Tsamis v Victoria (No 7)

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

MAJOR TORTS LIST

S CI 2014 06898

MARTHA TSAMIS	Plaintiff
V
STATE OF VICTORIA	Defendant

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JUDGE:	John Dixon J
WHERE HELD:	Melbourne
DATES OF HEARING (BEFORE JURY):	5-9, 12-16, 19-23, 26-28 August 2019
JURY VERDICT:	30 August 2019
DATES OF HEARING (DAMAGES):	16 September 2019
DATE OF JUDGMENT:	18 December 2019
CASE MAY BE CITED AS:	Tsamis v Victoria (No 7)
MEDIUM NEUTRAL CITATION:	[2019] VSC 826

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DEFAMATION – Damages – Trial by jury – Eight imputations alleged – Defendant justified four imputations – Mass media distribution of seven imputations – One imputation published to a journalist but diluted when republished – Grapevine effect – Whether justified imputations mitigated the damages by lowering the plaintiff’s true reputation – Seriousness of imputations – Whether injury to feelings caused by the true imputations – Whether aggravated damages warranted by conduct in publication and since publication – Defamation Act2005 (Vic) s 34.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr T Sowden with Mr H Kirimof	Mr Gary Prince
For the Defendant	Mr P Hayes QC with Ms R B Sion and Mr J C Hooper	Russell Kennedy

TABLE OF CONTENTS

Introduction........................................................................................................................................ 1

The jury’s verdict............................................................................................................................... 2

Applicable principles........................................................................................................................ 3

Evidence relevant to general damages........................................................................................... 6

The plaintiff.................................................................................................................................... 6
Plaintiff’s character witnesses................................................................................................... 14

Plaintiff’s submissions................................................................................................................... 17

Defendant’s submissions............................................................................................................... 19

Did the true imputations mitigate the impact of the false imputations............................... 23

Analysis of the verdict................................................................................................................ 26
Specific evidence of true character........................................................................................... 32
Conclusion on status of plaintiff’s reputation........................................................................ 36

Republication of imputation 7(a).................................................................................................. 37

Hurt feelings..................................................................................................................................... 41

Aggravation....................................................................................................................................... 43

Conclusion......................................................................................................................................... 46

Introduction

The plaintiff, Ms Martha Tsamis, is the manager of Inflation Nightclub (‘Inflation’), in Melbourne. The State of Victoria is liable for police torts and is the named defendant pursuant to ss 74 and 75 of the Victoria Police Act 2013 (Vic).

On 30 January 2014, Brett Guerin (then a Superintendent of Victoria Police) spoke with Mark Buttler, a journalist of the Herald Sun, in relation to Inflation. The conversation was primarily in respect of an application to the Victorian Commission for Gambling and Liquor Regulation (VCGLR) by Victoria Police to limit Inflation’s trading hours under the Liquor Control Reform Act 1998 (Vic) (‘LCRA proceeding’).

On 6 February 2014, the Herald Sun published an article online quoting Mr Guerin. On 7 February 2014, the article was reproduced on the front page of the Herald Sun newspaper. On the same day, Mr Guerin participated in an interview on 3AW’s ‘Breakfast’ radio programme with Ross Stevenson and John Burns.

Ms Tsamis alleged that publications, being the statements Mr Guerin made to Mr Buttler, republished in the Herald Sun, and his statements on 3AW (‘the publications’), were defamatory of her personally and the way that she managed Inflation, and had greatly injured her credit and reputation.

The proceeding was tried before a jury of six and its verdict was taken on 30 August 2019.

Ms Tsamis claimed that there were eight defamatory imputations conveyed in the publications. The defendants conceded that seven of the eight imputations were carried by the publications collectively and the defendant otherwise relied on defences of justification, fair comment and honest opinion. The jury found that the single contested imputation was published by Mr Guerin to Mr Buttler. The defendant did not rely on any defence in respect of that imputation but rather submitted that, unlike the other imputations, it was not republished either in the Herald Sun or on 3AW.

The jury’s verdict

The cumulative effect of the concessions and the jury’s verdict was that the publications conveyed that Ms Tsamis:

(a) had approached and cross-examined witnesses in the LCRA proceeding in a manner that was improper, inappropriate and unlawful;

(b) had allowed minors to enter the venue in breach of the provisions of the Liquor Control Reform Act 1998;

(c) had operated Inflation in a way that jeopardised her patrons’ health and resulted in many hospital admissions; and

(d) managed the venue in a manner that was conducive to drug trafficking, drunkenness and violence.

Each of these imputations of and concerning the plaintiff was false. No substantive defence was taken to publication of imputation 7(a) and the jury found that the defendant had failed to establish any positive defence in respect of imputations 7(b), 7(c), and 7(d). For convenience I will refer to these as the ‘false imputations’.

The defendant successfully persuaded the jury that the following imputations were substantially true. For convenience I will refer to these as the ‘drug activity imputations’. These imputations were that Ms Tsamis:

(a) was operating Inflation in a manner that resulted in drug dealing in and around the venue;

(b) was operating Inflation as a ‘honey pot’ (meaning a source of attraction) for drug dealers;

(c) operated the venue in a manner that resulted in drug overdoses in and around the venue; and

(d) operated the venue in a manner that allowed drugs to be sold and consumed in and around the venue.

Some damage to the plaintiff’s reputation is presumed by law. The defendants did not dispute that the plaintiff had a good reputation, both personally and professionally, and that she had also suffered some hurt to her feelings. The plaintiff called evidence and gave evidence herself of the damage to her reputation and the injury to her feelings, to which I will come. It is convenient to commence by stating some well-established principles relevant to the assessment of general damages that were not in contest. There was no claim for special damages.

Applicable principles

The purposes of an award of damages in defamation are to provide consolation for hurt to feelings, compensation for damage to reputation, and vindication of the plaintiff’s reputation.[1] The assessment of general damages is necessarily imprecise and, accordingly, damages are ‘at large’ in the sense that they cannot be arrived at through calculation or the application of a formula.[2]
[1]Carson v John Fairfax & Sons Ltd (1993) 178 CLR 44, 60; see also Coyne v Citizen Finance Ltd (1991) 172 CLR 211, 216; Rogers v Nationwide News Pty Ltd (2003) 216 CLR 327, 347 [60].
[2]Aktas v Westpac Banking Corp Ltd [2009] NSWCA 9 [89]–[91]; Rogers v Nationwide News Pty Ltd (2003) 216 CLR 327; Cassell & Co Ltd v Broome [1972] AC 1027, 1071.

The sum awarded must demonstrate vindication of the plaintiff’s reputation. The level of damages ought to reflect ‘the high value which the law places upon reputation and, in particular, upon the reputation of those whose work and life depends upon their honesty, integrity and judgment’.[3]
[3]Hockey v Fairfax Media Publications Pty Ltd (2015) 237 FCR 33, 113 [446]; Crampton v Nugawela (1996) 41 NSWLR 176, 195, applied in John Fairfax Publications Pty Ltd v O’Shane (No 2)[2005] NSWCA 291 [3].

At common law, it was legitimate to take into account not only what the plaintiff should receive but also what the defendant ought to pay. Section 34 of the Defamation Act 2005 requires that in determining the amount of damages to be awarded in any defamation proceeding, the court is to ensure that there is an appropriate and rational relationship between the harm sustained by the plaintiff and the amount of damages awarded.

The gravity of the libel and the social standing of the parties are relevant to assessing the quantum of damages necessary to vindicate the plaintiff.[4] The extent of publication and the seriousness of the defamatory sting are pertinent considerations.
[4]Carson v John Fairfax & Sons Ltd (1993) 178 CLR 44, 61.

In determining the damage done to a plaintiff’s reputation, the court should also take into account the ‘grapevine’ effect arising from the publication of the defamatory material.[5] This phenomenon is no more than the realistic recognition by the law that, by the ordinary function of human nature, the dissemination of defamatory material is rarely confined to those to whom the matter is immediately published.[6] It is precisely because the ‘real’ damage cannot be ascertained and established that damages are at large. It is often impossible to track the scandal and to know what quarters the poison may reach.[7] The award of damages must be sufficient to ensure that, the damage having spread along the ‘grapevine’, and being apt to emerge ‘from its lurking place at some future date’, a bystander will be convinced ‘of the baselessness of the charge’.[8]
[5]Ley v Hamilton (1935) 153 LT 384, 386; Crampton v Nugawela (1996) 41 NSWLR 176, 193–5, 198; Cassell & Co Ltd v Broome [1972] AC 1027, 1071; Palmer Bruyn & Parker Pty Ltd v Parsons (2001) 208 CLR 388, 416 [88]; Prendergast v Roberts [2012] QSC 144 [31].
[6]Belbin v Lower Murray Urban & Rural Water Corp [2012] VSC 535 [217].
[7]Ley v Hamilton (1935) 153 LT 384, 386.
[8]Crampton v Nugawela (1996) 41 NSWLR 176, 194–5.

It is well accepted that injury to feelings may constitute a significant part of the harm sustained by a plaintiff, and for which a plaintiff is to be compensated by damages.[9] Injured feelings include the hurt, anxiety, loss of self-esteem, sense of indignity and the sense of outrage felt by the plaintiff.[10]
[9]Belbin v Lower Murray Urban & Rural Water Corp [2012] VSC 535 [242].
[10]Carson v John Fairfax & Sons Ltd (1993) 178 CLR 44, 71.

Aggravated damages are a form of compensatory damages and, where appropriate, form part of the general damages awarded to a successful plaintiff for non-economic loss. Aggravated damages are designed to reflect aggravation caused to a plaintiff’s hurt or injury by reason of some conduct of the defendant.[11] An award of aggravated damages may be made if a defendant has acted in a manner which demonstrates a lack of bona fides or engaged in conduct which is otherwise improper or unjustifiable.[12] Conduct with those characteristics will be such as to increase the harm which the defamation has caused or may be supposed to have caused the plaintiff.[13] A damages award is not usually broken down into components for pure compensatory damages and aggravated compensatory damages.[14]
[11]Rookes v Barnard [1964] AC 1129, 1221; Broome v Cassell & Co Ltd [1972] AC 1027, 1085; Lower Murray Urban & Rural Water Corp v Di Masi (2014) 43 VR 348, 392 [118].
[12]Hockey v Fairfax Media Publications Pty Ltd (2015) 237 FCR 33, 114 [446], citing Triggell v Pheeney (1951) 82 CLR 497, 514.
[13]Hockey v Fairfax Media Publications Pty Ltd (2015) 237 FCR 33, 114 [446], citing Mirror Newspapers Ltd v Fitzpatrick[1984] 1 NSWLR 643, 653.
[14]Lower Murray Urban &Rural Water Corp v Di Masi (2014) 43 VR 348, 392 [116].

