Serious harm threshold in defamation law still poses contention

Special Counsel Stewart O’Connell from O’Brien Criminal & Civil Solicitors is an expert in defamation law. He spoke with LSJ Online about the benefits and drawbacks of the threshold and where it has raised public or industry concerns.

Since 2022, all Australian states and territories except for Western Australia and the Northern Territory have amended their defamation laws to raise the threshold for hearing a defamation claim, and for it to succeed. Following the amendments, the claimant must establish that the publication of the defamatory material has caused, or is likely to cause, serious harm to their reputation.

Under section 10A of the Defamation Act 2005 (NSW) (the Act), a plaintiff must establish that the harm is “serious”. The “serious harm” requirement was introduced through the Defamation Amendment Act 2020 (NSW). The rise of social media, and particularly Google and Facebook reviews of small businesses led to an increase in cases, exemplified by Scott v Bodley [2022] NSWDC 459, in which a small painting business claimed a one-star Facebook/Google review had caused significant business loss. The case did not meet the serious harm threshold, based upon inconsistencies between painter Scott’s claims of earnings and business loss and his actual finances (indicating he was doing well), and the court found that it was highly likely that in the two weeks the review was publicly on view, few people had read it, let alone responded.

The Act does not define “serious harm”, and it is left up to the courts to determine whether it exists, and to set precedent on what constitutes “serious harm” to reputation.

The first case to determine what does and does not meet the threshold was Rader v Haines [2022] NSWCA 198, in which the NSW Court of Appeal found that the actual impact of the publication – an email to the plaintiff’s parents – outweighed the gravity of the claims made in the publication. In that case, there was limited and short-term impact, however serious the allegations made in the email (stalking).

In an additional amendment to the Act, a plaintiff cannot proceed with a defamation case unless they have issued a “concerns notice” to the defendant that is compliant with sections 12A and 12B of the Act. The concerns notice must:

(a) be in writing;

(b) state the defamatory imputations conveyed by the publication in question;

(c) if practicable, enclose a copy of the relevant publication; and

(d) particularise the “serious harm” which the plaintiff claims to have suffered.

In Zimmerman v Perkiss [2022] NSWDC 448, the District Court of New South Wales clarified that a concerns notice is defective if it fails to make clear the “serious harm” which the plaintiff has suffered under a heading styled “Particulars of serious harm.”

The view from a defamation lawyer

Stewart O’Connell says the response to the initial bill introducing the serious harm threshold was mixed. “It was certainly welcomed by members of the profession who predominantly represent defendants, but for the plaintiff lawyers – I wouldn’t say it was unwelcome – but there was certainly some trepidation as to what it all held once in practice.” He is frank in admitting that he didn’t like it. “I didn’t think there was anything wrong with the system that was in place, where common law damage was presumed to have been caused by a defamatory remark. It was being dealt with by the courts in terms of the quantum of damages. If something wasn’t that serious, then you would risk getting minimal damages if you took the case through.”

However, O’Connell does acknowledge that the threshold has had the impact it was designed to have, making sure that trivial cases don’t make it to court. “What it has done, for the positive, is sharpen everyone’s mind as to what is a worthy case to use great resources to run versus what isn’t.”

In late 2019, former Victorian Bar President Dr Matt Collins, in his address to the National Press Club revealed that his own audit indicated that on a per capita basis, New South Wales had 10 times the defamation cases heard by superior courts than cases heard in London once reputed to be the libel capital of the world. By 2023, the Federal Court’s 67 defamation matters lodged in 2020 had fallen to to 33.

In a story for the ABC, journalist Annabel Crabb wrote: “Comprehensive statistics on defamation cases are extremely difficult to obtain. They’re shifty. Hard to chart. Some parties issue a concerns notice (the first formal step in the process) and — after a period of intense haggling via lawyers — get what they’re looking for; an apology, or a correction. Or some money to go away. That’s the end of it. It’s settled. Nothing is recorded in the court system.” Additionally, Crabb noted that defamation cases can go on for years and years where decisions are appealed and reversed.

