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Explainer: the result of the Palmer v McGowan defamation dispute

On 2 August, the defamation dispute between Clive Palmer and Premier Mark McGowan concluded, as Justice Lee of the Federal Court of Australia delivered his judgment.

Palmer said McGowan defamed him; McGowan said Palmer defamed him. Both were right. Both failed in their defences, and so both are liable to pay the other damages. Palmer has to pay $20,000, while McGowan has to pay $5,000; a net win for McGowan.

This article explains why the Court decided as it did.

Background: Palmer’s company, Mineralogy, and its interests in WA

Important context for this defamation dispute is in Palmer’s ongoing run-ins with the Government of Western Australia, which has been led by McGowan since 2017.

Palmer controls and beneficially owns Mineralogy Pty Ltd (Mineralogy), a company which holds a number of mining leases in Western Australia. Years ago, Mineralogy and other parties entered into a State Agreement with the Government of Western Australia, ratified by the Iron Ore Processing (Mineralogy Pty Ltd) Agreement Act 2002 (WA), to facilitate the development of mining projects in the State by Mineralogy.

Fast-forward to 2012, and a Minister of Colin Barnett’s Government refused to consider a proposal by Mineralogy, giving rise to a dispute between Mineralogy and the State of Western Australia via the Minister. That dispute went to arbitration, leading to awards in Mineralogy’s favour that determined, among other things, that the Minister (and so the State) is in liable for damages caused to Mineralogy by the breach of the State Agreement.

The dispute carried on for years to come, and into the tenure of the McGowan Government. Further arbitrations also considered whether Palmer’s company could pursue a damages claim against the State of Western Australia.

The McGowan Government sought to protect the State from Palmer and Mineralogy by passing legislation: the Iron Ore Processing (Mineralogy Pty Ltd) Agreement Amendment Act 2020 (WA) (Amendment Act).

The Amendment Act was passed swiftly. Among other things, it:

  • terminated the relevant arbitration agreements;
  • nullified the arbitral awards in Mineralogy’s favour; and
  • granted immunity from the criminal law to “the State”, which included McGowan and others.

The Amendment Act was justifiably controversial. It made Palmer very upset. Mineralogy failed in a constitutional challenge to the Amendment Act: Mineralogy Pty Ltd v Western Australia (2021) 95 ALJR 832.

Background: Palmer’s challenges to the McGowan Government’s COVID-19 response

Another aspect of the background to this defamation dispute is the response of the McGowan Government to the COVID-19 pandemic, and Palmer’s own response to it.

In 2020, McGowan took a strong and ultimately very popular response to the pandemic. Among other things, he closed the WA border to the rest of Australia.

Palmer had his own response. In March 2020, he promoted the malaria treatment hydroxychloroquine as a potential “cure” for the disease, and offered to personally fund one million doses of the drug for Australia. In doing so, he echoed calls by conservative figures, including President Donald Trump.

(A cynic might say that Palmer was positioning himself, and his United Australia Party of which he is now chairman, as a party of choice for “pro-freedom” electors, including conspiracy theorists and anti-vaxxers. That strategy did not pay off at the 2022 election.)

In turn, McGowan criticised Palmer:

“All the evidence from around the world is [hydroxychloroquine] does not help with COVID and in fact if you take it it’s not good for you.”

Palmer, together with Mineralogy, also challenged the WA hard border, launching a case based on s 92 of the Constitution. They failed in that challenge. In Palmer v Western Australia (2021) 246 CLR 182, the High Court affirmed that the McGowan Government’s hard border was justified.

While all of this was happening, Palmer and the Premier traded barbs through the media, some of which were the subject of their defamation dispute.

Palmer commences defamation litigation; McGowan returns serve

In August 2020, Palmer commenced defamation proceedings against McGowan in the Federal Court of Australia, suing over six publications made between 31 July and 14 August 2020. Among other things, Palmer argued that McGowan had published the imputation (or ‘sting’) that “Mr Palmer is a traitor to Australia”.

McGowan defended that claim, as one would expect. But the Premier went further. In September 2020, McGowan filed a cross-claim against Palmer—which is equivalent to commencing a defamation claim of his own. That cross-claim concerned nine publications made in 2020. Among other things, McGowan argued that Palmer had published the imputation that “[a]s Premier, Mr McGowan lied to the people of Western Australia when he said that he had acted upon the advice of the Chief Health Officer in closing the borders”.