Where the conduct of the defendant has increased the injury suffered by the plaintiff, a court may award aggravated damages.

Circumstances of aggravation can be found in the defendant’s conduct from the commission of the tort up until the day of judgment.[15] The inquiry is whether the harm suffered by the plaintiff was aggravated by the manner in which the act was done or by the publisher’s conduct thereafter. The focus of the inquiry is on the subjective experience of the plaintiff.[16]
[15]Praed v Graham (1889) 24 QBD 53, 55; Broome v Cassell & Co Ltd [1972] AC 1027, 1071.
[16]David Syme & Co Ltd v Mather [1977] VR 516, 526; Gray v Motor Accident Commission (1998) 196 CLR 1, 7 [15].

The defendant’s aggravating conduct may be found in the circumstances of publication where, for example, the defendant increased the harm suffered by the plaintiff by intentionally or recklessly inflicting damage on the plaintiff’s reputation,[17] by repeating the offending allegations,[18] or where the defendant failed to investigate the defamatory allegations before publishing them.[19] Acts of publication in retaliation or reprisal against the plaintiff may aggravate the harm.[20] Evidence which establishes malice will also generally support a claim for aggravated damages,[21] but only to the extent that the malice affects the harm sustained by the plaintiff.[22]
[17]Andrews v John Fairfax & Sons Ltd [1980] 2 NSWLR 225, 243–4.
[18]Sutcliffe v Pressdram Ltd [1991] 1 QB 153, 184.
[19]Andrews v John Fairfax & Sons Ltd [1980] 2 NSWLR 225, 244, 250.
[20]Mirror Newspapers Ltd v Fitzpatrick [1984] 1 NSWLR 643, 648, 652–3.
[21]Clarke v Bain [2008] EWHC 2636 (QB) [41].
[22]Defamation Act 2005 (Vic) s 36.

Aggravating conduct may occur after publication and prior to proceedings being commenced where, for example there was a failure to publish a retraction or an apology that amounts to a continuing assertion of the defamatory imputations.[23]
[23]Hockey v Fairfax Media Publications Pty Ltd (2015) 237 FCR 33, 114 [446], citing Carson v John Fairfax & Sons Ltd (1993) 178 CLR 44, 78 (Brennan J).

Damages may also be aggravated after the proceeding is commenced where the defendant’s conduct, either prior to or during the trial, has been calculated to deter the plaintiff from proceeding,[24] or where a defence of justification has been pleaded with reckless indifference as to its relevance,[25] provided in all cases that the defendant’s conduct increased the harm suffered by the plaintiff. In the conduct of proceedings, the defendant’s conduct must have been lacking in bona fides, unjustifiable or improper.[26] Legitimate defence of a proceeding is not a circumstance of aggravation.
[24]Sutcliffe v Pressdram Ltd [1991] 1 QB 153, 184.
[25]Herald & Weekly Times Ltd v McGregor (1928) 41 CLR 254, 262; Hewitt v West Australian Newspapers Ltd (1976) 17 ACTR 15, 26; see also Sutcliffe v Pressdram Ltd [1991] 1 QB 153, 184.
[26]Triggell v Pheeney (1951) 82 CLR 497, 514; Lower Murray Urban & Rural Water Corp v Di Masi (2014) 43 VR 348, 392 [118]; Belbin v Lower Murray Urban & Rural Water Corp [2012] VSC 535 [328]; Dods v McDonald (No 2) [2016] VSC 201 [66].

At common law, in awarding aggravated damages, the court compensated the plaintiff for the loss actually suffered as a result of the defamation. In doing so, the court could adopt the highest level of damages open as compensatory damages.[27] By s 34 of the Defamation Act, the guiding principle is now that the court is to ensure that there is an appropriate and rational relationship between the amount of damages awarded and the harm sustained by the plaintiff.
[27]Cassell & Co Ltd v Broome [1972] AC 1027, 1085.

Evidence relevant to general damages
The plaintiff

Ms Tsamis has worked in the nightclub/hospitality industry for approximately 30 years. She is the sole director of the company that is the licensee of Inflation, and another venue on Chapel St, ‘Chasers’. She commenced managing Inflation in 1995, and Chasers in 2005. At Inflation, a promoter regularly conducts an event known as Cloud Nine that was popular and well attended.

She first learned of the publications when, on the night before the Herald Sun article was published, she was contacted by the reporter for comment. She accepted that the article accurately conveyed her responses to the journalist. She read the article online that night and was very upset by it. She contacted Inspector Peter Ward wanting to know why the police had spoken to the journalist. She had never met Mr Guerin. She said she felt very hurt, very upset and ‘betrayed’ by the police.

At that point, she didn’t know precisely what Mr Guerin had said, other than the police were ‘alleging a certain amount of incidences’. She said she felt deeply troubled. She felt that her reputation in the community was not just being tarnished, but was being rubbished and she was devastated and distraught. She perceived the conduct of the police as directed to supporting their application to the VCGLR and that she faced the prospect that her venue would be shut and her business would be lost.

She described her response in these words:

[I]t was an attack on me professionally, personally and to the – putting information out to the community that was incorrect. I was – I was sick. I was sick. I didn’t get out of bed for three days. I was totally distraught. I was – I went through a process of continuously bleeding. I went and saw a doctor. And I stayed indoors because it was – it was just hurtful, it was a betrayal. It was hurtful and this – how this – this played out was not – was just not true.

The plaintiff’s communications with Inspector Ward that evening confirmed that she saw Mr Guerin’s conversation with the journalist to be directly about the LCRA proceeding, motivated by an objective on the part of the police to leak information to the media to her detriment. Inspector Ward responded that he knew nothing about any contact with the media and offered to follow up the matter, noting that as he was the applicant to the VCGLR, it was not appropriate that he investigate her complaint. He did however make an enquiry of Senior Sergeant Eager (who did not give evidence) who replied by email stating that the liquor licencing unit had not discussed anything to do with the LCRA proceeding with any media outlet.

I pause to observe that this response failed to disclose the fact that Mr Guerin identified Senior Sergeant Eager as the officer who briefed him and had supplied summaries of the information contained in the police brief that he provided to the Herald Sun journalist, Mark Buttler.

When Ms Tsamis saw the Herald Sun the next morning, she became very upset. The article was on the front page of the paper. Ms Tsamis was initially unaware of Mr Guerin’s interview on 3AW, but was contacted while the interview was playing by a friend, who told her that she needed to listen to the radio ‘right now’. She was unable to do so, but later obtained a transcript and a recording of the interview.

In the immediate aftermath of the publication, Ms Tsamis was contacted by hundreds of people, including family members, customers, staff, suppliers and corporate function businesses, who wanted to know whether the nightclub was closing. She estimated that she had received more than 300 personal messages. She recalled that about 30 people in total spoke to her specifically about the interview broadcast on 3AW. She also received responses through social media and online comments on the publications.

Ms Tsamis described her response to the reactions of others in these terms:

I was deeply shocked. I was devastated that they were putting my reputation in front of the community in this light that was tarnishing my reputation. It was hurtful. It was a betrayal. It was factually incorrect and it was a pure smear campaign. I worked so hard in the industry to get to the level I am at for someone to do that was just an absolute betrayal and just devastating.

Ms Tsamis also received an email from a person that she did not know that was very threatening, who called her names and described her as a criminal who should be ashamed of herself. She felt her safety was in jeopardy and forwarded that email to the police.

I pause to observe that the operation of Inflation was regulated by a liquor licence. That licence did not contain any conditions relating to drug use or drug trafficking. Although the relevant legislation imposes responsibilities on licensees in relation to alcohol, responsibility for regulation of drug use and drug trafficking is, by legislation, a matter for the police.

Ms Tsamis takes a proactive role in promoting the nightclub industry. She is a member of two relevant committees. First, she is a member of the Melbourne Licensees Steering Committee, which includes representatives from the police, the VCGLR, local council, fire brigades, other licensee members and the Australian Hotels Association. The committee’s objective is to introduce best and safe practice in the operation of licensed liquor premises, through discussion of topical issues and the development of initiatives for licensees to deal with such issues.

Secondly, some 23 years ago, Ms Tsamis joined an accord called Westend Forum that subsequently changed its name to Melbourne Liquor Accord.

I am satisfied that through the plaintiff’s participation in these organisations, she was taking, and was seen within the community to be taking, an active role towards nightclubs achieving compliance with appropriate regulatory standards, particularly in relation to responsible serving of alcohol, violence, underage drinking and other matters.

An example of a compliance innovation pioneered by Ms Tsamis in Melbourne was the use of a Scantek ID scanning system, which significantly improved the effectiveness of the assessment of identification documentation on entry and the identification of persons who ought to be refused entry.

A further example of the plaintiff’s work to improve responsible operation of nightclub venues through the Melbourne Liquor Accord, was to press for a change in police procedure to encourage venues and patrons to call ambulances to assist patrons apparently suffering from drug overdose, without fear of adverse consequences from the police.

The plaintiff was also a member of a not for profit organisation called the ‘Community Advocacy Alliance’ established by former Police Chief Commissioner Kel Glare, although it appears that the plaintiff’s participation in the work of this committee post-dated the relevant events.

The Melbourne Liquor Accord played some role in the development of the ‘Victorian Compliance Manual’, a manual designed to assist in ensuring regulatory compliance in the day to day operation of a nightclub. The manual used by Inflation also included standard operating procedures and guidelines for the operation of the venue, including responding to drugs, police, underage patrons, and ID issues. Ms Tsamis described it as ‘the bible on how to run your venue’.

The regulator, VCGLR, must be satisfied that a licensee is a fit and proper person to hold a licence, while the relevant legislation and licence conditions are enforced by the Victoria Police’s Liquor Licencing Squad. Breaches of conditions of a liquor licence or the Liquor Control Reform Act incur an infringement and the VCGLR maintains a star rating system. A licensee’s rating is taken into account in determining the applicable liquor licencing fee for that year. For example, incurring an infringement for permitting underage entry or drunkenness will lower the star rating and increase licencing fees. Ms Tsamis has maintained a five-star rating (the highest possible) since the system was introduced. Her sworn evidence that she had never breached her liquor licence conditions was not challenged.

When processing patrons for entry into the venue, the nightclub’s security staff were not empowered to search patrons. Only the police were trained to deal with drug investigations. Although the aspirational goal of the compliance manual was a zero-tolerance philosophy to the trafficking of illicit drugs within the venue, objectively there were significant limitations on the opportunities for venue management to exercise effective control. Notwithstanding this, the plaintiff maintained that there was not trafficking in drugs occurring inside the venue. Plainly, the jury did not accept her evidence in this regard.

