Smith v Dahlenburg
[2008] VSC 557
•10 December 2008
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMON LAW DIVISION
MAJOR TORTS LIST
No. 6128 of 2006
| JOHN N. SMITH | Plaintiff |
| v | |
| DEHLIA DAHLENBURG | Defendant |
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JUDGE: | BEACH J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 4 December 2008 | |
DATE OF JUDGMENT: | 10 December 2008 | |
CASE MAY BE CITED AS: | Smith v Dahlenburg | |
MEDIUM NEUTRAL CITATION: | [2008] VSC 557 | |
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DEFAMATION – Defences – Justification – Qualified privilege – Fair comment – Malice – Without prejudice privilege – Loss of without prejudice privilege - Damages – Aggravated damages – Exemplary damages – Plaintiff sufficiently punished by an award of compensatory (including aggravated) damages – Defamation Act 2005, s 46(2).
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Ms G. Schoff | Russell Kennedy |
| For the Defendant | No appearance |
TABLE OF CONTENTS
Introduction........................................................................................................................................ 2
The first letter..................................................................................................................................... 2
The second letter................................................................................................................................ 5
The third letter.................................................................................................................................... 6
The circumstances of the publications.......................................................................................... 7
Liability................................................................................................................................................ 8
The justification defences................................................................................................................ 8
The fair comment defences.............................................................................................................. 9
The qualified privilege defences.................................................................................................... 9
Damages............................................................................................................................................. 12
Conclusion......................................................................................................................................... 13
HIS HONOUR:
Introduction
Mr John Smith, the plaintiff, is and has for many years been the Chief Executive Officer of the West Wimmera Health Service (“WWHS”). WWHS was formed in 1995 when the Nhill Hospital merged with two other country hospitals. Prior to this time, Mr Smith had been the Chief Executive Officer of the Nhill Hospital. Mrs Dehlia Dahlenburg, the defendant, was for some years Mr Smith’s secretary. During the period 2005/2006, Mrs Dahlenburg wrote three letters which were defamatory of Mr Smith, namely:
(a) A letter dated 14 August 2005 to the Health Services Commissioner (“the first letter”);
(b) A letter dated 8 December 2005 addressed to the Board of Governance, West Wimmera Health Service (“the second letter”); and
(c) A letter dated 1 January 2006 addressed to Mr Rodney Stanford (“the third letter”), in which copies of the first letter and the second letter were enclosed.
In this proceeding, the plaintiff claims damages including aggravated and/or exemplary damages from the defendant in respect of the publication of the three letters.[1] The defendant did not appear at trial. However, she had previously delivered a defence[2] containing various denials and defences of justification, qualified privilege (both Lange[3] and common law) and fair comment. For the reasons given below, there will be judgment for the plaintiff[4] in the sum of $210,000.
[1]Originally a claim for damages for defamation was also maintained in respect of an email sent by the defendant on 10 February 2006 to the editor of the Hindmarsh Messenger and Wimmera Mail Times. However, at trial the plaintiff abandoned the separate cause of action constituted by the publication of this email and relied on the email as evidence of malice and on the issue of damages.
[2]The defendant’s further amended defence of 28 February 2007 (incorrectly dated 28 February 2006).
[3]See Lange v Australian Broadcasting Corporation (1997) 189 CLR 520.
[4]Subject to such interest as is properly to be included.
The first letter
The first letter is 11 pages of single-spaced material, some of which is in bold type and some of which is underlined. It has 34 additional pages of material attached to it. It is neither necessary nor desirable to set out the letter in full. It is sufficient to set out the following brief extracts from the first letter:
“Thank you for the opportunity to present you with the following information regarding what I feel is John Smith’s appalling abuse of privilege and power, and mismanagement of the West Wimmera Health Services.”
“I left when I could tolerate no longer John Smith’s abusive, controlling, bullying method of dealing with me and other members of staff.”
“John Smith is a very poor manager.”
“John Smith is incompetent to the point of being dangerous.”
“With his autocratic attitude, and ‘Hitleresque’ persona, he alienated everyone he dealt with. I can remember Smith browbeating and verbally abusing staff on an almost daily basis.”
