of 20 November 2009 although the jury found that it did. However, in her evidence to the Land and Environment Court Ms Chel did admit there was a breach of the development consent. She was asked: [154]

“Q.   There was audience participation in a show at your premises prior to 6pm on 29 December 2009, wasn’t there?

A.   Yes.

Q.   That was in breach of the license conditions?

A.   Yes.

Q.   That was in breach of the development consent?

A.   Yes.”

154. Ex 3 p 13.

99. Ms Chel’s written submissions also referred to the incorrect assertion of drink spiking in the Article. I accept that assertion was incorrect. The written submissions also assert that there were not “68 examples of problems” as stated in the Article. The reference to “68 examples of problems” with the Rouge referred to in the Article was to a schedule to a joint experts’ report tendered in the Land and Environment Court which listed 68 incidents that the experts opined upon. [155] The reference to the 68 incidents as “problems” was an overstatement because the experts considered that many of them either did not relate to the management of the Rouge or, if they did, did not reflect poorly on the management of the Rouge. [156]

    155. Ex 17, Appendix A.

    156. Ex 17, Appendix B.

100. The written submissions also assert that “[d]rinks were not more pricey between 3am and 6am as inferred” in the first paragraph extracted in [24] above. I do not accept that the Article conveys that. The reference to patrons “order[ing] more pricey drinks” was not a reference to an alleged practice of the Rouge in raising drink prices at 3am. Instead, it was suggesting that customers changed the type of drink they ordered in that period to a more expensive kind.

101. As noted, on behalf of Ms Chel’s it was contended that Fairfax’s conduct of the trial was a matter that warranted an award of aggravated damages. In particular it was submitted that on 36 occasions it was put to Ms Chel in cross examination that she was lying. [157] A schedule attached to the written submissions lodged on behalf of Ms Chel identified the instances when the suggestion of lying was put on behalf of Fairfax. I will address each of these instances. It follows from the above that the jury must have accepted Ms Chel’s evidence on some matters (see [39]) and rejected it on others (see [38]). To this point I have done the same (see [33] and [80]).

     157. A contention that the conduct of Fairfax in supposedly attempting to take the matter away from a jury in November 2015 warranted an award of aggravated damages was withdrawn: see Chel v Fairfax Media Publications Pty Ltd (No 2) [2015] NSWCA 379.

102. The first four instances when it was put to Ms Chel that she was lying concerned her dogged refusal to accept that the allegation that there was “sex on stage” at the Rouge on 20 November 2009 played any part in the decision of the Land and Environment Court to refuse Ms Chel’s appeal. [158] The kindest thing that can be said about Ms Chel’s refusal to concede that was that it was unreasonable. Both the transcript of the hearing in the Land and Environment Court which Ms Chel attended [159] and the judgment of the Land and Environment Court, [160] which were shown to her in cross examination demonstrate that the conduct of the entertainers on the afternoon of 20 November 2009 was of great significance to the decision to refuse Ms Chel’s appeal. Ms Chel’s refusal to concede that substantially undermined her creditability as a witness.

     158. T 101.36; T 117.50; T 118.16 and T 118.25.

     159. Ex 3.

     160. Ex 2.

103. The fifth, sixth and tenth instances relied on by Ms Chel were suggestions put to her that she lied when she denied that the CCTV footage proved that she watched the first entertainer perform sex acts on stage. [161] As noted the jury either accepted her denials or was not satisfied of the contrary. Nevertheless, having viewed the CCTV footage, I agree that there was a proper evidentiary basis to put those suggestions to Ms Chel.

     161. T 150.47; T 167.45; T 185.36.

104. The seventh and eight instances were suggestions put to Ms Chel that she had not given a “true answer” when she asserted that she had remained at the Rouge from midday to 6pm on 20 November 2010. [162] To suggest that an answer is not “true” is different to suggesting that an answer was deliberately untruthful. Moreover, for the reasons set out above (at [33]) her answers were untrue.

     162. T 174.3; T 174.7.

105. The ninth instance was a suggestion put to Ms Chel that her evidence that she told each entertainer that there was to be no “audience participation” was “untrue”. [163] Again, that was not a suggestion that she lied. In any event I do not accept that her evidence was true. As noted, Ms Chel had left the Rouge before the third entertainer arrived. With the first two entertainers, it is unlikely that the entertainers would have so brazenly breached her direction if she was walking around the Rouge during their performances as she was.