Ms Tsamis said that she had a good rapport with the Liquor Licensing Squad, characterised by open communication and regular frequent visits by police, not necessarily just from the Melbourne unit, to her nightclubs. The police have never suggested that the 59 incidents that were the subject of the application to restrict her trading hours were ever processed or prosecuted as infringements. The frequency of police visits to Inflation was significant. During the first 10 months of 2013, police visited on 337 occasions that varied from the more common walkthrough of two to four police officers on street patrol to ‘raids’ involving up to 20 police members. There was a regular police presence in the street outside the entry door when the nightclub was operating.

Although the plaintiff maintained that Inflation would never permit an underage person into the venue, I am satisfied that the system for ID assessment was not perfect and could be beaten by an enterprising minor. I would not conclude on the evidence that the plaintiff’s systems and procedures, as designed, were inappropriate. Rather, the defendant’s criticisms were directed to the efficiency of implementation of the systems and processes by the security staff actually employed at the venue.

The plaintiff also gave evidence of taking positive steps to deter drug use and to emphasise the dangers of drug use to patrons. She referred in evidence to using social media campaigns, posters and other sources of information and the manner of use of the Scantek database. Ms Tsamis explained that, in her view, social media has become the most effective platform for communicating such messages and that Facebook pages established for both Inflation and Cloud Nine have substantial followers. The plaintiff communicated an anti-drug use message for patrons, for the benefit of patrons and a zero-tolerance policy within nightclubs through social media. The plaintiff also produced anti-GHB[28] educational material, including a video that was distributed on social media. Such activities contributed to the plaintiff enjoying a reputation in the community as not being tolerant of drug use and of being concerned for the welfare of her patrons.
[28]GHB, or gamma hydroxybutyrate, is a drug of dependence that is used as a ‘party drug’.

In 2014, the plaintiff was invited to and did give evidence to a Victorian parliamentary inquiry in respect of crystal methamphetamine (the drug commonly known as ‘ice’).

Towards the conclusion of her evidence in chief, the plaintiff was taken to each of the alleged imputations and she denied that each imputation was true. Asked again how the two publications had affected her reputation, the plaintiff responded:

[W]ell, it has affected my reputation because it has tarnished me to be an irresponsible person; it has made my character in the community look like I am a person that is making people ill; I am not responsible; I am breaching the law; I am doing things that jeopardise peoples’ health. I felt my profile was being completely tarnished and it was devastating. It was devastating to see this.

As will become apparent, this passage of evidence was significant. Neither party anticipated the jury’s ultimate verdict would result in a split between the findings relevant to the false imputations and the drug activity imputations. It therefore becomes necessary for me to assess the relationship between the evidence relevant to damages on the one hand and the false imputations. Neither counsel explored the impact of the imputations, separately and individually, on either the plaintiff’s reaction to a publication or the damage to her reputation. However, I am satisfied that the plaintiff’s evidence in this regard is not significantly diminished, or liable to significant discount, by reason of the jury’s verdict that the drug activity imputations were substantially true.

In cross‑examination, the defendant did not mount any substantial challenge to the presumption that the plaintiff had a good reputation. So much was evident from the following passage:

MR HAYES: What I am suggesting to you is this: that your reputation as at 4

December 2018 was no different to what it was in 2014, and I am not suggesting you have poor reputation. I am just simply saying your reputation remained constant between February 2014 and December 2018; would you accept that?
MS TSAMIS: No. I don’t.

The cross‑examiner put this proposition repeatedly and Ms Tsamis denied it. She maintained that she was shunned within the nightclub community, particularly in activities related to regulation. On a later occasion the cross‑examiner again approached the same proposition:

MR HAYES: And what I am suggesting to you is that the Herald Sun article and also the 3AW interview had little or no effect on your reputation as it was at that time in the community and as it is today, would you accept that?
MS TSAMIS: That’s incorrect. Your Honour, I have not been invited to anymore new forums. I have not been invited to anymore lectures by the police or VCGLR, and I have not been invited to do anymore talks in any other arenas. I have not even been invited to workshops, and I use to be invited all the time. I was always in contact with the Consumer Affairs Minister, which was Tony Robinson and Sue McClellan. I have had no more contact from any of those people within the regulators. I don’t get invited to anymore council forums. So it has changed.

What is significant is that the cross‑examiner did not put the proposition to Ms Tsamis that her reputation was lowered because what was republished by the Herald Sun and 3AW was true, either in some or all meanings. Ultimately, the defendant sought to advance in submissions a proposition that had not been explored in cross‑examination, namely that the plaintiff’s reputation was lowered by the publications, and justifiably so, because some or all of the meanings alleged were true.

The cross‑examiner suggested that Ms Tsamis was offered the opportunity in 2018 to join the board of the Community Advocacy Alliance, an organisation associated with former Police Commissioner Kel Glare. However, I accept the plaintiff’s explanation that her association with the Community Advocacy Alliance grew out of a common interest in the exposure of Mr Guerin’s activities as a right wing troll and was not related to her reputation in the nightclub industry.

The cross‑examiner also suggested that promotional activities for Cloud Nine demonstrated that the plaintiff’s life had continued without any impediment to her reputation. Ms Tsamis responded that patronage at Cloud Nine had dropped by half following the publication. The cross‑examiner did not explore whether the decrease in patronage might have been related to the truth of the drug activity imputations. Rather, the proposition was again put that the publications had no negative effect on the operation of Cloud Nine and on Ms Tsamis’ reputation. She responded:

Yes, it did. You – your client went on the front page of the paper before my submission was due to the VCGLR and didn’t give me an opportunity to put my side of the story which was completely um, you know – totally pulled apart, and went on the front page of the paper the week before my submission was due to try and get the maximum hurt.

Ms Tsamis suggested that the police wanted to inflict the ‘maximum hurt’ on her position in relation to the application to the VCGLR and that Mr Guerin, who repeated and selectively gave stories to the Herald Sun, wanted to ‘rubbish’ her position in respect of the issues of industry regulation.

In this respect, the plaintiff’s evidence about both reputational damage and the hurt that she felt, was linked primarily to issues of industry regulation rather than drug activity at the nightclub. The plaintiff made clear, and I accept, that she has a strong personal anti‑drug attitude. The plaintiff gave evidence of a variety of ways in which her personal attitudes to drug use were expressed and the defendant did not contest this evidence. Both in respect of her reputation and her evidence of hurt and humiliation, exploration of her attitudes and her reactions and feelings was possible between her position as a regulated licensee of a nightclub and as a person who personally opposed drug use. As I will shortly explain, it was only in submissions that the defendant sought to make a point that was not explored in cross-examination, namely that the plaintiff’s hurt feelings were engendered by the publication of the true imputations. Before doing so, I will note the other evidence relevant to the assessment of damages.

Plaintiff’s character witnesses

William Horman is a former Assistant Commissioner of Victoria Police. He has known the plaintiff since the mid‑1990s through the Melbourne forums and later at the Stonnington Steering Committee and forums. He described Ms Tsamis as a person of the highest integrity in whom he had a great deal of confidence. In particular, her reputation as a responsible licensee was extremely high. She was regarded as one of the leaders within the industry. What contributed to her reputation was her obvious commitment and dedication to matters pertaining to the liquor industry and particularly in relation to late night venues.

He did not perceive significant damage to Ms Tsamis’ reputation amongst the people who knew her well, like fellow committee members. However, he considered there was an adverse impact on her reputation from the publications because of the ‘human response’ from persons who did not know Ms Tsamis in reaction to what they were reading.

Terrence Patrick O’Malley is an educator in compliance and risk management and a consultant to the liquor industry. He designs and delivers training courses at William Angliss Institute, in particular compliance training courses for the VCGLR. In that occupation, he has known Ms Tsamis over a long period of time, initially meeting her when he managed a competing business on King Street. Mr O’Malley has also had an active involvement with the licensing forums and the associated licensee’s accords. Mr O’Malley described the plaintiff’s reputation to be that of an industry leader, seen by her peers as an innovator and a leader in harm minimisation. He referred in particular to her early adoption of the ID scanning system. In addition, she led the way in implementation of patron welfare and harm minimisation for vulnerable people, especially with the development of female patron welfare policies.

Mr O’Malley was surprised and saddened by the sensationalist remarks contained in the publication, which he considered ‘flew in the face of a well‑established body of work’ that Ms Tsamis had undertaken around public safety, legal liability and compliance in licensed premises. He described Ms Tsamis as ‘saddened’ by the impact of the publications upon her reputation. He described the plaintiff’s reputation amongst her peers as ‘very much wounded’.

Craig Alistair Binnie, who was formally a journalist at the Herald Sun but who is now self‑employed, described himself as best friends with Ms Tsamis. By reason of the closeness of their relationship and Mr Binnie’s demeanour in the witness box, I derive little objective assistance from his evidence, except to the extent that it was corroborated by others. In that context, he confirmed that Ms Tsamis did much committee work including working with the police. Consistently with Ms Tsamis’ evidence and that of other witnesses, Mr Binnie observed that she was distraught and that she was furious. She could not understand why the police ‘were doing this to her’ and in the weeks following she ‘bunkered down’, like she was embarrassed. She appeared bewildered and she fell out of contact with the witness.

Mr Binnie confirmed that he had seen an offensive Facebook post that had earlier been described by Mr Tsamis and that she received abusive and threatening phone calls and emails.

Andrew Alexander Szoeke is a solicitor who was previously employed in the hospitality industry. He knows Ms Tsamis through that industry, particularly through the Stonnington Liquor Accord. Prior to the publications, he considered that Ms Tsamis was really highly regarded by other members of the Steering Committee as a person who was keen to be involved with the accord and to move the industry ahead, above and beyond what was required by legislation. In particular, she was adamant that underage entry not be permitted and was a ‘big proponent’ of ID scanners.

Mr Szoeke observed that Ms Tsamis’ reaction to the publication was that she became extremely upset and angry. She felt that her business was under attack and that she personally was under attack. He considered that other persons within the industry thought less of the plaintiff after the publication and questioned whether she was a bit dodgy and may have been pulling the wool over the eyes of other committee members about the way she ran her business.

Gregory Joseph Taylor has been a very good friend of the plaintiff for approximately 15 years. Currently a director of property owning trusts, he was formerly a property lawyer. He described the plaintiff’s reputation prior to the publications as extremely good and that she was regarded very highly by people in the nightclub industry. She was opposed to drug use and very concerned with patron safety.

Mr Taylor described Ms Tsamis as ‘devastated’ and ‘quite depressed’ by the publications. He said that ‘the wind was taken out of her sails’ for months, possibly longer and although the plaintiff’s reputation did not diminish in his eyes, he considered that reputation was everything and within the nightclub industry being accused by the police of something that could be criminal or to be encouraging drugs was serious.

