Triviality vs serious harm: two very different approaches to skinning the defamation cat

The 2021 amendments to the Uniform Defamation Acts repealed the triviality defence and now require plaintiffs seeking a remedy for a potentially defamatory article to demonstrate that their reputation has suffered "serious harm".

A recent Federal Court decision reviews reputational harm in the context of a triviality defence claim, but claimants and publishers alike should remain alert as the need to address serious reputational harm (or serious financial harm for excluded corporations) is looming for future cases.

In Sarina v O'Shannassy [2021] FCA 1649, the Federal Court reiterated the prospective nature of the triviality defence. This will be contrasted below with the approach that will need to be taken with post 30 June 2021 publications.

Business partners start talking

Messrs Clinton Sarina, Martin Green, Andrew George, Bryan Coleman, and John O'Shannassy were each business partners in "Fleur de Vie Beverages Pty Limited".

On 17 November 2017 Mr O’Shannassy (who was a solicitor) sent to Mr George an email stating he “will be resigning as company secretary”. Mr O’Shannassy also said the “reasons for this you will be interested in knowing. Please ring me to discuss”. According to Mr George, “[o]n receiving this email” he telephoned Mr O’Shannassy and asked what had happened. Mr George claimed that Mr O'Shannassy said that

"You should do your research into Clinton Sarina and Martin Green. Sarina is not someone to be trusted and he deals with underworld figures such as McGurk and is a dangerous individual. He is involved in fraud. Green is not credible and not of good character, he is also involved in fraud. Green has engaged in criminal activity and has been struck off as a solicitor in New South Wales".

Mr George said that he felt deeply concerned by Mr O’Shannassy’s comments, and called Mr Coleman to talk about them, and the risks for Fleur de Vie’s business, especially in obtaining finance, if he and Mr Coleman were to go into business with Mr Green and Mr Sarina if they were as disreputable as Mr O’Shannassy described.

On 20 December 2017, Mr O'Shannassy sent an email to Mr George and Mr Coleman, warning them of the "nefarious nature of Martin Green and Clinton Sarina". Mr O'Shannassy advised that he had heard rumours both Mr Green and Mr Sarina were being investigated for fraud related matters, that they were both in serious trouble, and that they should be "very careful in any dealings with these rogues". In addition to the conversation alleged on 17 November 2017, the 20 December email informed Mr George and Mr Coleman that:

• Mr Green was allegedly under investigation by the Legal Services Commissioner
• Mr Sarina had a court proceeding against him in the Supreme Court for “what I am told, fraud again” and referred to a criminal matter in which one party went to jail for six years; and
• the judge had said that, if Mr Green had given evidence, he would have gone to jail as well.

He then invited Mr George and Mr Coleman to read the judgment which he linked to the email.

Defamation proceedings were brought against Mr O'Shannassy by Mr Sarina and Mr Green. At first instance, Mr O'Shannassy successfully argued a triviality defence under (the now repealed) s 33 of the Defamation Act 2005 (NSW), which stated:

"It is a defence to the publication of defamatory matter if the defendant proves that the circumstances of publication were such that the plaintiff was unlikely to sustain any harm."

The trial judge determined, following a five-day trial and extensive cross-examination of witnesses, that Mr George and Mr Coleman had both forged strong personal relationships with each of Mr Sarina and Mr Green, and subsequent email exchanges between the directors demonstrated that Mr Sarina and Mr Green, as a matter of fact, did not suffer any actual harm.

On appeal, Justice Rares found that the trial judge had illogically rejected unchallenged evidence, made findings that were glaringly improbable and took a more favourable view as to the application of the triviality defence principle to the appellants than appeared open on the authorities. In doing so, he made two noteworthy observations.

First, despite the words "any harm" appearing in the section, the Federal Court confirmed that this assessment is limited to reputational harm only. It does not extend to harm to injury to feelings. Although a plaintiff may suffer emotional harm as a result of a defamatory publication, this is not a relevant consideration for assessing whether the plaintiff's reputation has been harmed. The circumstances must therefore be examined objectively; other cases identify that the subjective views of a recipient of a publication will be irrelevant.

