The defamation capital of the world

Australians are taking more defamation actions, the damages are increasing and the price of defamation insurance is rising as a result, lawyers and insurance brokers say.

The huge payout won by actor Rebel Wilson against Bauer Media in 2017 — A$650,000 for non-economic loss and A$4 million for economic loss — put Australia’s media outlets on notice. (Ultimately, the Victorian Court of Appeal cut the non-economic loss to A$600,000 and the economic loss to zero.)

Last year’s win by Geoffrey Rush, at first instance, against The Daily Telegraph — A$850,000 for non-economic loss and almost A$2 million for economic loss — was another prominent case involving a high-profile litigant.

At the same time, social media and the internet have ‘spawned a whole new industry of defamation’, says Barrie Goldsmith, principal of Australian Defamation Lawyers.

‘By far, most defamation cases now involve what we describe as ordinary people,’ he says.

In particular, Goldsmith says disputes between members of an apartment block’s strata committee and tenants are a breeding ground for defamation actions, because they are such fertile grounds for disputes. Office Christmas parties tend to spawn actions when, emboldened by alcohol, workers let fly with what they think of their bosses or their colleagues.

The internet has also given rise to self-represented litigants, who research their cases online. Even if they are unsuccessful, these actions can still cost a lot to defend.

THE RISE OF PRIVATE DEFAMATION PLAINTIFFS

According to Trends in Digital Defamation: Defendants, Plaintiffs, Platforms, a study by the University of Technology Sydney’s Centre for Media Transition, it is becoming more common for private individuals to be the plaintiffs in defamation actions.

‘Our findings contradict common assumptions about public figures being the main users of defamation laws,’ the study states.

In the period 2013 to 2017, only 21 per cent of the plaintiffs in defamation judgements in Australia could be considered public figures and only 25.9 per cent of the defendant ‘publishers’ were media companies.

In last year’s case of Raynor v Murray, the District Court of New South Wales ordered Patricia Murray, a tenant of the ‘Watermark’ in Sydney’s Manly, to pay damages of A$120,000 to the chairman of the building’s strata committee for a defamatory email regarding an unlocked mailbox.

The email, sent to 16 residents of the block, appeared to suggest that the plaintiff unreasonably harassed Murray, sent threatening emails and was a small-minded busybody.

(The District Court’s judgement was later overturned by a Court of Appeal.)

Australians threaten to sue and actually sue for defamation more than any other nationality, notes David Rolph, a Professor of Law at the University of Sydney and a leading academic on Australia’s defamation law.

‘It’s probably also true to say that it’s easier and more plaintiff-friendly to sue in Australia,’ he says, adding that law reforms planned for mid-2020 might change that’.

Tim Castle, a commercial litigation partner at law firm Sparke Helmore, says several prominent defamation actions have been prompted by the #MeToo movement. Many of these concern celebrities accused of inappropriate or illegal sexual behaviour who sue publishers who report the accusations.

In December 2019, for example, The Daily Telegraph issued a public apology to actor John Jarratt as part of its settlement of his defamation case against the newspaper. Other details of the settlement are confidential.

DEFAMATION INSURANCE HARDER TO OBTAIN

All of this is flowing through to the insurance market.

Robert Cooper, a director of Brisbane broker Cooper Professional Risks, says defamation insurance is ‘a lot tougher to obtain’.

This applies particularly to freelance authors of unauthorised biographies, where the writer reveals something about the subject that they don’t want revealed. Often these revelations rely on anonymous sources who will not put their names to a defamation defence.

‘It’s extremely hard to get cover on an author [who is] a freelance author. It’s probably not so bad if they’re part of a publishing house,’ he says.

Insurers are asking more questions of freelance authors or journalists before they agree to provide cover, if they do at all, says Cooper. They want a legal sign-off on the material.

‘Because the premiums are so expensive for freelance journalists, the organisations they provide work for have no choice but to agree to indemnify them contractually. Therefore, they also can become a party to them,’ he says. ‘They will take responsibility on for defending the journalist and their own publishing house. You would hope they can manage the risk more effectively.’

Cooper points to a client who recently asked for a quote. ‘He wanted to write his autobiography and he’s a barrister,’ he says. ‘The insurers were concerned that he would breach client confidentiality, therefore I couldn’t get cover for him in any way.’

Adding to the difficulty of obtaining insurance is the fact that even if defendants successfully defend an action, they can still face a large legal bill.

Cooper says the price of defamation insurance is rising, but it’s hard to put a specific figure on it. How much the premiums are rising depends on factors such as whether the insured has pre-existing cover; their long-term relationship with the insurer; their claims history; their risk management processes; staff training; and so on.

For existing clients who tick these boxes, premiums are only going to rise by ‘a minimal amount’, he says.

‘But if you have never taken out a cover before, you’re an unknown quality. So perhaps you’re a former journalist but have now decided to write the unauthorised biography of Pauline Hanson or someone, then that would be considered fairly high risk.’

Defamation cover is generally not a ‘standalone’ product for other professional occupations and is usually included in policies such as professional indemnity or management liability.

Cooper says there are specific multimedia policies that cover social media, websites and so on, but he adds: ‘When I sit down and compare a multimedia liability policy with an ordinary professional indemnity policy, there are not a lot of differences.

‘It is just that occupation will have more risk in the area of defamation and infringement of intellectual property.’

However, even these specialist insurers are particular about the type of insured they are prepared to accept.

James Fletcher, a director of Sydney-based brokerage Malton Road Advisory, says many insurers are excluding this cover from their management policies.

‘We do see some insurers actively trying to exclude libel, defamation and slander from D&O policies, which tells me that they see an exposure there for them,’ he says.

Insurer IAG says defamation claims constitute only a small proportion of its total business claims.

‘We haven’t seen any significant changes in insurance claims relating to defamation,’ the company says in a statement.

IAG covers defamation under professional indemnity insurance, including policies from CGU and NRMA.

Organisations and businesses in the media, marketing and advertising industries may also consider a multimedia liability policy, which provides cover specific for these industries, says IAG.

Libel and slander are covered under public liability insurance products, usually as part of the standard advertising liability that is included in these types of policies.

COULD DEFAMATION LAW REFORM END TRIVIAL CLAIMS?

A plan by federal and state attorneys-general to revamp Australia’s defamation laws could put an end to many of the more trivial defamation claims.

The proposed reforms will affect both traditional and online publishers, as well as social media giants such as Facebook and Twitter, with the first tranche of amendments expected to be carried out in mid-2020.

Among the possible changes is the introduction of a ‘serious harm’ threshold, which would require potential litigants to demonstrate the publication has, or is likely to have, caused serious harm to their reputation.

The proposed amendment follows a similar provision introduced in England and Wales in 2013. ‘The introduction of that in somewhere like Australia should have the effect of discouraging trivial clients at the outset,’ says the University of Sydney’s Professor David Rolph.

‘All you have to prove until now is that there was something defamatory [said] about you, which may or may not be something that could be the subject of evidence, that you’ve been identified and that it’s been communicated to at least one person, rather than you. That’s not a lot to prove.’

While Rolph expects the number of claims to fall, he cautions that the reforms are likely to be tested in the courts, so they might operate differently in practice.