“It appeared to me that in order to cover up his own inadequacies, he would constantly abuse staff who were qualified and competent.”
“Many heads have rolled over the years … including [a dentist] … [who was] ‘stood down’ on trumped up charges of bullying.”
“John Smith asked [an employee] to ‘alter’ her statement to the police regarding the circumstances surrounding [the death of a baby].”
“Other staff … leave as quickly as they can to escape John Smith’s bullying and tyranny.”
“John Smith’s style of management and intimidation.”
“His ‘Executive Team’ are chosen mainly for their ability to do as they are told, rather than ability or qualifications.”
“Abuse of power and financial mismanagement.”
“There have been so many instances where Smith has abused his position of power, and his financial mismanagement of the hospital has come under scrutiny.”
“Robert Weiser – recently ‘sacked’ from his position as catering manager told staff he had been to dinner with Smith, and several of his ‘cronies’ in Melbourne, and he was shocked to see Smith ordering bottles of red wines costing over $400 a bottle!”
“There have also been rumours that John Smith has paid himself and at least one other senior staff member … lavish bonuses on top of their already generous salaries. Ex Director of Nursing … told me she believed John Smith paid himself 10% of the value of building projects which he ‘oversees’.”
“Abuse of power: he not only employs footballers on the staff he also employs members of his immediate family, again despite their lack of suitability [at this point the letter attacks two children of the plaintiff].”
“There have been many instances in the past when John Smith has used hospital staff and resources for his personal use.”
“John Smith got his mother to ‘sign over’ her home to him when a retirement village unit became available. He wrote to the retirement village board of management saying his mother ‘didn’t own her own home’ and asked that the usual deposit be waived. The board approved his request! One of the members of the board resigned in protest. The other board members were friends of Smith’s. Smith then used hospital maintenance staff to decorate the house, and sold it off at a huge profit.”
“There are numerous other instances where he abuses his position. He employs friends of friends and ‘close personal friends’.”
“… the hospital’s annual report – which is an overly elaborate, inordinately expensive full colour obscenity – which I am told … clocks up a bill of some $2000,000[5] to produce and print! … He was thrilled to attend the annual report awards ceremony in Sydney. He basked in the limelight. … His ego had been lifted into the stratosphere! … He was obsessed with getting a ‘gold award’ for the book – regardless of the cost.”
“There are stories flying around the town about lavish overseas trips (for trumped up reasons) – a few years ago a nurse told me that Smith … and others had undertaken a trip to Paris, France, to look at ‘beds’. The beds they were supposedly looking at in France, were already installed in the Kaniva Hospital!”
“It is also rumoured that following … [an inquest] Smith shouted all of his ‘loyal’ staff who testified at the hearing in favour of the hospital – an all expenses paid trip to Queensland each.”
“Smith spends an enormous amount of time in Melbourne. Over the years he has put his hand up for as many committees as he can at the Victorian Hospitals Association, which necessitates him being away in Melbourne for numerous meetings staying in a top hotel and wining and dining himself and friends.”
“His management of the hospital therefore is only occasional, he relies on his team of ‘informers’ to tell him what has happened at the hospital.”
“I feel strongly that John Smith … should … be removed from … [his] position for mismanaging not only taxpayers’ money, but other public money.”
“… So many people have seen their careers and futures destroyed under the sheer force of John Smith’s tyranny.”
“He should be stopped before more lives and careers are ruined.”
“I don’t think he deserves to retire in a blaze of glory, when he has caused so much harm and ruined so many lives.”
[5]Whilst this was probably a typographical error for the figure $200,000 (having regard to the lack of a comma after the figure 2 and the reference to $200,000 in the email referred to in footnote 1 above), the matter was never corrected by the defendant at any stage.
Clearly, the first letter is defamatory of the plaintiff. In her defence, the defendant admits that the first letter meant and was understood to mean that:
“(1) The plaintiff should be removed from his position as CEO of the WWHS for mismanagement of taxpayer and public money; and
(2) The plaintiff was an abusing, controlling and bullying manager.”