Secondly, the Court noted the prospective nature of how triviality operated under the Act. The trial judge had given weight to the subsequent email exchanges between the directors, following Mr O'Shannassy's publication, which Justice Rares found reflected their ongoing confidence in Mr Sarina and Mr Green, evidencing the lack of harm caused to their reputations. But this exercise demonstrated that the trial judge was "reasoning back", to assess what harm was actually done. This was not the correct question: the triviality defence is prospective and focuses solely on the circumstances of the publication. In doing so, the Federal Court took the same approach as the New South Wales Court of Appeal in Morosi v Mirror Newspapers Limited, which noted that section 33 of the Act "looks to those circumstances as at the time of publication, and requires the tribunal of fact, being aware of those circumstances, to consider… the likelihood of harm ensuing, and not whether harm did actually ensue".

Relevant factors to consider include:

• the content of the publication;
• the extent of the publication; and
• the nature of the recipients and their relationship with the plaintiff. This may include the recipients' knowledge of the plaintiff's reputation.

On appeal, the Federal Court noted that the email was sent by a solicitor (Mr O'Shannassy), to two other directors of a company who shared a mutual interest in being cognisant of the management of the company. The email was seemingly "calculated to cause harm", and concerned extremely serious allegations (fraud). They were intended to warn the recipients not to deal with Mr Sarina or Mr Green. Justice Rares considered that:

"An email from a solicitor, such as Mr O’Shannassy, warning Mr Coleman and Mr George about the nefarious character of each of the appellants with links to substantiating material was likely to cause them harm…"

The fact that no actual harm was demonstrated was not relevant: the test for triviality was whether the circumstances of the publication were such that they were unlikely to cause harm. In the circumstances, the Court considered that this threshold was not met, and the matter was remitted for a hearing on damages (as that was the only relief the appellants had sought).

The proceeding was a catastrophe for all parties. It originally involved a challenge to the jurisdiction of the Federal Circuit Court which was abandoned on the appeal. Nonetheless, the jurisdiction question involved a day of hearing before the trial judge and a separate costs order. The trial itself took five days. No doubt a costly exercise and any new trial, even on the hearing of damages will exacerbate the costs, where damages are unlikely to be very large because the publication of the defamation of each appellant was only to two other persons, or possibly three and there was no suggestion of any economic loss.

That said, on the material before him, Justice Rares did not consider that the case would be one resulting in only nominal damages. "Mr O’Shannassy set out, but failed at the trial, to justify very serious imputations including that each of the appellants was a fraud, a fraudulent businessman and a close confidant of a standover man".

Serious harm and triviality distinguished

The decision in O'Shannassy is a reminder of the prospective, not retrospective, operation of the triviality defence which looks to the circumstances of the publication itself, in contrast to ascertaining whether a publication actually caused reputational damage. In practice, this has ordinarily been a difficult, although not impossible, defence to prove.

The 2021 revisions to the Uniform Defamation Acts remove the triviality defence and instead impose an onus on the plaintiff to establish that the relevant publication "has caused, or is likely to cause, serious harm" to their reputation.. The new s.10A expressly stipulates that the harm must be caused "to the reputation of the person", confirming that only reputational harm, and not hurt feelings, must be considered when determining whether harm has been caused. This involves a retrospective assessment.

The fact that serious harm involves a preliminary threshold issue is reinforced by the requirement that a Concerns Notice must inform the publisher of the particular harm that the person considers to be the serious harm to their reputation, that was caused or likely to be caused by the publication. (In contrast, where the plaintiff is an 'Excluded Corporation', it must identify the serious financial loss allegedly occasioned by the publication).

If a plaintiff is unable to prove the serious harm threshold, their claim will fail. This may result in preliminary applications where the contest over serious harm is raised as a dismissal issue.