The result in Palmer v McGowan (No 5) [2022] FCA 893

Each side won—or rather, each side lost. Each side had made comments to the media which meant that they published defamatory imputations about the other through the media.

In considering whether the imputations were conveyed by the publications each side sued upon, the Court considered how the “ordinary reasonable person” would understand what was said.

In a previous case, Oliver v Nine Network Australia Pty Ltd, [19]-[20] Justice Lee explained that ordinary men and women have different temperaments and outlooks, degrees of education and life experience; some are unusually suspicious and some are unusually naïve; some are unusually well educated and sophisticated while others are not. In adopting the perspective of the ordinary reasonable person, the court attempts to come up with a hypothetical mean or midpoint, who does not consume media like a judge or a lawyer, but reads between the lines in light of their general knowledge and experience.

Applying that legal test, Justice Lee determined that both Palmer and McGowan had succeeded in establishing that the other published matter that conveyed imputations that were defamatory.[47]

Palmer succeeded in establishing that McGowan published the following defamatory imputations:

  • Mr Palmer represents a threat to the people of Western Australia and is dangerous to them
  • Mr Palmer represents a threat to the people of Australia and is dangerous to them
  • Mr Palmer promotes a drug which all the evidence establishes is dangerous
  • Mr Palmer selfishly uses money he has made in Western Australia to harm Western Australians
  • Mr Palmer represents a threat to Australians and is dangerous to them
  • Mr Palmer is prepared to bankrupt a state merely because he is unhappy with standard conditions set on a project by the State Government that apply to all mining projects
  • Mr Palmer is so dangerous a person that legislation was required to stop him making a claim for damages against the State of Western Australia

McGowan succeeded in establishing that McGowan published the following defamatory imputations:

  • As Premier, Mr McGowan lied to the people of Western Australia when he said that he had acted upon the advice of the Chief Health Officer in closing the borders
  • As Premier, Mr McGowan lied to the people of Western Australia when he told them their health would be threatened if the borders did not remain closed
  • As Premier, Mr McGowan lied to the people of Western Australia about his justification for imposing travel bans
  • As Premier, Mr McGowan corruptly attempted to cover up the personal involvement of himself and others in criminal acts by overseeing the passing of laws designed to provide exemptions from the criminal law
  • As Premier, Mr McGowan was acting corruptly by seeking to confer upon himself criminal immunity

Establishing that a person published defamatory imputations about you is not enough to establish that the person is liable in defamation. Even if a person has seemingly defamed you, they will not be liable if they can establish that they had some other positive defence.

In this case, both McGowan and Palmer argued that they had defences which excused them from defamation liability. Both sides failed in their arguments.

McGowan’s defences fail

McGowan relied on three positive defences in his broader defence to Palmer’s claim: common law qualified privilege; statutory qualified privilege; and constitutionally protected privilege.

Common law qualified privilege protects a person (a publisher) who defames another, even when what they publish is false. The defence operates where the publisher has a duty in making the publication, and those to whom the defamation is communicated have an interest in receiving it. Where the duty and interest are reciprocal, the law describes the circumstances as a “privileged occasion”: Cush v Dillon (2011) 243 CLR 298. [11] For McGowan, the common law qualified privilege defence was described by Justice Lee as “hopeless”. [160] A “privileged occasion” is unlikely to arise where the publication was to a large audience, and here, the communications were made to a mass audience.

Statutory qualified privilege is a cousin of the common law defence, which was recently changed by amendments in force through much of Australia, but not in the NT or WA. (For technical reasons, arguably, those changes were irrelevant: Justice Lee should have applied the law of WA.) The defence was relevantly and previously expressed in the Defamation Act 2005 (NSW) s 30 in the following terms, which are still in force in Western Australia through the Defamation Act 2005 (WA) s 30:

“(1) There is a defence of qualified privilege for the publication of defamatory matter to a person (the recipient) if the defendant proves that —
(a) the recipient has an interest or apparent interest in having information on some subject;
(b) the matter is published to the recipient in the course of giving to the recipient information on that subject; and
(c) the conduct of the defendant in publishing that matter is reasonable in the circumstances…”