In his amended statement of claim, the plaintiff pleads 21 imputations arising from the first letter. The imputations largely mirror the words of the first letter. Each of the plaintiff’s imputations arise and I find that the first letter was defamatory of the plaintiff in the meanings alleged by him. The sting of the libel may be summarised as follows:
(a) The plaintiff should be removed from his position as CEO of the WWHS for mismanagement of taxpayer and public money.
(b) The plaintiff has committed appalling abuses of privilege and power which has led to lives and careers being ruined.
(c) The plaintiff has appropriated for himself money and resources to which he was not entitled.
(d) In managing the health service, the plaintiff has preferred his own interests and those of his friends and family to the detriment of the health service and the wider community.
The second letter
The second letter was sent to the Board of Governance of the WWHS. The letter is three pages long and encloses a newspaper article. From the front page of the letter it is apparent that it was sent to ten people (nine of whom constituted the Board of Governance and the last of whom was the Complaints Officer of WWHS). It is not necessary to set out the second letter in full. The letter relates to an incident that is alleged to have occurred on 26 October 2005 at the Iona Digby Harris Nursing Home. In the second letter it is stated:
“I was told that in full view of patients, visitors and staff Mr Smith savagely and loudly verbally abused Kelvin Asplin.”
“This is interesting given the fact that John Smith has been quoted in the local press saying bullying would not under any circumstances be tolerated at the Service.”
“Mr Smith set a precedent when he suspended and eventually terminated the employment of Dr Peter Pickering – for raising his voice to a dental reception staff member.
Why then shouldn’t John Smith be suspended from duty/terminated for ‘raising his voice’?
With his intimidating, bullying manner he has been responsible for numerous staff leaving the hospital, staff who are very difficult to replace.”
The second letter is defamatory of the plaintiff. It is nothing like as defamatory as the first letter, but nevertheless it is defamatory. In her defence, the defendant admits that the second letter meant that the plaintiff was an abusing, controlling and bullying manager. This is the essence of the sting. Whilst the plaintiff contends that an imputation of hypocrisy arises on the basis that the second letter records his opposition to bullying in circumstances where he is alleged to be a bully, the ordinary, reasonable reader would probably not draw this conclusion.
The third letter
The third letter was sent to Mr Rodney Stanford. He became a member of the Board of Governance on 1 January 2005. The third letter encloses copies of the first letter and the second letter. Little of substance is said in the third letter. The defendant expresses the hope that Mr Stanford will be “sufficiently alarmed to investigate … [her] claims fully, and perhaps bring about a resolution to this ongoing problem”. During the course of the hearing, counsel for the plaintiff accepted that in the event I came to award damages in respect of the publication of the first letter and/or the publication of the second letter, then I should deal with the third letter as merely being a republication of the first two letters, rather than as a standalone cause of action entitling the plaintiff to another award of damages.
The circumstances of the publications
The plaintiff did not see the first letter at or about the time of its publication. In fact, the plaintiff saw the second letter before seeing the first letter. The plaintiff did not see the first letter until the third letter was received at the Hospital. However, the effects of the first letter were first felt by the plaintiff shortly after it was published to the Health Services Commissioner in August 2005. Following the death of a child at the Hospital in August 2002, a Review Advisory Committee (of which the Health Services Commissioner was a member) was set up. There was a meeting scheduled for 26 August 2005. Prior to that meeting, the Health Services Commissioner disclosed that she had received complaints and expressions of concern about WWHS and stated that she wished to have these matters aired at the meeting. It is apparent[6] that the concerns and issues the Health Services Commissioner wanted aired were the matters referred to in the first letter. A meeting with the Health Services Commissioner was arranged to be held before the Review Advisory Committee meeting. Mr Smith’s evidence concerning this matter[7] was:
“I felt we had been ambushed, I really felt bad about it. Usually you have an opportunity to discuss these things. I was also conscious of the matter being placed before the Department of Human Services who, in some way, would have influence in putting to the Board that these complaints are very, very serious and that I might in my own instance be either stood down or removed from office which I wasn’t but I was terribly fearful of that. I was very angry with the Commissioner that the courtesy hadn’t been extended in any professional way to give me … an opportunity to deal with these.”