When the serious harm threshold amendment was proposed in draft reform provisions for public consultation in November 2019, then NSW Attorney General Mark Speakman said: “Social media platforms have enabled an explosion in defamation cases, many of them ‘backyard’ actions based on trivial comments … NSW courts are overrun with minor claims, so much so that Sydney is now regarded as the defamation capital in the world. I want NSW to lead Australia’s legal system by many measures. This isn’t one of them. We’ve consulted, we’ve crafted, and we’ve captured a fine balance.”

Early discussion about threshold

O’Connell, like so many defamation lawyers, has had clients approach him with a concern that he doesn’t feel meets this threshold. The result is that, from early in the enquiry, there’s a discussion with the client over whether serious harm requirements can be met.

“What’s clear from law in Australia, and cases to date, is that you have to show causation, and demonstrate that the damage to reputation was caused by the actual defamation. You need to have a strategy with the client right from the beginning. Some people come in and they can’t prove causation, and we have to tell them that their chances are quite low in relation to serious harm.” He adds, “Our job is to advise our clients, they don’t have to accept that advice.”

The relatively new amendment means that, especially in some situations, there remains some ambiguity about whether serious harm can be established. O’Connell explains it this way. “It’s very difficult to find direct evidence of the causation. What the serious harm element is asking you to do is to say [to the plaintiff], ‘You say that your reputation has been damaged in that you know people are not talking to you, or people are saying bad things about you. Are they not talking to you? And are they saying bad things about you because of the defamation?”

He says the only way to prove that directly is to ask these people why they’re no longer talking to the plaintiff or saying bad things about them. “Most people aren’t going to say, ‘I’m not talking to him because of what was said in that article’. So, it is quite difficult to find that evidence. You do rely a lot on inferences, and traditionally, the strongest cases are the ones where the defamation is made by the mass media.”

That’s because mass media is an established, credible source, so people are going to believe what it says. Additionally, it has a very wide audience. “If you add to that a very grave imputation, you’re a long way down the road to establishing serious harm,” says O’Connell. “Where it becomes really tricky is when you’re dealing with the social media publication. It is difficult to find some evidence, but we can find it.”

He explains that there are a lot of cases where something might be said about a business, or a bad review might be given to a business, and the business might receive an email from a client saying, “I don’t want to work with you anymore because of what the review said.”

“If you get an email like that, that’s excellent evidence of serious harm.”

O’Connell says there is also ambiguity around when a case involving serious harm gets heard. “There seems to be a bit of uncertainty as to whether it should be heard on an interlocutory basis before the trial, or whether it should be heard as part of the trial. I can see arguments for both sides. The argument for the interlocutory is that it’s an easier way to get a matter struck out on that particular issue. But, because so many of the broader issues in the trial are sort of tied into that as well, it also makes sense just to have the one hearing.”

O’Connell is circumspect on the nature of humans and defamation. “The natural human response when someone writes something nasty about you on social media is to feel outraged, to feel attacked, but then you have to pause and say, ‘has this changed the trajectory of my life?” After all, there are a lot of one-star reviews and for the most part, businesses absorb them and carry on.

“Sometimes it can actually be devastating,” says O’Connell. “So, the legislation has done its job in terms of filtering out those ones where the business has recovered and there’s no need to go to court, versus those that haven’t recovered.”

He says that his firm still gets the same number of enquiries, but once given advice, a lot of matters might not continue. “I’ve always been cautious, because any civil litigation is unpredictable and defamation is particularly unpredictable. The costs are very high and they add up if you lose. I’ve been extra cautious since the serious harm threshold was introduced.”

The alternative, he says, it to send a cease and desist for those clients who don’t meet the serious harm threshold in terms of evidence of causation. “There are other things you can try to do to bring an end to the matter without having to go to court. The reality is, even with defamation cases where there’s a strong case for serious harm, the vast majority do settle because both sides rack up significant costs and don’t want to continue doing so if they can avoid it.”