     163. T 184.26.

106. The eleventh instance relied on was a suggestion put to Ms Chel in cross examination that it was not true that she received a bond under s 10 of the Crimes (Sentencing Procedure) Act 1999 (NSW) for a charge of supplying a prohibited drug. [164] The proposition put on behalf of Fairfax was entirely correct as Ms Chel herself later conceded. [165]

     164. T 187.15.

     165. T 188.9.

107. The twelfth instance was a suggestion that Ms Chel “made ... up” that part of her evidence in which she stated that she “start[ed] using the name Lilli Orrock because of [the] [A]rticle”. [166] The twenty fourth, twenty fifth and twenty sixth instances were to similar effect. [167] Given the evidence noted in [79], these questions had more than a sufficient basis.

     166. T 190.3.

     167. T 287.25; T 289.46 and T 289.50.

108. The thirteenth and fourteenth instances were part of a submission made by Mr Blackburn SC on a voir dire in which he contended that Ms Chel had not given a truthful answer when she answered an interrogatory about whether she knew or understood that members of bike gangs had been in the Rouge or wearing colours in the Rouge. [168] The fifteenth and sixteenth instances were questions to Ms Chel to similar effect. [169] Fairfax contended that was untruthful given that Ms Chel conceded that Mr Orrock had entered the Rouge. When cross examined about that Ms Chel sought to draw a distinction between a motorcycle “gang” and a motorcycle “club” stating that the Nomads was an example of the latter. [170] I find that distinction elusive to say the least and I am sceptical that Ms Chel had it in mind when she answered the interrogatory. The submission made by Mr Blackburn SC the subject of this complaint had more than a proper basis to support it.

     168. T 194.5; 194.36; T 94.45.

     169. T 204.12; T 212.47.

     170. T 181.1.

109. The seventeenth instance was a suggestion put to Ms Chel in cross examination that her evidence that all the other licensees in the Kings Cross area rejected the proposal for the addition of a condition to liquor licences requiring the removal of persons wearing bikie colours from licensed premises. [171] Fairfax tendered letters demonstrating that her assertion in this respect was untrue. [172]

     171. T 220.33.

     172. Ex 9.

110. The eighteenth and nineteenth instances were suggestions made to Ms Chel in cross examination that she attempted to mislead the Land and Environment Court when she denied that there was “audience participation” in the entertainer’s shows and that she mislead that Court in an attempt to avoid a finding that she was in breach of her liquor licence. [173] In her evidence in the Land and Environment Court Ms Chel initially denied that the description of the events of the Christmas party set out in a police report involved “audience participation” but then later admitted there was audience participation. [174] The suggestions put to Ms Chel had a proper basis.

     173. T 214.1 to T 241.12.

     174. Ex 3, p 13.6 and p 13.32.

111. The twentieth instance was a suggestion put to Ms Chel that her evidence to the Land and Environment Court that she did not make “money out the [Entertainer’] show” [175] “wasn’t correct”. [176] This is significantly different to suggesting she lied. In any event, as Ms Chel conceded, her evidence was not correct as she received almost $4,000 for hiring the Rouge to the building company. [177]

     175. Ex 3 p 13.43.

     176. T 242.4.

     177. T 60.30; T 241.

112. The twenty-first instance was a suggestion put to Ms Chel in cross examination that her evidence in the Land and Environment Court denying that there was “sex on stage” [178] was not a “truthful answer”. [179] The twenty second instance was a suggestion put to her that that denial was an attempt to mislead the Land and Environment Court. [180] As I have explained the jury found that there was “sex on-stage”. The twenty third instance was a suggestion put to Ms Chel that she made up her evidence that she told the person who supposedly organised the Christmas party that there was to be no audience participation. [181] I have already rejected Ms Chel’s evidence to that effect. All of these suggestions put to Ms Chel had a very strong basis to support them.