[6]See Exhibit B.
[7]At T20.13 - .25.
The plaintiff became aware of the second letter at about the time it was written to the Board of Governance (8 December 2005). Mr John McGrath contacted the plaintiff and made the letter available to him. The letter primarily relates to an incident involving Mr Asplin. Whilst on 26 October 2005 there had been a heated exchange of words between Mr Asplin and the plaintiff (in respect of which both of whom had apologised to each other if they thought they had gone too far), neither the plaintiff nor Mr Asplin considered that there had been any bullying.[8] The second letter was referred to the Board. The President was asked to do an investigation into the incident and a report was ultimately produced, concluding that there was no impropriety on the part of the plaintiff.
[8]See T24 and Exhibit C.
On 2 or 3 January 2006, the plaintiff received a telephone call from his Executive Assistant. There was a policy at the Hospital that all mail addressed to the Health Service under its title be opened. The third letter was opened at the Hospital on this basis. It was read by the plaintiff’s Executive Assistant. The plaintiff attended and read the third letter and saw the first letter. He read it and felt “shattered”.[9] Ultimately, the letter was tabled at a Board meeting on 9 February 2006 at which there were 19 people (including the plaintiff) present. After discussion, a motion was moved and carried in the following terms:
“The Board endorsed their full professional support to the Chief Executive Officer of West Wimmera Health Service during this personally challenging time recording their total confidence in his performance and his commitment to the Service.”[10]
[9]T30.27.
[10]Exhibit H.
Liability
I have already found that the first letter and the second letter were defamatory of the plaintiff. I have set out the stings above. The question now is whether any defence is made out. Whilst the defendant did not appear at trial, her defences as disclosed in her pleadings are:
(a) justification defences;
(b) fair comment defences; and
(c) qualified privilege defences (both Lange and common law).
I turn now to consider whether the defendant has made out any of these defences.
The justification defences
I have set out above two of the imputations the defendant admits arise from the first letter and one that she says arises from the second letter. In addition to those imputations, the plaintiff also alleges that the first letter meant and was understood to mean that the plaintiff:
(a) was an incompetent manager;
(b) had so conducted himself as the CEO of WWHS as to bring WWHS and the Nhill Hospital into disrepute.
In her defence, the defendant alleges that in the meanings she admits and contends for, the first and second letters are true. The short answer to these defences is that there is simply no evidence to support them. I reject these defences.
The fair comment defences
The defendant pleads that, insofar as each of the letters consists of statements of fact, they are true in substance and insofar as they consist of expressions of opinion, they are fair comment on such facts “namely the due administration and proper management of a rural and public hospital, the Nhill Hospital”. The short answer to these defences is that whatever comments can be extracted from the letters, there is no evidence that the underlying facts are true. That is sufficient to dispose of the defendant’s fair comment defences. Accordingly, I reject those defences.
The qualified privilege defences
At common law a defence of qualified privilege exists when a defendant has a duty to make a statement and the recipient of the statement has a corresponding interest to receive the same, or where the defendant is acting pursuant to an interest he or she has and the recipient has a corresponding interest or duty in relation to the same, or where there is a common interest between the parties. In this case, counsel for the plaintiff contended that neither the first letter nor the second letter was written on an occasion of qualified privilege. The point is debatable. So far as the first letter is concerned, it is at least arguable that the letter constitutes a complaint relating to health services. It is the function of the Health Services Commissioner “to investigate complaints relating to health services”.[11] So far as the second letter is concerned, a complaint to the Board of Governance of a Health Service concerning the conduct of its Chief Executive Officer is at least arguably a complaint made on an occasion of qualified privilege. Similarly, the third letter (being a republication of the first letter and the second letter) is capable of being seen as being published on an occasion of qualified privilege when it is sent to a new member of the Board of Governance. In the end, it is not necessary for me to resolve these issues definitively. For the reasons given below, I find that the publication of the letters was actuated by express malice. Proof of express malice destroys qualified privilege.
[11]See s 9(1)(a) of the Health Services (Conciliation and Review) Act 1987.