Anthony Michael Zelewski is a security risk consultant and a former Victoria Police member. He has also known the plaintiff for a long time through the hospitality industry and has kept in professional contact with her. The plaintiff’s reputation was that she was a very good operator and adopted many good practices well before their time, including ID scanners. He observed that she was terribly distraught following the publications, to the point where he was concerned for her mental health. He described how he regularly received questions from people in the industry involved in enforcement about Ms Tsamis and Inflation, including whether he thought the contents of the publications were true. He described Ms Tsamis as an ethical venue operator.

Plaintiff’s submissions

In respect of the general damages, the plaintiff drew particular attention to the gravity of the sting and the extent of the publication. She submitted that each of the true imputations concerned the operation of the nightclub and drug activity. Two of the false imputations concerned the plaintiff’s conduct directly and should be regarded as more serious imputations. The plaintiff submitted that I should regard imputations 7(a) and 7(b) as raising criminal wrongdoing in the first instance and breach of regulatory provisions in the second instance. The other false imputations, she submitted, showed a callousness on her part as to the welfare of her patrons and the general sense of lawlessness in the way in which she operated the nightclub.

Ms Tsamis submitted that, although there were no exact publication figures in evidence, the defendant had admitted that the Herald Sun had an extensive readership throughout the State of Victoria in both printed and electronic form. Further, Ms Tsamis relied on the grapevine effect.

The plaintiff submitted that the principle that a defendant who established partial justification can rely on the justified imputations in mitigation of the plaintiff’s damages provided little assistance in the present case because the false imputations were of a different character to the drug activity imputations found to be substantially true by the jury. The two imputations that directly related to the plaintiff herself went specifically to her reputation, not just as a nightclub owner, but also generally as to her standing in the community.

Although the plaintiff is presumed to have a good reputation, she contended that the evidence at trial positively demonstrated her good reputation prior to the publications. This was not in contest. In particular, the plaintiff submitted that the evidence of Mr O’Malley, Mr Szoeke, Dr Zelewski and Mr Binnie provided clear evidence of the damage that the publications caused to the plaintiff’s reputation. The plaintiff’s evidence that the defamatory publications caused her hurt and distress was clear and strong and was supported by the evidence of Mr Szoeke, Mr Taylor, Dr Zelewski and Mr Binnie.

The plaintiff relied on six factors as circumstances warranting an award of aggravated damages. First, she pointed to the contextual background of the police application to restrict the nightclub’s trading hours. The timing of Mr Guerin’s interviews with Mr Buttler coincided with when the plaintiff was due to file a response to the application but had not yet done so. In this context, the plaintiff submitted that imputation 7(a) and 7(d) were particularly egregious.

Secondly, Mr Guerin’s position as the Superintendent of Victoria Police meant that readers were likely to attach greater weight to his comments and that the matters were so serious as to require the direct involvement of and public comment by very senior members of the Victoria Police force.

Thirdly, the defendant unreasonably pressed its justification defence in respect of the underage patrons, drunkenness and violence imputations despite there being no reasonable prospects of success. She contended that the evidence was thin and any reasonable assessment of the defendant’s justification defence ought to have concluded that it was bound to fail. In particular:

(a) there was no evidence of drunkenness;

(b) the evidence that there was concerning violent behaviour did not demonstrate any connection to the manner in which the plaintiff operated the venue; and

(c) the evidence of underage patrons merely exposed that the ID scanning system could not be perfect, particularly where there was a likeness between the patron and the person represented in the ID being used.

Fourthly, Mr Guerin failed to investigate the circumstances before making the publications, other than to read a summary of the application and some of the witness statements. He agreed that he had not made any other enquiries and had spoken neither to the informant nor Ms Tsamis.

Fifthly, neither Mr Guerin nor anyone else on behalf of the defendant had apologised to the plaintiff before or after the jury’s verdict.

Sixthly, as a model litigant, the defendant ought to have made an early assessment of its prospects of success in respect of imputation 7(a). It acted too late in withdrawing its defences to that imputation on the eve of trial. The defence of fair comment/honest opinion was hopeless and bound to fail.

Defendant’s submissions

The defendant contended that it had justified the most serious imputations pleaded by the plaintiff, namely the drug activity imputations that it submitted were seriously damning of the plaintiff and effectively overwhelmed the plaintiff’s otherwise good reputation that had existed up until the time of the jury’s verdict, almost to vanishing point. It submitted that the false imputations impacted very lightly upon the professional and general sectors of the plaintiff’s reputation, if at all.

The defendant accepted that the plaintiff maintained a good personal and professional reputation that was not impaired by the publications. It submitted there was little or no evidence that the plaintiff’s feelings were hurt by the false imputations and there was little or nothing in the way of hurt feelings capable of aggravation by the defendant, notwithstanding that the defendant’s conduct in the proceeding was not aggravatory in nature.

On this basis, the defendant contended that the plaintiff should not receive any monetary damages or anything more than nominal damages.

The defendant’s primary submission drew attention to the principles of mitigation and partial justification.

The defendant submitted that the principle in Pamplin v Express Newspapers Limited (No.2)[29] that evidence before the court in respect of failed justification and fair comment defences may be considered in the context of the plaintiff’s reputation when assessing damages was applicable in this proceeding. The Pamplin principle has been consistently applied in Australia.[30]
[29][1988] 1 All ER 282, 286.
[30]See generally, Holt v TCN Channel Nine Pty Limited (2014) 86 NSWLR 96, 102-103 [26]–[31], 110–111 [76]–[77]; John Fairfax Publications Pty Limited v Zunter [2006] NSWCA 227 [46]–[51]; Fairfax Digital Australia and New Zealand Pty Limited v Kazal (2018) 97 NSWLR 547, 552 [15], 582–4 [176]–[183]; Australian Broadcasting Corporation v Wing [2019] FCAFC 125 [94]; Sheales v The Age Company Pty Limited [2017] VSC 380 [51].

The defendant also relied on a related principle drawn from Burstein v Times Newspapers Limited.[31] The Burstein principle permits defendants to rely on directly relevant background context admissible as the circumstances in which the publication came to be made, notwithstanding that such evidence may also be characterised as evidence of the claimant’s reputation. In Burstein, a distinction was drawn between advancing an unsustainable defence of justification and thereby, under the guise of particulars of that justification, seeking to rely on particulars that are otherwise inadmissible and evidence of directly relevant background context. A defendant is not prevented from frankly accepting that there is no proper plea of justification but seeking to rely in reduction of damages on particulars that would not be ruled inadmissible under the rule in Scott v Sampson.[32] While a plaintiff may seek to rely on evidence of the plaintiff’s bad reputation, specific acts of misconduct on the part of the plaintiff tending to show his or her character or disposition is inadmissible. The Burstein principle permits use of evidence in support of a failed plea of justification on the question of mitigation of damages. The defendant contended that two recent cases illustrated the Burstein principle being successfully used where a defendant was able to partially justify the defamatory publication.[33]
[31][2001] 1 WLR 579, 598 [42], 600 [47]. See also Rush v Nationwide News Pty Ltd(No.2) [2018] FCA 550 [32]–[46]; Australian Broadcasting Corporation v Wing [2019] FCAFC 125 [87]–[101].
[32](1882) 8 QBD 491.
[33]Fairfax Digital Australia and New Zealand Pty Ltd v Kazal (2018) 97 NSWLR 547, 551–2 [12], [15]; Australian Broadcasting Corporation v Wing [2019] FCAFC 125 [93].

The defendant contended that the relevant principles to be drawn from these authorities was that evidence which goes to the plaintiff’s general reputation is able to be admitted on consideration of her reputation and whether there ought be any reduction of damages where such evidence is:

(a) properly admitted in support of a failed defence of justification or fair comment insofar as it establishes facts which were relevant to that defence, thereby mitigating the effect the relevant imputation might have had on the plaintiff’s reputation;

(b) directly relevant background context as to the circumstances in which the publication came to be made, including partial justification by the defendant of the defamatory publication or evidence that impacted directly on the plaintiff’s general reputation at the time of judgment; and

(c) in either or both of (a) or (b) above, addresses the relevant area or sector of the plaintiff’s reputation.

Ultimately what the defendant contended was that although Ms Tsamis may have prevailed in establishing that the publications were defamatory by reason of the false imputations, when regard has had to admissible evidence that impacted on the plaintiff’s general reputation being the evidence in respect of the drug activity imputations, the effect of that evidence was to completely swamp or overwhelm the plaintiff’s reputation resulting in the outcome of nil or nominal damages.[34]
[34]Pamplin v Express Newspapers Limited (No.2) [1988] 1 All ER 282, 287.

The defendant submitted that imputation 7(a) was only published to one person namely Mr Buttler who did not republish it in the Herald Sun article. Although the defendant accepted that the natural and probable consequence of the publication of Mr Guerin’s words to Mr Buttler was the republication of those words in the Herald Sun and that the extent and scope of republication was extensive, it submitted that no discrete imputations were pleaded or relied on by Ms Tsamis in respect of the republication. Because she relies on the republication of the imputations contained within Mr Guerin’s statements, it was relevant that the content of the republication was significantly more moderate than Mr Guerin’s oral statements. Further, although Mr Guerin did not do so, Mr Buttler afforded Ms Tsamis an opportunity to respond. The defendant contended that imputation 7(a) should be ignored.

The defendant next submitted that the effect of the remaining false imputations on the plaintiff’s general reputation was mitigated in two ways — first by facts established that were relevant to those imputations and secondly by the facts established in support of the fully justified imputations. The defendant identified the relevant sector of the plaintiff’s general reputation to be as the manager and operator of Inflation. The defendant’s contention appeared to be limited to the second way in which it contended for mitigation, as the submission drew my attention to evidence of drug use by minors and contended that much of what was said in the republication of Mr Guerin’s remarks was accepted by the jury as true.

I pause to note that for reasons I will shortly develop, for this submission to carry force, any significant mitigatory effect needed to be identified with reference to the conduct of the plaintiff in the management and operation of the venue. For example, the defendant accepted that the sting of imputation 7(b) was that the plaintiff allowed minors to enter, submitting that the sting was relevant to the plaintiff’s reputation in the relevant sector and ultimately to her responsibility as the licensee. The defendant contended that the jury accepted that it was true that there was drug activity and, in doing, so had before it evidence of drug activity by minors. In the context of this imputation, the jury must be taken to have found that the minors identified by that evidence acted independently and to have not accepted that there was conduct of the plaintiff in the management and operation of the venue that caused that drug use by minors. On proper analysis, any mitigatory impact of the drug activity imputations on the plaintiff’s pre-existing good reputation was ameliorated by the jury’s findings in respect of imputation 7(b). Her reputation was to some extent lowered by the true identification of drug activities at her venue but it was damaged by the imputation that she was uncaring for the welfare of patrons.