McGowan’s statutory qualified privilege defence failed because he could not establish that publishing the relevant matters was ‘reasonable’ in the circumstances. [199]

Constitutionally protected privilege is another cousin to common law qualified privilege. It is usually known as “Lange qualified privilege”—a reference to the case which affirmed the defence, Lange v Australian Broadcasting Corporation (1997) 189 CLR 520. Arguably, it is not a distinct defence, but an application of common law qualified privilege to certain circumstances that engage the implied freedom of political communication in the Constitution. As Justice Lee explained at:[202]

“Each member of the Australian community has an interest in receiving information, opinions and arguments concerning government and political matters, and each person has a correlative duty to disseminate such information, opinions and arguments…”

Given the wider audience of defamatory publications that may be captured by the defence, the publisher must prove that they acted reasonably, which courts have treated as equivalent to the task required by the statutory qualified privilege defence. [221] While Justice Lee questioned whether historical approaches to ascertaining reasonableness were convincing in the context of Lange qualified privilege, ultimately, his Honour followed the orthodox law and determined that McGowan’s conduct was not reasonable. [222]-[224]

Palmer had also argued that McGowan was actuated by malice in publishing the defamation; if established, in the circumstances, each of McGowan’s defences would have been defeated. Justice Lee did not need to consider these arguments because his Honour decided that McGowan’s defences would fail on other bases. Nevertheless, he did, and concluded at[221]: “despite the evident political hostility between the protagonists, I have not reached the level of satisfaction to conclude that Mr McGowan was actuated by malice as alleged.”

Palmer’s defences also fail

Palmer also relied on three positive defences in his broader defence to McGowan’s cross-claim: justification, contextual truth, and common law qualified privilege.

Justification is a statutory truth defence, in force throughout Australia and expressed in Defamation Act 2005 (NSW) s 25: “It is a defence to the publication of defamatory matter if the defendant proves that the defamatory imputations carried by the matter of which the plaintiff complains are substantially true.” The pleading of a justification defence thus obviously turns on the evidence.

Here, it was relevant that Justice Lee did not “consider it safe” to rely on Palmer’s evidence [139]. Among other things, his Honour had regard to Palmer’s evidence that he “feared for his life”, and that McGowan had, by passing the Amendment Act, provided himself with a “licence to kill”.[125], [420] That evidence was described as “fanciful”, and undermined Palmer’s credibility. Conversely, with respect to McGowan’s evidence, Justice Lee considered “that although Mr McGowan was sometimes non-responsive, he was otherwise generally candid in his evidence”. [145]

Palmer argued that the following imputations were substantially true (see [276]):

  • As Premier, Mr McGowan lied when he said that he had acted upon the advice of the Chief Health Officer in closing the borders;
  • As Premier, Mr McGowan lied when he told them their health would be threatened if the borders did not remain closed; and
  • As Premier, Mr McGowan lied about his justification for imposing travel bans.

After considering the evidence, Justice Lee concluded that Palmer had not established that any of these imputations were substantially true [315]. Among other things, his Honour considered that an allegation of a lie implies that a person knowingly misled; he was “inclined to agree” with McGowan’s evidence which rejected the allegation that McGowan knew any of his statements were actually false. [299]-[300]

The contextual truth defence is also a statutory defence, which has been affected by the law reform described above, in force through much of Australia but not in WA. At the time, the defence in Defamation Act 2005 (NSW) s 26 relevantly provided:

“It is a defence to the publication of defamatory matter if the defendant proves that—
(a) the matter carried, in addition to the defamatory imputations of which the plaintiff complains, one or more other imputations (contextual imputations) that are substantially true, and
(b) the defamatory imputations do not further harm the reputation of the plaintiff because of the substantial truth of the contextual imputations.”

While the defamatory matter did convey “contextual imputations” capable of engaging the statutory defence, Palmer could not establish that any of them were substantially true. [324]

The principles regarding common law qualified privilege are described above. Palmer’s reliance on the defence appealed to what is known as “reply to attack”. As Justice Lee explained at: [374]

“Where an applicant makes a public attack upon the reputation or conduct of the respondent (or upon some interest which the respondent is entitled to protect), the resultant privilege of the occasion enables a response to that attack.”

