Winners aren’t necessarily grinners in Defamation

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Claimants may want to think twice before embarking on a defamation claim in light of the recent Joe Hockey v Fairfax Media decision in the Federal Court in July of this year.

The case

Mr Hockey commenced a lawsuit for defamation claiming reputational damage in the Federal Court against Fairfax Media, after the publishing company featured the headline “Treasurer for sale” in The Sydney Morning Herald and The Age last year.

The decision

Whilst Mr Hockey was successful in establishing that the phrase “treasurer for sale” was defamatory and was awarded $200,000 in damages, the Treasurer didn’t come out on top in legal costs. As Mr Hockey was only partially successful in proving his claim, with his other asserted grounds dismissed, it was ordered that only 15% of his costs be recoverable from Fairfax.

Given that the combined legal fees for the two parties is estimated to be around the $1 million mark, Mr Hockey’s financial loss is significant. Whilst Mr Hockey has no regrets over pursuing the claim against Fairfax, the risk of losing out financially even when partially successful indicates that defamation may not be worth the trouble for many.

Damages and defamation

As a general rule, where a party is successful or partially successful in commercial litigation, costs will usually be awarded.

In his judgment, Justice White explained that had Mr Hockey’s claim been limited to the two media outlets that had published the defamatory statement, rather than Fairfax Media as a whole, the time and costs of the proceeding would have been significantly more confined, and a trial potentially avoided.

A number of factors may be attributed to the ordering of partial damages in defamation as opposed to other commercial matters. In particular, the highly technical nature of a defamation claim may cause legal fees to inflate significantly. For this reason, limiting a plaintiff’s costs to reflect the relative success of their claim evinces an intention on the part of the Court to control costs and deter unnecessary actions.

What does this mean for you?

Despite being successful in defamation, it doesn’t necessarily follow that a claimant is entitled to recover all of their legal costs. The high costs and risks associated with a defamation claim mean that in reality it is an inaccessible cause of action for many. Claimants should think long and hard before pursuing an action in defamation, as even if they are successful, they may lose out financially.

Sources:

Hockey v Fairfax Media Publications Pty Limited [2015] FCA 652

Hockey v Fairfax Media Publications Pty Limited (No 2)[2015] FCA 750

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