It will be convenient to explain the contentions put by the defendant during the course of the following analysis. I will next set out the proper analysis of the jury’s verdict, and of the impact on the assessment of damages of the mix of injurious and mitigatory effect arising from those findings and from the evidence that must be taken to have been accepted by the jury.

Did the true imputations mitigate the impact of the false imputations

I accept the defendant’s submission that publication of the true imputations had a mitigating effect on the plaintiff’s true reputation. Plainly, had the defendant failed to prove the substantial truth of the drug activity imputations, the appropriate quantum of damages would be significantly higher than the sum I propose to award. However, I have not been persuaded that publication of the true imputations substantially mitigated, even swamped, the plaintiff’s true reputation as the defendant contended.

What then is the proper approach to the jury’s verdict that the defendant successfully justified four out of eight imputations conveyed by the published material? Prima facie the defendant is liable to pay damages in respect of the publication of the false imputations, but the first question is what principles determine the effect on the damages assessment of the partially successful justification defence that the drug activity imputations were substantially true.

Gillard J in Li v The Herald &Weekly Times stated:

It is open to the defendant to prove partial justification of the defamatory words complained of. This can arise where the words complained of contain more than one defamatory imputation or are severable in some way. In those circumstances, the defendant may justify part only of the defamatory words. This is not a defence. At common law the defendant remained liable to pay damages in respect to the part not justified.[35]

[35][2007] VSC 109 [88]–[89].

More recently in Plato Films Ltd v Speidel, Lord Denning said:
Although the newspaper cannot justify in whole it can justify in part. It can plead that, in so far as the words meant that he had been convicted twice, they were true and thus bring the two convictions before a jury … This rule is based on sound sense. Seeing that the law does not permit a defendant, in mitigation of damages to produce evidence which tends to justification, it must permit him to adduce the self same evidence when pleaded in partial justification … if it were not so, the plaintiff would recover damages for a character which he did not possess or deserve; and this the law will not permit. [36]
[36][1961] AC 1090, 1142.
On the assessment of damages in respect of the defamatory imputations published and not successfully defended, evidence properly admitted to successfully justify other defamatory meanings conveyed by the publication may mitigate the plaintiff’s damages.

Jordan CJ identified the governing principles in Howden v Truth & Sportsman Ltd (No. 2):

There can be no doubt that, at common law, in a civil action, ‘a justification need not be to the whole, but may be to a part. If a man says that a certain neighbour of his was guilty of manslaughter and was also a thief, it is perfectly open to take a plea in justification of either charge only’: Sutherland v Stopes [1925] A.C. 47 at 78. It is, however, necessary that the part sought to be separately justified should be severable, and also that the pleading should clearly indicate exactly what the severed part is which is sought to be separately justified. [37]

[37](1938) 38 SR (NSW) 287, 290.

The question whether a publication conveys a severable imputation is one of substance and not of form. The test is whether it is a substantially separate and self-contained allegation, or whether it is merely one ingredient of a connected whole which, when taken as a whole, conveys a damaging imputation that is not contained in its parts taken separately.

The present case may be taken to be one of publications that contain more than one distinct imputation rather than communicating a total overall damaging imputation. That the jury interpreted the publications in this fashion is evident from the finding of justification of the drug activity imputations and the failure of that defence for the remaining imputations. Neither party submitted that another interpretation of the jury’s verdict would be appropriate.

In essence, the publications were not alleged to convey an overarching imputation that the plaintiff managed the nightclub in a manner conducive to criminal and illegal activity. Rather, they meant that the plaintiff managed the nightclub in a manner that had various distinct consequences identified by the several imputations alleged. In this sense, the imputations are distinct, not inextricably intertwined, and are severable in the way required by the test identified in Howden. That said, there is nonetheless overlap between the imputations that requires further analysis, which I will return to shortly.

In Australian Broadcasting Corporation v Chau Chak Wing,[38] the Full Federal Court noted that there are limited circumstances in which a publisher may rely on facts in mitigation of damage, referring with approval to the judgment of Gleeson JA in the New South Wales Court of Appeal in Fairfax Digital Australia & New Zealand Pty Ltd v Kazal.[39] Gleeson JA identified the common law exclusionary rule in Scott v Sampson[40] as the starting point. While a defendant may seek to rely on evidence of the plaintiff’s bad reputation in mitigation of damages, evidence of specific acts of misconduct on the part of the plaintiff tending to show his or her character or disposition, as distinct from general bad reputation, is inadmissible. There are a number of exceptions to this rule. Relevantly, the exclusionary rule does not apply to evidence properly admitted in relation to a defence of partial justification provided the evidence relates to ‘the relevant sector of the plaintiff’s life’.[41]
[38][2019] FCAFC 125 [94].
[39](2018) 97 NSWLR 547, 582 [176]–[180]. See also Pamplin v Express Newspapers [1988] 1 All ER 282, 286–7, cited by the defendant.
[40](1882) 8 QBD 491.
[41](2018) 97 NSWLR 547, 583 [180].

In this proceeding, the defendant did not lead evidence of bad reputation in mitigation. The defendant submitted it was entitled to rely on the specific evidence of the plaintiff’s conduct that it led in respect of the justified drug activity imputations as tending to show Ms Tsamis’ character or disposition. Although there was a great deal of evidence led about drug activity, it mostly concerned the conduct of patrons and care is required to identify the plaintiff’s conduct that was the foundation for this submission. The defendant’s broad submission was that the impact of the drug activity imputations lowered the plaintiff’s reputation to its true level and in doing so swamped the injurious nature of the false imputations such that no entitlement to damages remained.

What I am entitled to take into account is the evidence of the plaintiff’s conduct, led in respect of the drug activity imputations, that constitutes evidence of specific acts of misconduct on the part of the plaintiff tending to show her true character or disposition. The evidence admitted in respect of each imputation related, at least in part, to the same sector of the plaintiff’s reputation: her conduct in the management and operation of the nightclub, her business reputation, particularly her reputation with the regulator and those within the nightclub industry who took an active interest in regulatory compliance, including patron safety and behaviour. The exception identified by Gleeson JA in Kazal to the exclusionary rule in Scott v Sampson applies.

That said, two specific issues warrant further consideration. The first is how the apparent contradictions in the jury’s verdict are to be reconciled and how the jury’s verdict governs reliance on the evidence led at trial. The second issue is precisely what specific acts or conduct on the part of the plaintiff are revealed by the evidence that can be taken as accepted by the jury as indicative of the plaintiff’s true character or disposition.

Analysis of the verdict

The jury’s verdict broadly classified the multiple imputations carried by the publications. On the one hand, there were four imputations that were substantially true that were all imputations about drug activity and four imputations that were false. The true imputations would primarily lower the plaintiff’s reputation in the area of civic responsibility, of being a responsible, law abiding person, with particular concern for the welfare of patrons. The sector of the plaintiff’s reputation in which the imputations may have effect is broader than just her business reputation and extended to her personal reputation.

The false imputations are less susceptible to specific categorisation. The first imputation denigrated the plaintiff’s integrity, as it implied that the plaintiff was a person who engaged in improper, inappropriate and unlawful conduct for personal gain. The second imputation affected her character as a responsible licensee, who set an example in running her business within regulatory requirements and operated in the sector of civic responsibility. The third imputation affected her reputation as a business operator genuinely interested in patron welfare, again affecting the civic responsibility sector. The second and third imputations also damaged her reputation for integrity. The fourth imputation affected her reputation in the area of civic responsibility.

The seven imputations to which a justification defence was run carried the essential sting that, in some specific respects that differed between each imputation, the manner in which the plaintiff managed or operated the nightclub resulted in drug activity, regulatory failure or adverse health consequences. The police identified drug activity and adverse health consequences as a reason for regulatory interference by the application to restrict the trading hours of Inflation to what was then colloquially known as ‘lockdown’. The police response is instructive. Liquor licensing and control processes regulate neither drug activity nor threats to health (unless alcohol related). What the police were seeking to do in the LCRA proceeding was to regulate the activity of the nightclub, to restrict its hours of operation. There was no evidence that the police sought to condition the manner of management of the venue. The application did not proceed for reasons that were not revealed by the evidence. All that can be concluded is that as a strategy to deal with the policing issues raised by the operation of the nightclub, the LCRA proceeding failed.

To my mind, there was tension in the evidence around whether the drug activity of patrons overwhelmed the real issue to be addressed when meeting the sting of the imputations, namely the causal relationship between the manner in which the plaintiff operated Inflation and the drug activity identified by the evidence. This distinction is significant as firstly, there was overwhelming evidence of drug activity in and around the venue that the jury accepted. It was plain from the evidence and from the jury’s verdict that Inflation, like any nightclub operated in a similar fashion, attracted drug users who in turn attracted drug dealing.

Secondly, the police had little or no effective control over that drug activity. It is not contentious that drug activity is regulated or controlled through policing and not through liquor licensing regulation and the police plainly carry the obligation to enforce the criminal law. The evidence demonstrated that the police failed to control drug activity in and around the nightclub. There was no evidence that a nightclub could be managed and operated in a manner that absolved the police from the need to enforce the criminal law. It was not part of the defendant’s case to show how the plaintiff might have achieved what the police, with substantial statutory power, could not. The consequence was that the jury heard much evidence about drug activity through the fact of the existence and operation of the nightclub per se and it accepted, in summary, that the venue was a honey pot.

Thirdly, Mr Guerin told the Herald Sun journalist ‘we can’t arrest our way out of all this.’ The police were seeking alternative solutions. One solution appeared to be the regulatory process. Mr Guerin accepted when speaking with the journalist that the regulator did not necessarily agree that drug activity was to be regulated by liquor licensing laws. He acknowledged that the motivation of the police in seeking a change in licence conditions for Inflation was to reduce the incidence of drug overdoses, improve community safety, and to give people confidence that ‘licenced premises’ were not ‘drug dens’. Mr Guerin expressed his personal view that nightclubs or licenced premises need to be run in a way that was not conducive to drug trafficking.

Why the police withdrew the LCRA application was not explained, but much of the police case about the 59 incidents referred to in the publication was heard by the jury in support of the justification defence that succeeded in respect of the drug activity imputations. However, from the fact of its withdrawal and the continuing operation of the venue, the jury could not be taken to have concluded that the 59 incidents would support either lockout type trading conditions or any other conditions on the manner of operation of the venue, including closure of it.