The language of the first letter itself demonstrates that the defendant was actuated by express malice. The defendant’s willingness to publish baseless rumour and allegations of the extraordinary breadth contained in the first letter discloses this fact. As was put by counsel for the plaintiff, about the only thing not contained in the first letter was an allegation of sexual impropriety against the plaintiff. That matter was saved for the defendant’s defence and further and better particulars filed in this proceeding. The willingness of the defendant to permit that matter[12] to be published in her pleadings as a ground for justifying the publications sued upon in this proceeding demonstrates again actual malice.[13] Further, the existence and publication of the email referred to in footnote one above is additional evidence of malice. The gratuitous attack on the plaintiff’s family in the first letter also establishes malice. A consideration of the evidence as a whole discloses that the first and second letters were written as part of a campaign by the defendant to denigrate the plaintiff and have him sacked from his position as Chief Executive Officer of WWHS.[14] This constitutes a further basis for concluding that in publishing the first and second letters, the defendant was actuated by express malice.
[12]Sexual misconduct – about which there is absolutely no evidence.
[13]If there was any truth in the defendant’s allegation of sexual misconduct, one would have expected the defendant to have at least made a complaint or referred to the matter in the first letter (particularly having regard to the breadth of the first letter). However, no such complaint has ever been made and the matter is not referred to in the first letter.
[14]See, in addition to the evidence I have referred to above, the letters from the plaintiff to the Premier of Victoria and the Minister for Health dated 16 November 2005 (Exhibit M).
It is not productive to detail all of the evidence that demonstrates malice in this case.[15] However, one further episode requires mention. In a letter dated 11 October 2006, lawyers then acting for the defendant wrote to the solicitors for the plaintiff in the following terms:[16]
[15]Other evidence included Exhibit N, being the letter dated 21 May 2005 from the defendant to Mr Magrath and his response to the defendant’s letter dated 9 June 2005. It was contended by the plaintiff that these letters established malice because, notwithstanding Mr Magrath’s responses in his letter, the defendant still chose to publish the first letter and the email of 10 February 2006. There is force in this contention. I accept that the publication of the first letter and the email after this exchange of correspondence also shows malice.
[16]This letter was headed “WITHOUT PREJUDICE”. Whilst my tentative view was that the defendant had no privilege in this letter because it did not constitute a bona fide offer to compromise the proceeding and/or because of the threat contained in it, it is not necessary for me to reach a final view about this matter because the defendant waived any privilege she might have had in the letter when she referred to and exhibited the letter as part of an application to have this proceeding heard by a jury (see the defendant’s affidavit sworn 19 December 2006 – Exhibit O).
“We are instructed to reiterate our client’s offer of settlement as set out in our letter dated 24 August 2006 and leave the offer open for a further period of seven days from the date of this letter for your client’s acceptance. …
In addition we are instructed to advise that our client is presently arranging with her accountant to initiate action to file for bankruptcy.
We are further instructed to advise that failing your client’s acceptance of the abovementioned offer which is contained in the letter dated 24 August 2006, then we advise that our client will also take the following further steps:
(1) To make an appointment with Mr Ken Taylor, the delegate of the West Wimmera Health Service Board to lodge a complaint against Mr Smith and to fully detail his past history.
(2) To approach the print and electronic media to inform them of the activities of Mr Smith.
We await your response within seven days of the date of this letter.”
Upon receipt of a complaint by the solicitors for the plaintiff concerning this letter, the defendant’s then solicitors wrote on 13 October 2006 in the following terms:
“As requested … our client hereby retracts and withdraws her allegations. We advise that our client has taken no steps to proceed with the action threatened in our letter of 11 October 2006 and accordingly will not proceed with the threatened action.”
As the defendant did not appear at trial, it is not possible to know precisely what was being retracted and withdrawn in the 13 October 2006 letter.[17] However, the giving of the instructions that led to the 11 October 2006 letter demonstrates again that, in her dealings in relation to the plaintiff in 2005 and 2006, the defendant was actuated by express malice.[18]
[17]Whilst in the plaintiff’s reply it was alleged that the withdrawal contained in the letter of 13 October 2006 constituted an acknowledgment that the defendant “had no honest belief in the truth of the imputations which she expressly retracted and withdrew”, counsel for the plaintiff fairly (and correctly) conceded that it was hard to say that the mere retraction in the letter demonstrated a lack of honest belief in the truth of the imputations that arose from the letters the subject of this proceeding.
