Fairfax falters with Honest Opinion Defence
In this decision the Federal Court of Australia considered the criteria for the defence of honest opinion in the context of allegedly defamatory imputations published in the Australian Financial Review, and whether the publisher’s conduct was unjustified and improper so as to support an award of aggravated damages.
The Federal Court of Australia considered:
- the criteria for the defence of honest opinion, in the context of allegedly defamatory imputations published in the Australian Financial Review (AFR) relating to the collapse of the venture capital investment company Blue Sky Alternative Investments Limited (Blue Sky); and
- whether the publisher’s conduct was unjustified and improper, so as to support an award of aggravated damages.
Fairfax Media Productions Pty Ltd (Fairfax) publishes the AFR, in which Mr Joe Aston (together with a colleague), writes a column entitled “Rear Window”. Dr Elaine Stead, managing director and Head of Venture Capital of Blue Sky, became the focus of Rear Window in 2018 and 2019.
From 3 February 2019 to 28 October 2019 Mr Aston’s column, published in print and on the AFR website (the publications),1 conveyed imputations (which Lee J found to be defamatory) that Dr Stead was:
- a cretin;
- rashly destroyed capital causing enormous loss to unitholders;
- a venture capitalist who made stupid investments in two worthless companies, Shoes of Prey and Vinomofo, which had no prospects of success; and
- an untrustworthy venture capitalist who fails to deliver on her promises to shareholders and investors. (collectively the imputations).
Fairfax and Mr Aston exclusively relied on the honest opinion defence under section 31 of the Defamation Act 2005 (NSW) (the Act). Under that section the publication of defamatory matter will be defensible if the respondent proves that:
- the matter was an expression of opinion of the respondent rather than a statement of fact;
- the opinion related to a matter of public interest; and
- the opinion is based on proper material.
The decision at trial
Honest opinion defence
The Act provides that opinion will be based on proper material if it is based on material that is substantially true.2 A respondent will therefore be able to make out the honest opinion defence, even when not all the facts are true, but the opinion is reasonably based on those facts.3
The language of the publications as conveyed to the ordinary reasonable reader would be understood to be statements of Mr Aston’s opinion. It was noted that the language employed was colourful, sarcastic and exaggerated. The tone of the column was set by sarcastic headlines, and then continued with phrases including ‘feminist cretin’, ‘a prodigious destroyer of capital’, and ‘fatuous investments in peanut start-ups’. Lee J formed the view that Mr Aston’s language was not indicative of recounting a series of facts, but rather would be characterised as the strongly held opinions of the author.
Dr Stead was no longer a director of Blue Sky, but remained a senior executive during the publications. Blue Sky had attracted substantial monetary investments from the public. It was held that the public had every reason to be legitimately interested in, or concerned at, what was going on at Blue Sky and the reactions of its directors and senior employees.
His Honour noted the following key statements of fact were identifiable from the publications:
- unitholders in investments presided over by Blue Sky suffered untold losses in the 2018 financial year;
- Dr Stead solicited funds on social media to fund a trip to Mongolia;
- Shoes of Prey and Vinomofo were worthless start-ups with no prospects of success;
- Dr Stead lost other people’s money investing in unviable enterprises including investments into the cafeteria chain THR1VE, social media platform HeyLets, and Vinomofo;
- out of the amounts raised from investors for Shoes of Prey, Blue Sky kept $1.6 million in fees for itself;
- Blue Sky promised investors that all annual fees paid upfront would be refunded if it exited the investment before 2020;
- despite the promise, investors were not given any refund of the fees;
- by the time of the bridge funding round, other venture capital firms had stopped investing in Shoes of Prey; and
- Vinomofo is imminently likely to suffer significant financial difficulty.
Lee J embarked upon an analysis of the parties’ submissions as to the truth of the statements. Having done so His Honour found that it was evident that the critical aspects of the facts contained in the publications were not shown to be true in substance, and that Mr Aston’s opinions could not have been reasonably based on proper material. Lee J considered that while there is no need for opinion writers ‘to be mealy-mouthed in denouncing hypocrisy, cant, farce or misfeasance’, the opinion nonetheless needed to be properly based on facts. The statutory defence was therefore not established.
Relief in damages
Further to general damages claimed, Dr Stead asserted that there were aspects of Fairfax’s and Mr Aston’s conduct which were unjustifiable, improper and lacking in good faith that attracted an entitlement to aggravated damages.4 She alleged that Fairfax and Mr Aston undertook a campaign of vilification which included, amongst other things, derogatory comparisons of Dr Stead to the fictional weatherman in Anchorman (Brick Tamland).
Lee J emphasised that Dr Stead was singled out by Mr Aston, and was subjected to a sustained campaign of offensive mockery, which was akin to bullying. His Honour noted the asymmetry of power in circumstances where she was ‘serially mocked in Australia’s leading financial daily as being, in effect, a gaping moron’. The manner in which the defamation occurred was sufficiently oppressive to warrant aggravated compensatory damages. Dr Stead was ultimately awarded damages of $280,000, and Fairfax and Mr Aston were ordered to pay most of her costs of the proceedings on the indemnity basis.
Implications for you
The decision highlights that publications of opinion ought to be based upon substantially true material in order to attract the defence of honest opinion.
1 Joe Aston, ‘Fairfax dead, feminist self-interest lives’ and ‘Clementine Ford, Elaine Stead ensure self-interest lives’, Australian Financial Review (Sydney, 3 February 2019) (the first publication); and Joe Aston, ‘Fox in Steven Marshall’s burning henhouse’, Australian Financial Review (Sydney, 28 October 2019) (the second publication).
2 Defamation Act 2005 (NSW), s 31(5).
3 Defamation Act 2005 (NSW), s 31(6).
4 Aggravated damages are awarded precisely because other conduct by the defendants, which may or may not take the form of another libel, rubs salt in the wounds inflicted by libel sued upon: Suttcliffe v Pressdram Ltd  1 QB 153, 170.