This tension between regulation of drug activity by police and regulation of it by a licensee of a nightclub was evident in the jury’s verdict. On the one hand, the defendant could not justify the imputation that the plaintiff managed the venue in a manner that was conducive to drug trafficking, drunkenness and violence. On the other hand, three of the four drug activity imputations could, in general terms, be described as operating Inflation in a manner that was conducive to drug trafficking. The apparent contradiction between these verdicts may be explained on the basis that the jury was not persuaded that the defendant met the whole sting of the imputation that management of the venue was conducive to such consequences because there was no evidence of drunkenness and no sufficient evidence of violence referable to the manner of operation of the venue. The Herald Sun referred to the 59 incidents as including ‘brutal assaults’, but the evidence at trial could not relate any assaults to the management of the venue.

The defendant had not proved the substantial truth of the whole of the sting of that imputation. The contradiction between those verdicts does, to some extent, ameliorate the adverse impact of the justified imputations in lowering the plaintiff’s true reputation. This is a difficult assessment. On the one hand, the justified drug activity imputations were strongly founded on evidence of drug activity by patrons, but on the other hand, the three false imputations were supported by the evidence of the manner of management of the venue. I am not persuaded that once one is balanced against the other, a substantial and negative adjustment of the plaintiff’s true reputation is required.

The second inconsistency in the verdict may better explain the limited mitigatory impact of the true imputations. On the one hand, the jury’s verdict was that the defendant did not justify the imputation that the plaintiff operated the venue in a way that jeopardised her patron’s health and resulted in many hospital admissions, while on the other hand, the defendant justified the imputation that the plaintiff operated the venue in a manner that resulted in drug overdoses in and around the venue. Because the only evidence of the cause of patron’s health being jeopardised and of hospital admissions was drug overdose, the jury must be taken to have considered that the plaintiff operated Inflation in a way that did not jeopardise the health of patrons. The jury accepted the plaintiff’s evidence of the manner in which overdosing patrons were supported and must have accepted that drug overdose was the consequence of the conduct of the drug-using patron.

The defendant accepted as much in its submissions. The Herald Sun article contains phrases such as ‘dozens of drug overdose victims’ and ‘many hospital admissions of overdose victims’. Such consequences were not linked to the manner in which the plaintiff managed Inflation and the defendant, in its cross-examination, accepted that there was a fine line between a dose and an overdose with GHB, the drug that was mostly associated with overdoses.

The defendant submitted that the evidence relevant to drug overdoses and hospital admissions squarely went to the plaintiff’s reputation as a manager and operator of the nightclub. I cannot accept this submission. The defendant pointed to the connection between drug overdose in the neighbouring area and attendance at Cloud Nine, hospitalisation of victims of violence and the attendance of ambulances in Geddes Lane at the rear of the nightclub and in neighbouring carparks. This evidence was likely to have been the basis for the jury’s rejection of the truth defence to the jeopardising health imputation. The nightclub assisted drug affected patrons to get to hospital.

The evidence could not establish in what particular respect the management of the venue contributed to drug overdoses or that that the decision of patrons to use drugs in a way that resulted in overdose was facilitated by the manner in which the club was managed. The evidence was that neither the plaintiff’s systems nor the police presence could effectively deter either drug use or drug trafficking in the nightclub. It was not suggested to the plaintiff that there were alternative methods of management of the venue that would have deterred drug use and the consequent attraction of drug dealers. The defendant clearly persuaded the jury to reject the plaintiff’s denial that entry points into the premises were porous to drugs. The dominant explanation was that security had no effective powers of search. Cross-examination demonstrating instances of failure in the plaintiff’s systems that may have permitted patrons to enter without being searched was insufficient to displace the inference that large quantities of drugs must enter the venue concealed from door security.

Police use of drug sniffer dogs to scan the queue of patrons waiting to enter demonstrated that they recognised the limitations of the entry scanning system in detecting drug possession. The evidence of frequent and regular police inspections and ‘walk throughs’ inside the nightclub during its operations warranted the conclusion that neither drugs nor drug use was detected in or on the premises by them, notwithstanding that the defendant’s case at trial — that drug use was substantial, sustained and obvious — was accepted by the jury. The defendant suggested that nightclub staff ought to have been aware of drug use and sale, particularly in the vicinity of toilets and the smoking area in Geddes Lane, but accepting that to be so, no method for the licensee to eradicate or control drug use and sale without police powers was evident on the evidence. The jury must be taken to have reasoned that unrestrained drug use, the decision of the patron, was the cause of drug overdose and that the plaintiff could not be described as jeopardising her patron’s health.

The plaintiff gave evidence, supported by the evidence of others, that she was known to be caring about the welfare of her patrons, particularly female patrons. While she personally advocated an anti-drug use message, she lived in the real world and saw regulation of drug taking and the elimination of drug trafficking as a police matter.

The police had identified a number of different activities that went to the heart of policing concerns around the operation of the nightclub. Mr Guerin articulated those concerns in the interview with the Herald Sun journalist. On the one hand, there were drug related activities, and, on the other hand, there were activities that directly related to the regulation of liquor licensing, such as entry of minors, failure to responsibly serve alcohol (drunkenness) and violence involving intoxicated patrons. Because, ultimately, responsibility for effective control of drug activities did not rest with the plaintiff, I cannot accept the defendant’s submission that the evidence of the drug activities so adversely affected the reputation of the plaintiff that the damaging effect of the false imputations was swamped.

Yet, the imputations successfully defended as true were predicated on a manner of operation of the venue. The apparent contradictions in the jury’s verdict may be explained by the jury taking a very general view of what that phrase implied. It meant no more than that the venue existed and was open for business. In other words, operating Inflation meant having the venue open for patrons to attend for the purpose of dancing through the night, a lawful activity that attracts patrons with an interest in partaking in an unlawful activity.

This broad and general interpretation of ‘managing’ or ‘operating’ was open to the jury due to a want of particulars of the material facts supporting the concept. The parties went to the jury on quite imprecise imputations, with a high degree of overlap. Properly pleaded imputations should be precise and distinctive. This lack of precision and overlap was not ameliorated when the evidence was taken. Its consequence is that it is difficult, if not impossible, for the defendant to make out its contention that the extent to which the plaintiff’s reputation was lowered by the true drug activity imputations was substantial, a swamping. The jury’s verdict is consistent with the nightclub having the reputation as a place where drugs are used and sold and drug overdoses occur because it was open for business, in distinction to any specific feature of its management by the plaintiff. To assess the extent to which the plaintiff’s reputation as the operator and manager of the nightclub was lowered, it was necessary to analyse the second requirement for the exception to the rule in Scott v Sampson identified above.

Specific evidence of true character

The second issue is to identify precisely what specific acts or conduct on the part of the plaintiff are revealed by the evidence tendered in support of the defendant’s justification defence as being indicative of the plaintiff’s true character or disposition. Notwithstanding an extensive submission on the implications of Pamplin and Burstein, the defendant did not explicitly address this factual question in its damages submission.

Again, the focus on identifying specific acts or conduct is hampered by the lack of precision and of overlap in the alleged imputations. Notably, the justified imputations, cast in the passive voice, bespeak a default consequence. The plaintiff operated the venue in a manner that ‘resulted’ in drug dealing and drug overdoses or that ‘allowed’ drugs to be sold and consumed. The extensive exploration in cross-examination of the drug activities of patrons was essentially a sideshow that overshadowed any analysis of the plaintiff’s methodology in operating Inflation. The defendant failed to address two propositions that must directly affect any evidence that could be indicative of the plaintiff’s true character or disposition. First, nightclubs attract persons who like to use drugs with a high risk of overdose while attending the venue and congregating drug users attract drug sellers. Secondly, the police could neither control this unlawful drug activity, despite extensive powers, nor advance a credible solution as to how a nightclub proprietor might do so.

In that context, the jury’s verdict that the operation of Inflation resulted in or allowed drug trafficking, use and overdosing does not reflect poorly on the character of the plaintiff so much as on the quality of the activities occurring at her venue. Inflation was, by its lawful activity of providing an opportunity for patrons to engage in activities such as dancing through the night, attractive to drug users whose presence in turn attracted drug sellers. Little is revealed by those facts about the true character or disposition of the operator of the venue that helpfully quantifies those characteristics.

Specific acts or conduct of the plaintiff that the defendant pointed at in evidence included the operation of the entry screening system, the conduct of staff in the operation of the nightclub, conduct of promoters, exceptions to the proper procedures that might be cast as failings, and procedures for supervision of toilets and the outdoor smoking area. The plaintiff’s operating policy manuals were analysed and compared to the evidence of actual practice. It is not necessary to set out all of the evidence elicited in cross-examination. Having read through that evidence, and interpreting it consistently with the jury’s verdict, I cannot discern how it can be said that there was conduct of the plaintiff indicative of a true character or disposition that was significantly lower that the description proffered by her witnesses.

To illustrate this reasoning, while the jury probably accepted that minors either purchased or consumed drugs at Cloud Nine, the sting of the imputation was that the plaintiff ‘allowed’ minors to enter the venue in breach of the law. The evidence did not establish the unlikely proposition that a perfect system could exist while there were examples of the ingenuity of tenacious minors. The jury accepted that drug activity occurred, but not that the drug activity involving minors was caused by the plaintiff. There is no basis for concluding from what these facts say about the plaintiff’s conduct that her apparent reputation for concern for the welfare of her patrons must be truly seen as non-existent, or significantly diminished. In its submissions, the defendant conflated its failure to establish the truth of the imputation that the plaintiff allowed minors into the nightclub with its success in demonstrating the truth of the drug activity imputations by reframing them as imputations that minors attended Cloud Nine and purchased and consumed drugs. This contention overstates the proper conclusion to be drawn from the jury’s verdict and the proper use to be made of the evidence led in support of the justification defence.

Moreover, the defendant neither challenged the reputation evidence as inconsistent with the drug activities around the nightclub that would be the subject of weeks of evidence, nor identified precisely in submissions the specific acts or conduct that supported the defendant’s contentions that the plaintiff’s reputation was lowered, even swamped, by the facts that supported the justification defence. In the atmosphere of imprecise generality that pervaded the evidence relevant to revealing the plaintiff’s true character by her specific conduct referable to drug activities, and I am not speaking of the detailed evidence of the conduct of patrons, the defendant could only emphasise conclusions, for example, ‘the consequences of the evidence (about ambulance attendances) is that such facts are damning of the plaintiffs’ reputation as a nightclub manager’. In making submissions in this manner, the defendant failed to persuade me that there was specific conduct on the part of the plaintiff that revealed her true disposition and character as significantly lower than was described by her witnesses.

Evidence of the plaintiff’s response to drug activity associated with the operation of nightclubs was revealed in her dealings with the forums and accords, rather than through generic observations about the drug activity per se in and around the venue. This evidence supported the inference that nightclub operators, just like the police, saw the cause of the drug use problem as related to the nature of activities at a nightclub. I am satisfied that the jury took the same, or a similar, view.