The defence was unavailable to Palmer for three reasons. First, Palmer had already responded before the so-called “attacks” occurred; second, the defamatory publications made by Palmer were not sufficiently connected to any attack by McGowan; and third, Palmer’s defamation was better understood as comprising its own separate attacks. [394]

Like Palmer, McGowan also argued that his opponent was actuated by malice, which might have defeated qualified privilege if that defence were otherwise available to Palmer. The argument was rejected, with Justice Lee commenting that the comments “were made in the course of a politicised debate between two prominent figures, in which both were engaging in hyperbolic and robust attacks on the other”. [419], [423]

Damage to Palmer’s reputation was minimal

Palmer was awarded just $5,000 in general damages, and no aggravated damages, despite his success in establishing that McGowan had defamed him. This award complied with the statutory direction that an award of damages for defamation must be appropriate and rational to the harm sustained by the plaintiff: Defamation Act 2005 (NSW) s 34.

Justice Lee considered that McGowan’s publications about Palmer would not have had any real impact on Palmer’s reputation. The task of assessment of damages could not “ignore the reality that for many, views as to Mr Palmer’s reputation were already ‘baked in’”. [448]

Apart from compensation for damage to reputation, general damages for defamation serve two other purposes: consolation for hurt to feelings, and vindication in the eyes of the public. Palmer’s credibility undermined his argument that he deserved general damages for hurt feelings; Justice Lee was not persuaded that Palmer suffered any real or genuine hurt to his feelings by reason of the defamation. [465] The ultimately small size of the general damages award thus followed from the holding that “if there is no real damage to reputation, there is little to vindicate”. [499]

McGowan awarded a higher sum of damages, even though his reputation was not damaged

A very unusual (and somewhat humorous) aspect of Justice Lee’s decision is the holding that, even though McGowan succeeded in establishing defamation, his reputation was not damaged. Rather, being attacked by Palmer may have even improved McGowan’s reputation; the McGowan Government’s landmark electoral victory occurred after the defamation. Justice Lee said at: [470]

“I accept the submission of Mr Palmer that, notwithstanding any presumption that might arise from the extent of publication and the seriousness of the imputations carried, the evidence establishes the inconsequential impact of the publications upon Mr McGowan’s reputation. Indeed, it is more likely that Mr McGowan’s reputation was enhanced.”

From that, it would be impossible for McGowan to walk away with a significant sum of general or aggravated damages. Reputation is the core interest protected by the tort of defamation, damage to which compensatory damages respond.

McGowan did succeed, however, in establishing injury to feelings. In particular, Justice Lee noted the “clarity” of McGowan’s evidence concerning his anger in response to Palmer’s allegation that McGowan is corrupt. [479]-[484]

Costs to be determined

The Court adjourned the case to consider the issue of costs at a later date.

Costs usually “follow the event” in civil litigation, so that the “winner” of the substantive dispute can recover some (but not all) of the costs that they paid to their lawyers from their unsuccessful opponent. Costs for defamation matters are complicated by provisions in legislation: see, eg, Defamation Act 2005 (WA) s 40.

The operation of this legislation is complicated, and may turn on the content of any offers the parties made to one another to settle their dispute before the court decided the dispute. These offers are typically confidential. The complication is compounded by the interaction between State and federal law; the Federal Court may take the view that, through operation of the Judiciary Act 1903 (Cth) s 79, the principle in the States’ Defamation Acts is not applicable in the Federal Court’s federal jurisdiction; see Murphy v Nationwide News Pty Ltd (No 2). [6]

In this case, both sides succeeded on some claims and failed on others. McGowan succeeded to a greater degree than Palmer. Yet it would not be unsurprising if neither side succeeds in whatever they submit on costs issues, given the disproportionality between the interests at stake and the cost of taking this dispute through to judgment.

Comment: this case was a waste of resources

Justice Lee summed it up neatly [522]: “The game has not been worth the candle”.

Taking a complex defamation matter through to trial can be an expensive exercise. Given the interlocutory disputation preceding judgment, and the senior counsel involved in this case, it would be unsurprising if each side incurred many hundreds of thousands of dollars—or even 7-plus figures—in legal fees.

Resources spent instructing lawyers to argue transposes to resources of the court to adjudicate the dispute. This case would have consumed considerable resources of the Federal Court, and so Australian taxpayers. Further, as McGowan’s defence and cross-claim was underpinned by State resources, the case also drew on the WA State budget.

