Case Law, Australia, Papaconstuntinos v Holmes a Court, Qualified privilege, Holmes a Court wins in High Court – Justin Castelan

22 12 2012

papa1Given that this year AFL Football and cricket have graced the Australian courts with fantastic defamation cases about talk shows, lurid affairs and sordid match-fixing claims, it seems only natural that Rugby League would eventually be selected as well.  And so it was. The High Court gave leave to appeal (still not sure why) and heard the appeal relating to the financially struggling South Sydney Rabbitohs and the feuding enemies who jousted for positions on the Club’s Board in March 2006 ([2012] HCA 53). In the one corner was the plaintiff, Tony Papaconstuntinos, or Mr Papa for short, who was a director of the Club and also employed by the Construction, Forestry, Mining and Energy Union (“CFMEU”).

In the other corner was the defendant, Peter Holmes a Court, a rich businessman and Russell Crowe, who hasn’t yet hosted the Academy Awards, but has managed to win one or two along the way. They had a $3 million proposal to help the Club out of its financial woes and in exchange would take a controlling interest in the Board’s management. Mr Papa was firmly opposed to it.

An Extraordinary General Meeting was set down for 19 March 2006 to vote on the proposal. Two days before that, Holmes a Court wrote a letter to the State Secretary of the CFMEU. Holmes a Court complained to him that:

  • Mr Papa, as an official of the CFMEU, had contacted members of the club “to repeat misleading information about the members of the Club”.
  • If there was a change of management in the Club, then there would be disclosure of certain dealings between the Club and Mr Papa’s son, Jamie, who was employed as an assistant coach and paid $60,000, when the usual rate for someone in such a position was $4,000;
  • The question was then raised as to whether Jamie’s payment was a premium “as a reward for other activities, or a method of channeling funds to the CFMEU”; and
  • Holmes a Court had also been told that the payments were to be met by sponsors of the club and they were construction companies.

The matter originally came before Her Honour Justice McCallum for trial in the NSW Supreme Court in 2009 ([2009] NSWSC 903).  Her Honour found that the sponsors might have had a motive for keeping the CFMEU happy and that the facts were “inherently suspicious”. In any event, Her Honour concluded that the letter conveyed the following 3 imputations:

  1. Mr Papa, a board member of the club, repeated information he knew to be misleading about Mr Holmes a Court’s proposal to take a controlling interest in the club;
  2. Mr Papa was reasonably suspected of corruptly arranging for funds meant for the club to be channeled to himself; and
  3. Mr Papa was reasonably suspected by Mr Holmes a Court of corruptly channeling overpayments by the club to the CFMEU.

Holmes a Court only pleaded common law qualified privilege, on the basis that he had an interest in publishing the letter to the CFMEU and they had a corresponding interest in receiving the information. The trial judge concluded that there was no “pressing need” for Holmes a Court to write the letter and volunteer defamatory information about events surrounding Mr Papa’s son and his employment several years earlier. Mr Papa was awarded $25,000 in damages.

Holmes a Court appealed to the NSW Court of Appeal, who concluded that the letter was protected by qualified privilege and set aside the verdict ([2011] NSWCA 59). Mr Papa appealed to the High Court.

The question was really this. Can a defendant claim qualified privilege, when there is no “pressing need” to publish the matter complained of and it concerns the protection of that person’s self-interest? The only interest that Holmes a Court could point to was a private interest, that is, he wanted to get his proposal up. Also, the information in the letter was not requested by the CFMEU.

Counsel for Mr Papa argued that the reciprocity of interest qualified privilege defence should only be available if the publisher satisfied a test of “reasonable necessity” to publish, and that should be wound in with there having to be a “pressing need” to publish.

But the High Court said no. There is no such principle in the law and the qualified privilege defence therefore stood. Four judges concluded that just because the letter was voluntary did not mean that it necessarily could not be covered by qualified privilege. It was so covered here.

In dissent, Justice Heydon spoke of “this lamentable litigation” and gave a  concise summary of defamation law as we know it [53]:

Modern defamation statutes typically include a provision capping damages for non-economic loss, a provision making malice irrelevant to damages and a provision preventing the grant of exemplary and punitive damages. They also provide for many defences. Cui bono? Whom does the modern law of defamation assist? Not people in the position of the appellant in this appeal – the plaintiff at trial. It is rarely commercially wise for a poor plaintiff to sue a rich defendant over defamatory material published to a small number of people only. That is so even if, as here, the defamatory material alleges deceit and corruption, the defendant admits that the defamatory material is untrue, and the defendant makes no attempt to establish that the publication was reasonable. The appellant has lost this appeal and lost the case. But even if he had won the case, it is highly questionable whether he would have been financially better off than if he had never sued at all.”

Certainly a warning to potential plaintiffs and a sobering thought to all who practice in the area. Nevertheless, at the end of the day, it was still the High Court who granted special leave to address this qualified privilege point in the first place, so His Honour can probably expect that there will be more to come.

This post originally appeared on the Defamation Watch blog and is reproduced with permission and thanks

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