I would not regard the plaintiff’s personal anti-drug use attitude, as she and Mr Taylor described it, to be the measure of her commitment to reducing or controlling drug use in the nightclub industry as expressed to members of those forums. Had her reputation been predominately described in those terms, I consider it would have been significantly lowered by the truth of the drug activity imputations. Her reputation was described, not in terms of being an anti-drug campaigner, but as a caring person, particularly in relation to the welfare of her patrons, and the jury’s verdict that the defendant could not justify that the plaintiff jeopardised her patron’s health is affirmative in this respect. In the conduct of the venue, there was no evidence that she was in fact not a caring person, nor evidence that she encouraged or facilitated drug use. She complained that she was not supported by the police. Mostly, the police, particularly the licensing police with whom she mostly dealt, did not complain that she was uncooperative or obstructionist.

There was a particular example where Senior Sergeant Finlay alleged obstruction to his attempts to film drug dealing during a police raid of the venue. This was an isolated example and the evidence was inconclusive. It was difficult to discern precisely what occurred. Although the defendant made no specific submission about this incident in this context, I am not persuaded that the incident could support a conclusion that the plaintiff’s conduct was inconsistent with her reputation as described in evidence.

Conclusion on status of plaintiff’s reputation

The fact that drug use in and around nightclubs was not manageable, or actually managed, by either the police or nightclub management does not warrant the conclusion that the plaintiff’s professional reputation must be marked down. Transfer of responsibility for any failure in public policy, through law enforcement, regulatory control or public health management, to the plaintiff requires specific evidence warranting that conclusion.

Having carefully considered the evidence, I am persuaded to conclude that her high reputation in the nightclub industry for her integrity was founded in the matters over which she had more direct control, namely regulatory matters such as controlling the entry of minors, responsible service of alcohol, ensuring the safety of female patrons, and improving the effectiveness of control over entry of patrons. In that last respect, nightclub proprietors plainly lack the legal powers of search and seizure that police may lawfully employ meaning that, despite the plaintiff’s firm views, best endeavours in point-of-entry security will not effectively keep drugs out of a venue. I am satisfied that on careful analysis it cannot be said on the balance of probabilities that the evidence disclosed specific acts or conduct of the plaintiff in relation to the drug activity in and around the venue that significantly lowered the proper assessment of the relevant sectors of the plaintiff’s reputation.

The thrust of the defendant’s final submission was consistent with the course of its cross-examination and was that the plaintiff’s good general and professional reputation remained largely intact. The fact that the defendant contended for that conclusion is consistent with the distinction I have identified between the venue being open for business and thus operated or managed in that sense and broad public policy failings in controlling public drug use and the want of evidence that drug use was caused by the plaintiff’s particular conduct in the management of the venue. Advancing this conclusion, the defendant did not, could not, cross-examine the plaintiff to suggest that her reputation would be lowered or swamped by the drug activity imputations because they were true.

That said, I do not accept that the conclusion the defendant contended for is warranted. In the relevant sector of the plaintiff’s business reputation, I am satisfied by the evidence that the plaintiff’s good general and professional reputation was damaged by the false imputations and that this adverse impact on the plaintiff’s reputation was not overwhelmed by any lowering of her reputation by the justification of the drug activity imputations. This is not to deny that there was some negative impact on the plaintiff’s reputation because the allegations of drug activity at the venue were proved true. In the plaintiff’s business and professional circles this fact would not be surprising. Rather it was well understood and a source of their efforts to improve the management of venues. The significant damage to the plaintiff’s true reputation occurred in the sector of her integrity.

Republication of imputation 7(a)

In that sector, the most serious imputation was the first imputation that the plaintiff interfered with witnesses. As I have noted, the defendant submitted that this imputation cannot be considered as having actually damaged the plaintiff’s reputation because it was only published to Mr Buttler, who did not republish it in the Herald Sun.

To evaluate this submission, it is convenient to compare Mr Guerin’s oral statements with the publication in the Herald Sun. Mr Guerin relevantly said:

SUPERINTENDENT GUERIN: So the licensee has actually put out a message. You know, ‘Anyone’s who made a statement about this to the police, please call me. I want to talk about it.’ And – and a number of them have done that ---
MR BUTLER: Oh ---
SUPERINTENDENT GUERIN: --- and a number of them have told the police that they’ve done that and, you know, she started cross-examining them about the contents of the statements about, you know, why they’ve made a statement and ---
MR BUTLER: So they’ve seen this?
SUPERINTENDENT GUERIN: Oh, they – they’ve seen ………. is just the tip of the iceberg.
MR BUTLER: Yeah, the – and she’s gone, ‘Hey, hang on, who ---‘
SUPERINTENDENT GUERIN: Well, she – she would have – she would know.
MR BUTLER: Yeah, she’s – well, she knows what you know anyway.
SUPERINTENDENT GUERIN: That’s right.
MR BUTLER: Right.
SUPERINTENDENT GUERIN: So she’s – she’s got – she’s asking these people – well, you know, she’s started to cross-examine them about the statement. Now, I can’t say that she’s threatened them or put the frighteners on ‘em and no-one has told me that, but the fact that she’s actually reached out and, you know, got them to contact her and started talking to them is a bit – a bit of an issue of concern for us.
MR BUTLER: Is that on the record?
SUPERINTENDENT GUERIN: Yeah, yeah. I mean, witnesses make statements to the police on the understanding that their information will be dealt with in the appropriate way and the appropriate way is for us to produce the statements in a brief of evidence or in an application like this ---
MR BUTLER: Yeah.
SUPERINTENDENT GUERIN: --- present it to the relevant authority and needed to be dealt with according to the law, not for interested parties to be making calls, you know ---
MR BUTLER: Offer a drink card if they withdraw their statement.
SUPERINTENDENT GUERIN: Oh, well ---
MR BUTLER: Or is it too late to withdraw the statement?
SUPERINTENDENT GUERIN: I don’t ---
MR BUTLER: I’m not saying they’re ………
SUPERINTENDENT GUERIN: No, no, no, no. Well ----
MR BUTLER: But you don’t want interference.
SUPERINTENDENT GUERIN: To – to – to – to – you know, improper contact ……….
MR BUTLER: Yeah.
SUPERINTENDENT GUERIN: So, you know, there – there are ways that, you know, if – if people want witnesses to – you know – but she’ll have an opportunity, they’ll all have an opportunity to challenge evidence.
MR BUTLER: Mm.

The defendant disputed at trial that the words complained of carried the meaning that the plaintiff’s approach and cross-examination of witnesses, while improper and inappropriate, was done unlawfully. The jury was plainly satisfied that that imputation or a permissible variant of it was conveyed by Mr Guerin to the journalist.

The words published by the Herald Sun were more limited. The defendant drew attention to the following passage: ‘Supt Guerin said he was concerned the club had contacted some of the witnesses after receiving the police submission’. The article did not explicitly state the concept that the plaintiff’s approach to witnesses was ‘improper, inappropriate and unlawful’. Hence, the defendant’s contention that the publication of this imputation could not be more limited. The defendant contended that this imputation should be ignored in the assessment of damages because it does not and cannot arise on the republication. I am unable to accept this contention in its entirety although I accept that it has some force.

It is necessary to carefully analyse the context revealed by the publication as a whole. When that is done, the defendant’s contention loses its apparent strength. The concern being described in the Herald Sun is about the plaintiff’s contact with witnesses after receiving the police submission in the LCRA proceeding. That concern was expressed by the State’s ‘top licensing cop’ in relation to witnesses who had provided ‘damning testimony’. Further, police were conducting a ‘campaign’ to restrict Inflation’s liquor licence on the basis of the incidents described by these witnesses because ‘the public would expect police to take action’.

In a technical submission, the defendant contended that the strength of the imputation was fully or considerably diluted on republication. The defendant contended that to think otherwise was to adopt a frame of mind that was unusually suspicious, avid for scandal or naïve resulting in an unduly strained and unreasonable characterisation of Mr Guerin’s concern.

I do not agree. A reader of fair, average intelligence engages in a degree of loose thinking and can and does read between the lines in the light of their general knowledge and experience of worldly affairs. Their capacity for implication is greater than that of a lawyer. When the reader pauses, ever so briefly, to ponder on the concern being stressed by Mr Guerin, concluding that he was suggesting that the plaintiff had made improper, inappropriate and unlawful contact is not perverse, unusually suspicious or naïve. That said, I would accept that the journalist has to some extent diluted the meaning conveyed to him by Mr Guerin.

The meaning conveyed by Mr Guerin carried a sting of greater gravity than the remaining imputations. It is the most serious meaning because it involves an allegation that the plaintiff may have interfered with witnesses to the prejudice of the police application. That is what was concerning the top licensing cop because the testimony in their campaign was damning. As I have said, that is a most serious slur on a person’s integrity. Although it operates in the professional reputation sector, it also impugns the plaintiff more broadly across her general reputation. The ordinary reasonable reader of the Herald Sun can extract that same meaning from the context in which the relevant sentence appears in the article and the timing of the allegation of contact with the witnesses, as if such witnesses belonged to the police, after receipt of the police submission.

Further, once it is accepted that the imputation is carried and that its strength was not fully diluted, there is a basis on which to take account of the grapevine effect, arising from the original publication by Mr Guerin of the defamatory imputation to the journalist who did not give evidence. The law recognises that by the ordinary function of human nature, the dissemination of defamatory material was rarely confined to those to whom the matter is immediately published. Although I assess the impact of the grapevine effect to be modest, the imputation is grave. I take into account the need for the award to be sufficient to convince some bystander who became aware of that meaning of the baselessness of the charge.

Neither counsel specifically adduced evidence relevant to the impact of each several imputation on any particular sector of the plaintiff’s reputation and I must do the best that I can in evaluating that issue. Mr Horman commented on the plaintiff’s integrity which he observed to have been adversely impacted. Mr Szoeke concentrated on the plaintiff’s reputation for compliance with regulation. He considered that the plaintiff had been made to look ‘a bit dodgy’. Mr Taylor noted that the plaintiff was being accused by the police of conduct that could be criminal. Mr Zelewski regularly received questions from people in the industry involved in regulatory enforcement.

I am satisfied that the publications damaged that sector of the plaintiff’s reputation for integrity and law abiding management of her business. That damage most obviously was caused by the imputations that she breached the provisions of the Liquor Control Reform Act, jeopardised her patron’s health and managed the venue in a manner conducive to drug trafficking, drunkenness and violence. I am satisfied that, although diluted to some extent, the imputation that the plaintiff approached and cross-examined, or contacted, witnesses in a manner that caused concern to the State’s top licensing cop also inflicted damage on that sector of the plaintiff’s reputation. The expression of Mr Guerin’s concern in this respect can invite inquiry not only of him, for example by other police, regulators, or those involved with accords and forums, but also of the journalist. It supports the inference of a grapevine. While I accept in the plaintiff’s favour that it is impossible to track the possible republication of Mr Guerin’s statement, I accept the defendant’s contention that the Herald Sun did not give the statement full force and effect in a mass media circulation.