Justice Lee lamented [523]:

“These proceedings have not only involved considerable expenditure by Mr Palmer and the taxpayers of Western Australia, but have also consumed considerable resources of the Commonwealth and, importantly, diverted Court time from resolving controversies of real importance to persons who have a pressing need to litigate.”

With respect, the blame for that situation is not entirely at the feet of the parties.

The Court must have regard to the overarching purpose expressed in Federal Court of Australia Act 1976 (Cth) s 37M that it should facilitate the just resolution of disputes according to law, and as inexpensively and efficiently as possible. The Court may have appealed to that overarching purpose in staying Palmer’s claim as an abuse of process on the basis of the glaring disproportion between the interests at stake and the cost of litigation. While such decisions are rare in defamation litigation, there is a principled basis for a defamation dispute to be summarily disposed of in such a manner applying common law principles; see Armstrong v McIntosh (No 2).

That said, if Justice Lee had taken such an approach, it would have made news and arguably developed the law. Allowing the parties to throw down at enormous expense was the more conservative path forward; it is understandable that the Court did not stay the proceedings on its own initiative. In much of Australia, the introduction of a new threshold of serious harm, seen in provisions like Defamation Act 2005 (NSW) s 10A, may now provide a more certain basis for disposing of a case brought by a plaintiff whose reputation is not seriously affected by a defamatory publication.

Further comments

The judgment is full of fodder for defamation and political nerds to digest. A couple of points are worth highlighting.

First, with hindsight, McGowan’s cross-claim should properly be assessed as a strategic failure—albeit less of a failure than Palmer’s. While the best defence is sometimes a good offence, that is not always the case. With respect to a defamation dispute in which you have a relatively strong position, and your opponent has the means to litigate ad inifinitum, seeing the dispute resolved as quickly and cheaply as possible is a sound objective. Bringing the cross-claim was justified by legal principle, but added to the complexity of the dispute, dragging it out and adding unnecessary costs.

Admittedly, it may have felt just to fight back against a serial litigant like Clive Palmer; taking that approach was presumably part of a broader political calculus. With the benefit of hindsight, and from my armchair, a better approach may have been to run a strong defence with appropriate confidential offers to settle for a low sum; to seek summary judgment on the basis that Palmer does not have a reputation worth vindicating; and to pursue indemnity costs as efficiently as possible.

Second, the case is another example of how defamation law accommodates litigation involving politicians. Often, such litigation pits a politician against a media organisation or a journalist—for example, the classic defamation case Uren v John Fairfax & Sons Pty Ltd (1966) 117 CLR 118. Unusually, it involves a politician having a go at a member of the public who is not part of the media—for example, Peter Dutton’s ongoing claim considered in Bazzi v Dutton. Here, the case pitted one politician against a rival, following the model of Leyonhjelm v Hanson-Young (2021) 282 FCR 341.

An interesting aspect of this case was the theme that the public has come to expect vindictive hyperbole from politicians, so that an otherwise defamatory publication by one politician has minimal impact on another politician’s reputation. Against that, it should be remembered that in the absence of the statutory requirement of serious harm, damage is presumed upon proof of publication of defamation. One interpretation of Justice Lee’s judgment is that the ordinary reasonable person is either an entrenched partisan, immune to political persuasion; or so disconnected from political discourse to be immune from political persuasion. In an ideal world, politics would matter; people would make up their minds with reference to logic and evidence, and what politicians say and do. In that world, defamation of one politician by another would matter. The ordinary reasonable person lives in a world that is far from ideal.

While I read the judgment in Palmer v McGowan feeling frustrated that the case consumed so many public resources, it has not impacted my view on defamation law. Defamation is still a valuable cause of action, that protects a commodity more precious than ever: reputation. Those who misuse the privilege of access to that cause of action ought to pay the price with an appropriate adverse costs award. A great many plaintiffs suffer real harm and genuine hurt, and ought to have a means to protect themselves through access to the courts.

For more information, please contact the authors:
Michael Douglas | Consultant

 

Disclaimer: The information published in this article is of a general nature and should not be construed as legal advice. Whilst we aim to provide timely, relevant and accurate information, the law may change and circumstances may differ. You should not therefore act in reliance on it without first obtaining specific legal advice.

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