Amendments to damages provisions under the Defamation Act 2005 (NSW)
The Defamation Amendment Act 2020 (NSW) has received the Governor’s assent, although the date that it will come into force is yet to be announced. Important amendments have been made to s 26 (the contextual truth defence), s 30 (the defence of qualified privilege of reasonable publication of information); and a public interest defence in s 29A, among other matters. The focus of this article, however, will be confined to an examination of the amendments to section 35, which provide a statutory cap on awards of damages for non-economic loss.
Generally speaking, a successful plaintiff in defamation proceedings is entitled to award of compensatory damages. Damages for non-economic loss comprise general damages (damages for injury to reputation and hurt to feelings) and aggravated damages (damages for injury to feeling which have been increased by some illegitimate conduct of the defendant). Damages for non-economic loss were capped under the national uniform defamation laws in 2005.
Section 35 of the Act relevantly provides:
Unless the court orders otherwise under subsection (2), the maximum amount of damages for non-economic loss that may be awarded in defamation proceedings is $250,000 or any other amount adjusted in accordance with this section from time to time ('the maximum damages amount') that is applicable at the time damages are awarded;
A court may order a defendant in defamation proceedings to pay damages for non-economic loss that exceed the maximum damages amount applicable at the time the order is made if, and only if, the court is satisfied that the circumstances of the publication of the defamatory matter to which the proceedings relate are such as to warrant an award of aggravated damages.
The maximum amount for damages for non-economic loss under this section is currently $421,000.
In Lower Murray Urban and Rural Water Corporation v Di Masi (2014) 43 VR 348, 392 , the court held that 'A damages award is not usually broken down into components for pure compensatory damages and aggravated compensatory damages.' In practice to date, aggravated damages in defamation proceedings have not been assessed separately and formed part of general compensatory damages. This created an issue about the correct interpretation of section 35 and whether the maximum amount operates as a statutory cap which could be set aside in circumstances where aggravated damages were warranted, or whether the section operated as a scale or range of damages with the maximum amount reserved for the worst kinds of damage even if the publication did not warrant an award of aggravated damages.
Bell J considered the issue in Attrill v Christie  NSWSC 1386. Her Honour stated at :
I approach the matter on the basis that the maximum damages amount provided by s 35 is to be understood as fixing the outer limit of damages for non-economic loss (in cases which do not warrant an award of aggravated damages) and by analogy with the approach explained by Hayne [J] awards for non-economic loss are to find a place within a range marked out in this way. This is not to say that an award of the maximum damages amount in a case not warranting an award of aggravated damages is to be reserved for the worst defamation imaginable.
The approach was followed in a number of defamation cases for assessment of non-economic damages. However, a different approach was adopted by the Court of Appeal of Victoria in Bauer Media Pty Ltd v Wilson (No 2)  VSCA 154. The court in that case construed section 35 to permit the statutory cap to be totally disregarded where aggravating circumstances could be established. This led to significant increases in the awards of compensatory damages in defamation proceedings which undermined the intended operation of the statutory cap in section 35.
At first-instance, in Wilson v Bauer Media Pty Ltd  VSC 521 an issue arose in relation to the construction of the statutory cap in section 35 and whether this section gave the court a discretion to award damages for non-economic loss in excess of the cap where the circumstances warranted award of aggravated damages. Dixon J stated that '…
there is an obvious nexus in the statutory text between the entitlement to aggravated damages and the discretion to then award damages in excess of the cap.
His Honour further stated that the language of section 35 was 'unambiguous' and imposed no limit on award of damages for non-economic loss if the court were satisfied that the publisher engaged in a conduct which was 'malevolent, spiteful, lacking in bona fides, unjustifiable, or improper' that warranted an award of aggravated damages. Therefore, his Honour formed the view that the statutory cap was inapplicable in Ms Wilson’s case and awarded her $650,000 for non-economic loss.
The issue of the proper construction of section 35 was raised again on appeal in Bauer Media v Wilson. The question was whether the statutory cap in section 35 acted as a cut-off or fixed outer limit of a range. The Victorian Court of Appeal upheld Dixon J’s approach in the construction of section 35. Section 34 of the Act provides that in determining the amount of damages to be awarded in any defamation proceedings, the court is to ensure that there is an appropriate and rational relationship between the harm sustained by the plaintiff and the amount of damages awarded. Their Honours stated at  that:
In our view, the combination of s 34 and s 35(1) does not create a range or scale with respect to the quantum of damages to be awarded for non-economic loss.
Their Honours agreed with Dixon J and held at :
…where the defendant engages in conduct that is improper, unjustified, or lacking in bona fides, it is disentitled to the benefit of the cap and these are matters under its control.
However, the Victorian Court of Appeal reduced the award for non-economic loss to $600,000.
The 'cut-off' approach was followed in the assessment of compensatory damages in Wagner v Harbour Radio Pty Ltd  QSC 201 and Rayney v Western Australia (No 9)  WASC 367 in which the plaintiffs were awarded $850,000 and $600,000 for non-economic loss respectively. Conversely, in Al-Muderis v Duncan (No 3)  NSWSC 726 Rothman J emphasised that the total amount for non-economic damages (apart from aggravated damages) would not exceed the statutory cap and awarded the plaintiff $320,000 for non-economic loss.
Fortunately, these issues are now moot because the Defamation Amendment Act 2020 NSW has now addressed the flaws in the current text of section 35. Under the Model Defamation Amendment Provisions 2020, the maximum amount for damages sets a scale rather than a cap, with the maximum amount to be awarded only in a most serious case; and an award of aggravated damages is to be made separately to any award of damages for non-economic loss so that the scale or range for damages for non-economic loss continues to apply for non-economic loss even if aggravated damages are awarded (see Explanatory Note, Model Defamation Amendment Provisions 2020).