Accordingly, I do not accept the full force of the defendant’s contention that there was no republication of the first imputation.

Hurt feelings

The plaintiff gave evidence of significant hurt to her feelings that was corroborated by those who were near to her at the time. She was clearly indignant and described a sense of outrage that she felt. I accept from her description of retreating from all social contact in the aftermath of the publications that she suffered a loss of self-esteem. She also described that she felt that the police wanted to inflict the maximum hurt on her in relation to the contest over reduction in the trading hours of the nightclub. She described that she was shunned. She has been shunned in a number of ways, particularly in participation in education and training roles associated with improving standards within the nightclub industry.

The defendant suggested that it was necessary to disentangle the plaintiff’s hurt that arose from the justified imputations, the mitigated components of the non-justified imputations from any discernible hurt arising from what remains of the mitigated non‑justified imputations. Whether such a disentanglement is possible is questionable. The defendant did not attempt it in evidence but now invites the court to undertake the exercise that it was not prepared to undertake. The plaintiff was simply not asked, either by her own counsel or in cross‑examination, to evaluate her feelings in respect of each individual pleaded imputation.

Looking carefully at the plaintiff’s evidence, she described experiencing a reaction that was fundamentally based in the police unexpectedly moving the contest about the regulation of the hours of operation of the nightclub to the front page of the Herald Sun. Her sense of devastation, her sense that her reputation had been tarnished and her sense of deep shock were founded in her response to the police attempt to, as she put it, rubbish her position before the regulator.

Nothing in the evidence in respect of hurt feelings, either that given by the plaintiff or that given by her character witnesses, linked the plaintiff’s hurt feelings to any particular imputation. The defendant’s contention that the evidence did not link her hurt feelings to the unjustified imputations cannot stand scrutiny. The false imputations materially contributed to her hurt. I do not accept that the plaintiff’s hurt feelings were only linked to the drug activity imputations. When Mr Binnie explained that the plaintiff felt that she had been made out to be a bad person, a monster, somebody who doesn’t care about drugs, the plaintiff was referring to her caring attitude towards the welfare of patrons, an attitude for which she enjoyed a good reputation. This sense of hurt plainly related to the false imputations. It cannot be sectioned with the drug activity imputations. The plaintiff’s sense of caring for the welfare of patrons clearly recognised the existence of the drug problem. The plaintiff interpreted the conduct of Mr Guerin as a strategy or a tactic that generally shocked and devastated her having regard to her prior dealings with the police. The plaintiff saw Mr Guerin’s conduct as an attempt to make an example of Inflation, to transfer to the plaintiff responsibility for the impotence of the police in reducing harm and improving community safety. I am satisfied that the plaintiff suffered significant hurt to her feelings that cannot be explained away as a reaction to the drug activity imputations that were later shown to be true.

As the plaintiff submitted, the injury to her feelings caused by the defamatory publications was significant.

Aggravation

The plaintiff’s allegations by her pleading of circumstances of aggravation were limited. Mr Guerin’s conduct was improper because he disclosed or purported to disclose police information contrary to the Victoria Police Act. The plaintiff did not prove this impropriety. Mr Guerin’s unchallenged evidence was that he was exonerated.

In submissions, the plaintiff went beyond her pleadings and relied on six circumstances aggravating her hurt. The defendant did not seek to confine the plaintiff to her pleadings. It submitted that none of the six circumstances warranted aggravated damages. For reasons already stated, I do not accept the defendant’s submission that there was little in the way of hurt feelings on the part of the plaintiff open to be aggravated by the defendant’s conduct.

I am not persuaded that the fact that Mr Guerin was a very senior police officer is an aggravating circumstance. The plaintiff described her hurt feelings arising from the publication by reference to the conduct of the police in prosecuting the LCRA proceeding. It is usual for senior police to act as spokespersons for the force generally and I do not accept that the plaintiff’s hurt was aggravated by any public perception of Mr Guerin’s rank.

The plaintiff also contended that her hurt was aggravated by the defendant’s pressing at trial of unjustified defences. I reject this submission. The defendant was entitled to press the defences that it did and it did so appropriately. That some of these defences were unsuccessful did not appear to aggravate the plaintiff’s hurt. She gave no evidence in re‑examination that her hurt was aggravated by any aspect of the manner of conduct of the trial. Notwithstanding that she was not specifically questioned about that matter, it was apparent from her evidence that her feelings remained hurt by the publications which the defendant had only partly justified, but I was not persuaded that her hurt was being aggravated.

The plaintiff contended that imputations 7(a) and 7(d) were particularly egregious in the context of the application to restrict the nightclub’s trading hours. It may be accepted that the publications were unlikely to prejudice the administrative proceeding before the VCGLR panel, however, Mr Guerin’s explanations for his conduct in disseminating his views about the application were not satisfactory. He suggested he was doing no more than other agencies do when they talk to the public about what they are doing pending an outcome, drawing an analogy with ASIC, the corporate regulator. He emphasised that he was seeking to reassure the public in relation to a range of policing issues. The defendant submitted that any question of pre‑judging that application fell away as it was ultimately withdrawn.

However, the circumstances in which, or the reasons why, the application was withdrawn remain unexplained. I cannot infer simply from the chronology of events that there was any connection between Mr Guerin’s public statements and the subsequent withdrawal of the application. What is however clear is that the plaintiff, in my view reasonably, directly related Mr Guerin’s public comment on the application with the timing for the filing of her response in the LCRA proceeding and felt that the police wanted to inflict the maximum hurt on her. There was evidence of cordial relations between the plaintiff and licensing police in respect of regulatory issues, yet Mr Guerin before speaking to journalists made no attempt to be balanced in his observations by seeking her views. It is not to the point to submit, as the defendant did, that the Herald Sun sought her views and included her comments in the article. The relevant enquiry is whether any conduct for which the defendant is responsible aggravated the plaintiff’s hurt.

I am satisfied that Mr Guerin’s conduct was intended to maximise the exposure of the police argument to be put to the VCGLR panel to the plaintiff’s detriment. In that context, Mr Guerin inflicted damage on the plaintiff’s reputation through publication of the false imputations. That this occurred shortly prior to the plaintiff’s response being due to be filed and without any attempt by Mr Guerin to ascertain and represent the plaintiff’s views in response aggravated the damages. This circumstance increased the hurt experienced by the plaintiff.

That said, I am satisfied that, at least in part, this hurt experienced by the plaintiff was attributable to the drug activity imputations. For the reasons already stated, I do not accept that the plaintiff’s hurt feelings can be solely attributed to the drug activity imputations. The manner in which evidence was taken makes it difficult to be precise in evaluating the extent of aggravation. Had the defendant failed to justify the drug activity imputations, I would have considered this circumstance of aggravation to be particularly significant. Taking all relevant considerations into account, it is appropriate to make a modest allowance for aggravation of the plaintiff’s hurt feelings arising from Mr Guerin’s conduct to the extent that it relates to the false imputations.

I would add that the defendant contended that Mr Guerin did investigate the matters about which he spoke before publishing them. The defendant pointed to evidence that he looked very intently at the police file in relation to the application and gained a good appreciation of what it was about. I have no difficulty with the proposition that Mr Guerin familiarised himself with the police file, but in the context where the plaintiff was obliged to very shortly file a reply to those allegations, the gravamen of the allegation of a failure to investigate is that Mr Guerin’s enquiries were entirely one‑sided, and that was plainly the case.

The plaintiff submitted that the defendant’s failure to publish an apology aggravated her hurt. The defendant accepted that it had not apologised. It is accepted that a mere failure to apologise, without more, is not a factor ordinarily warranting an award of aggravated damages.[42] The plaintiff did not in evidence identify that her feelings of hurt were exacerbated by this failure.
[42]Carson v John Fairfax & Sons Ltd (1993) 178 CLR 44, 66.

Further, I am satisfied that the defendant behaved responsibly in relation to the defences taken in the proceeding and run at trial notwithstanding that a number of those defences were not accepted by the jury. The plaintiff drew particular attention to the defences of fair comment/honest opinion, which she characterised as hopeless and bound to fail. Again, there was no evidence from the plaintiff that her hurt feelings were exacerbated during the trial by the defendant’s conduct particularly by maintaining those defences.

For these reasons, I reject the defendant’s submission that the plaintiff’s claim for aggravated damages must fail. On the other hand, I have not been persuaded by the plaintiff that there were significant circumstances of aggravation and I propose to include only a modest allowance for aggravation in the assessment.

Conclusion

The gravity of the sting conveyed by the defamatory publication, while subject to discount to pay proper regard to the justification of the drug activity imputations, cannot be totally or substantially discounted. The true imputations concerning the drug activity relate primarily to the nature of the business operated by the plaintiff. While a person’s reputation cannot be divorced from the nature of the business that they operate, the community concerns around drug taking activities and adverse health consequences for young persons occurring in public places were not transferable to the operator of a lawful business activity, save by identification of specific conduct having that precise effect.

Properly understood, the truth of the drug activity imputations had less impact on the plaintiff’s reputation than the false imputations that went to the core of the plaintiff’s professional reputation. The most damaging aspect of the publications was not that they identified drug use issues at nightclubs but that they presented a false picture of the plaintiff’s activities in relation to the regulatory management of her venue in contrast with the reputation that she had developed in that respect. This was sufficient to inflict significant damage on the plaintiff’s reputation, properly understood. An award of damages that provides vindication for that damage to her reputation is warranted. Moreover, the defendant sought and obtained an extensive platform for the publications through mass media circulation in the Herald Sun and, to a lesser extent, through a popular radio program.

Although the most serious imputation is the first imputation in terms of its impact on the plaintiff’s integrity, the imputation was diluted from the meaning conveyed by Mr Guerin when published in the Herald Sun. However, as I have explained, there was limited publication by Mr Guerin to a journalist, who did not give evidence, and the grapevine effect must be taken into account. In my evaluation of the proper sum to be awarded, I have concluded that the seriousness of this particular imputation is tempered by the more limited extent of its publication in the form expressed by Mr Guerin and by the diluting of its sting by Mr Buttler.

I am satisfied that the plaintiff experienced significant injury to her feelings that was, in a modest way, aggravated by the defendant’s conduct. The extensive publication through the mass media was a major contributing factor to the injury to the plaintiff’s feelings.

I will award the plaintiff the sum of $90,000 for her damages, including aggravated damages.

I will hear from the parties on the question of costs.

[2019] VSC 826

18 December 2019