Predicting "serious harm" in application

The application of the new "serious harm" element appears not to have yet been determined by a superior court in Australia. The section is, however, modelled on a similar provision from the United Kingdom: section 1 of the Defamation Act 2013 which, while not identical, materially provides:

A statement is not defamatory unless its publication has caused or is likely to cause serious harm to the reputation of the claimant

The issue of what amounted to serious harm has been defined by the United Kingdom Supreme Court in the case of Lachaux v Independent Print Ltd [2019] 3 WLR 18. Lord Sumption noted that while the common law presumption as to damage remains, there is no presumption that it is “serious”. Claimants will therefore need to establish that serious harm has been caused or is likely to be caused as a fact. Lord Sumption explained the significant change this made to UK defamation law as follows:

“[14] Secondly, s 1 necessarily means that a statement which would previously have been regarded as defamatory, because of its inherent tendency to cause some harm to reputation, is not to be so regarded unless it “has caused or is likely to cause” harm which is “serious”. The reference to a situation where the statement “has caused” serious harm is to the consequences of the publication, and not the publication itself. It points to some historic harm, which is shown to have actually occurred. This is a proposition of fact which can be established only by reference to the impact which the statement is shown actually to have had. It depends on a combination of the inherent tendency of the words and their actual impact on those to whom they were communicated. The same must be true of the reference to harm which is “likely” to be caused.”

Accordingly, for harm to be serious, published material must carry more than a ‘tendency’ to harm a plaintiff’s reputation. The plaintiff must prove that serious harm has been caused, or is likely to be caused to their reputation ‘as a fact on the balance of probabilities’. This will require evidence of a factual nature, but some evidence will undoubtedly be inferential in nature. (For example, in Lachaux, one of the issues relevant to serious harm was that there could be persons who read the matter complained of in the future who did not yet know the plaintiff).

Findings of serious harm will therefore be "based on the circumstances and extent of publication, whether the publication was likely to have come to the attention of others at the time or in the future and the gravity of the imputations. The meaning of the words, the situation of the plaintiff, the circumstances of publication and the inherent probabilities are also relevant", per Judge Gibson in Rader v Haines [2021] NSWDC 610, (applying the UK law to the case, and where her Honour found that the plaintiff failed to discharge the onus of proof of demonstrating serious harm).

One other question that arises is at what time the harm is assessed (in terms of whether one looks backwards to the harm that has been caused or forwards to whether substantial harm is likely to be caused. In what was the first case on s.1 of the UK Act (Cooke & Anor v MGN Ltd & Anor [2014] EWHC 2831 (QB), Bean J concluded that the relevant time for this assessment to occur was the point at which the claim was issued. However, the potential for harm to arise in the future, and not merely at the time of publication was recognised by Lord Sumption in Lachaux when he observed that "The provision extends to situations where publication is likely to cause serious harm in order to cover situations where the harm has not yet occurred at the time the action for defamation is commenced".

In Rader v Haines Judge Gibson noted that:

"[130] Implicit in all of the above is that the harm that is caused is in some way measurable at one or more of these times, as opposed to being solely at the time of publication. Where there is no such evidence at the time of commencement of proceedings, or at trial, or in the future, and the harm is one which readily dissipated after a short period of time, such harm arguably cannot be said to be serious.

[131] In those circumstances, it may be that the best approach to take to the timing of the serious harm is to pursue the trajectory of the harm from the first evidence of it until its end, and to consider that in the context of the harm still extant both at the time of commencement of proceedings and at trial, with some recognition for the potential for harm in the future".

Future defamation claims which fall under the reformed Uniform Defamation Acts will need to address this serious harm element. It is an issue that could cause a stumbling block to plaintiffs who fail to pay adequate attention at the outset when preparing their Concerns Notice to the particular evidence required to establish resultant harm from the publication in question.

The serious harm test is a matter that plaintiffs and publishers alike must keep a keen eye on as this area of law develops.