Justin Quill writes in The Australian – Rebel Wilson case has downside for plaintiffs

Source: The Australian

Author: Justin Quill

In a week when sweeping changes to media ownership laws passed parliament, it is significant that the biggest news in media law was a defamation case result.

The Rebel Wilson case set a record in damages. Yes records are made to be broken; that is so in every endeavour in life, and the law is no different.

But the Wilson damages award didn’t just break the record, it smashed it. The actor was awarded $4,567,472. The previous highest sum, awarded against the ABC to Ron Clarke in 2001, was just short of $1,100,000. That was divided between Clarke, who received $710,000, and his company, which received $386,000.

The ABC appealed the Clarke decision and it ultimately settled for just over half that sum. The Clarke award was made at a time when juries decided damages — and there was no cap on damages like there is now (the current cap stands at $389,500). That law changed in 2006 so Wilson’s award was decided by Justice John Dixon.

The Wilson decision is not just remarkable for the extent of the increase from the previous highest award, but also for the way the decision disregarded the damages cap. The $4.5 million is broken up in $650,000 in general damages and more than $3.9m in lost opportunity. That means the award of $650,000 in general damages is about $260,000 more than the $389,500 damages cap. This cap is now more of a Clayton’s cap — the cap you have when you’re not having a cap.

The sums for interest and costs are still to be decided. But the interest could be as much as $500,000 and the costs are likely to be about $3m for both parties, which the publisher, Bauer Media, is likely to have to pay. Ultimately the case will cost Bauer about $8m.

So how did His Honour award damages higher than the cap? Justice Dixon found that the cap (or statutory maximum) did not apply in cases where aggravated damages are awarded.

Until now, defamation practitioners have always understood the cap to limit general non-economic damages. However, it was always open to the court to give an award of aggravated damages over and above the cap. If a person was gravely defamed, a court might consider they were entitled to an award of $800,000 plus aggravated damages of $100,000. But by operation of the statutory cap, they would receive $389,500 plus $100,000. Aggravated damages were added to the capped amount — but didn’t impact on the cap itself.

This judgment dramatically changes that position. I expect an appeal — but the case will probably settle before any result.

The damages cap aside, I suspect the biggest change as a result of this will be its impact on the psychology of the players in defamation cases — that includes the plaintiff, the plaintiff’s lawyers and the media organisations.

Some plaintiff lawyers will use this massive damages award as ammunition to pump up clients who might otherwise be risk-averse. Now, they will claim, the potential reward is far higher for the same risk (costs will not increase). Plaintiffs might well now take matters to trial. As for media organisations, there’s a chance some will be so concerned about big payouts it will change the way they handle complaints.

But if plaintiffs think this case is a big windfall, they need to think again. Wilson was in an unusual situation: she could afford to risk paying the costs, and the value of her Hollywood contracts meant her “lost opportunity” award of $3.9m was a lot more than the average person. The upside for Wilson was far more than for the average person. And then there’s the downside. If the jury had come down the other way — which could very easily have happened — Rebel would not have received her $4.5m and would be left with a $3m bill for costs.

It’s easy for plaintiff lawyers to focus on the upside, but this could lead to an increase in plaintiffs losing their houses because of the downside.