     178. Ex 3, p 10.3.

     179. T 244.49.

     180. T 245.2.

     181. T 245.9.

113. The twenty-seventh to thirty-sixth instances all concerned Ms Chel’s evidence in reply (see [45]). The twenty-seventh to thirty-first instances were suggestions put to Ms Chel that she was making up her evidence that the strip club “Porkys” sometimes operated as a nightclub (and thus Mr Chivers may have confused Porkys with the Rouge when he left Showgirls). [182] The thirty second instance was a suggestion put to Ms Chel that she made up her evidence when she asserted she had a “month by month recollection” of the appearance of the front of Porkys during the period 2003 to 2011. [183] The thirty third to thirty sixth instances were suggestions put to her to the same effect. [184] As I have explained the jury’s verdict did not necessarily involve a rejection of Mr Chivers’ evidence to the extent he said that he attended the Rouge. I am satisfied that he did. The suggestion put to Ms Chel in her evidence in reply that she tailored her description of Porkys to support the suggestion that Mr Chivers confused it with the Rouge had a proper basis. Ms Chel’s assertions as to the extent of her recollection of the exterior of Porkys from time to time were not credible.

     182. T 717.1; T 755.14; T 755,43; T 755.50; T 756.3.

     183. T 757.25.

     184. T 757.50; T 758.3; T 761.23 and T 761.28.

114. Overall, I am not satisfied that the damages award should include any element of aggravation. In light of the jury’s findings and my findings I do not accept that Fairfax’s conduct of the trial warrant taking that step. Fairfax’s failure to respond to Ms Chel’s letters is concerning but the letters did not complain about drink spiking which is the most serious defamatory imputation. To the extent that the Article was “sensationalist” and focused on sex on stage the jury accepted that sex on stage occurred. The most concerning aspect of the Article and Fairfax’s conduct concerned the allegation of drink spiking and the dubious reference to 68 problems. However, as I have explained in the end result it was not those matters which most affected Ms Chel.

115. I decline to award damages on an aggravated basis.

The Award

116. I have already noted that an award of damages in defamation serves three purposes, namely reparation for the harm done to the plaintiff's reputation, consolation for distress or hurt to the plaintiff's feelings and vindication of the plaintiff's reputation

117. Overall, I am satisfied that the publication in a newspaper with a circulation of 1,108,000 of an article that conveys that a nightclub owner was a menace to patrons because she did not prevent drink spiking on the premises had the potential to and did occasion significant damage to Ms Chel’s reputation. It is an allegation that suggest a high degree of negligence on Ms Chel’s part bordering on a reckless disregard to the safety of patrons. It a serious reflection on her character not just as a nightclub manager but as someone placed in any position of responsibility.

118. So much of the Article that conveyed that Ms Chel engaged in disgraceful conduct by allowing on stage sex at her night club was a not insubstantial attack on her reputation. However, it was nowhere near as serious as the allegation of not preventing drink spiking. The sting of this aspect of the Article was that she knowingly allowed sex on stage and to do so was disgraceful but that must be considered in a context where she in fact hosted a party at the Rouge that involved, inter alia, on stage sex.

116. I have already addressed the evidence concerning Ms Chel’s distress from the publication of the Article. She was greatly hurt by its publication and her perceptions of what others thought of her as a result. However, much of that distress was occasioned by aspects of the Article that were either not defamatory or were substantially true.

117. Otherwise the award of damages must reflect a need to vindicate Ms Chel’s reputation. It should be an amount sufficient to make clear the baseless nature of the suggestion that Ms Chel was a menace to patrons for failing to prevent drink spiking and that she personally allowed sex on stage at her nightclub.

118. Each of the parties referred me to cases that were said to be comparable. I have considered them. The cases referred to by Ms Chel’s Counsel involved large verdicts. However, they were generally inapposite comparisons as most involved allegations of corruption and the like. Overall, Ms Chel’s case on damages failed to come to grips with the significant aspects of her case that were lost and the resultant mismatch between so much of her evidence that explained why she was distressed as a result of the publication of the Article and her partial success. Similarly, the cases referred to by Fairfax involved awards for negligible amounts. They failed to reflect the significant effect on a person’s reputation that follows from being labelled a “menace” who failed to prevent drink spiking.

119. Overall, I consider that an award of $100,000.00 is appropriate.

Future Disposition

123. It follows that after Ms Chel’s entitlement to interest has been determined I will enter judgment in her favour against the defendants for $100,000.00 with interest. Given the time since the proceedings commenced I expect the parties’ costs are significant. I will order the parties to file submissions on interest and costs and then list the matter for mention only on 29 August 2017 at 9.30am to determine if a further substantive hearing is required.

124. Accordingly, the Court orders that:

(1)   On or before 24 August 2017 the parties file and serve submissions on interest and costs which are not to exceed 6 pages.

(2)   The proceedings be listed for mention on 29 August 2017 at 9.30am.

(3)   There be liberty to apply.

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Endnotes