[18]I say nothing about whether or not an offence under s 87 of the Crimes Act 1958 has been committed.
For these reasons, the defence of qualified privilege fails. Whilst I have not dealt specifically with the defendant’s qualified privilege defence based on Lange, it also fails for the above reasons. Additionally, the element of reasonableness required to establish that defence is absent in this case. Having reached these conclusions, it is not necessary for me to determine definitively whether or not either of the letters related to Government or political matters.
Damages
It follows from what I have said above that the plaintiff has established an entitlement to damages in respect of the publication of the first letter and the publication of the second letter. In amplification of his evidence of having felt “shattered” when he read the first letter, Mr Smith said:[19]
“It was very personal. It really hit at the heart of my job, my family. It was just disgraceful. I can’t say much.”
Mr Smith has clearly been very affected by the publication of the first letter. He was considerably less affected by the second letter.[20] A number of witnesses were called on behalf of Mr Smith, who testified to his high reputation. These were Mr John Magrath (who served on the Hospital Board of Management for 19 years, six of which were as President - which included the years relevant to this proceeding), Mr John Hobday (a solicitor), Mrs Janet Fisher (the Executive Director of Clinical Services at WWHS), Mr Hugh Delahunty (the State Member for Lowan and the current Shadow Minister for Sports and Recreation, Youth Affairs and Veteran Affairs) and Mr Alec Djoneff (the Chief Executive of the Victorian Hospitals Industrial Association). Mr Magrath also gave evidence of the hurt and upset that he observed the plaintiff to suffer as a result of the publication of the first letter.[21]
[19]At T30.29 - .31.
[20]See T26 – 27.
[21]T50.15 – 51.22 and T53.1 – 54.22.
The principles concerning the awarding of damages in defamation cases are conveniently summarised in the judgment of Gillard AJA in Herald & Weekly Times Limited v Popovic.[22] It is not necessary to set them out in any detail here. Compensatory damages are awarded as a vindication of the plaintiff’s reputation, reparation for the harm done to the plaintiff’s reputation and consolation for the distress, upset and injury to the plaintiff’s feelings occasioned by the publication.[23] In this case, there are matters to be taken into account in aggravation. The defendant’s conduct from the time of the publication of the first letter to the present has aggravated the damages. In this regard I refer to the matters that I have set out above in relation to the issue of malice. Whilst it is true that the letters were published to relatively limited audiences by comparison to cases involving the mass media, allowance has to be made for the “grapevine” effect. Were it not for the aggravating features in this case, I would have assessed compensatory damages in respect of the first letter at $175,000. However, the aggravating factors I have identified above justify an award of $200,000 in respect of the first letter. The second letter is a much less serious defamation. I award the sum of $10,000 in respect of its publication. In awarding damages in respect of the first and second letters, I have taken into account the republication of those letters in the third letter.[24]
[22](2003) 9 VR 1 at 76 [377] et seq.
[23]See also Cassell & Co Limited v Broome [1972] AC 1027 at 1070 – 1071.
[24]I should say for completeness that in any event the third letter is not a letter to which the Defamation Act 2005 applies. This is so because of the operation of s 46(2) of that Act. But for the operation of that section, the third letter would be one to which the Defamation Act applies because of s 11(1) of the Interpretation of Legislation Act 1984.
The plaintiff has also claimed exemplary damages. It is not necessary for me to analyse this issue in any great detail because I have formed the view that awarding the sums of $200,000 and $10,000 against the defendant is sufficient punishment in this case.[25] Accordingly, there will be no award of exemplary damages.
[25]See Backwell v AAA [1997] 1 VR 182.
Conclusion
For the reasons given above, there will be judgment for the plaintiff in the sum of $210,000. I will hear the parties on the question of interest and costs.
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