New South Wales Supreme Court CITATION : AKTAS & 1 ORS v WESTPAC BANKING CORPORATION LIMITED [2007] NSWSC 1261 HEARING DATE(S) : 23 April-2 May 2007; 30 July-3 August 2007 JUDGMENT DATE : 7 November 2007 JUDGMENT OF : Fullerton J DECISION : 1. Verdict for the defendant in the defamation action brought by the first plaintiff.; 2. Verdict for the defendant in the defamation action brought by the second plaintiff.; 3. Verdict for the second plaintiff in the action for breach of contract brought by the second plaintiff.; 4. Damages for breach of contract are awarded in the amount of $84,500 plus interest. CATCHWORDS : DEFAMATION - Cheques dishonoured by bank - Refer to drawer - Defences - Common Law defence of qualified privilege - Imputations - Matter complained of - Damages - Reputation - Business reputation - Hurt to feelings - Causation - Failure to mitigate - Breach of contract Cheques Act 1986 (Cth) Civil Liability Act 2002 LEGISLATION CITED : Defamation Act 1974 Local Court (Civil Claims) Act 1970 Property, Stock and Business Agents Act 1941 Adam v Ward [1917] AC 309 Aktas & Anor v Westpac Banking Corporation [2004] NSWSC 218 Amalgamated Television Services Pty Ltd v Marsden (1998) 43 NSWLR 158 Ballin v Bank of Australasia (1895) 16 NSWLR 15 Baltic Shipping Co v Dillon (1993) 111 ALR 289 Bashford v Information Australia (Newsletters) Pty Limited (2004) 218 CLR 366 Bellino v Australian Broadcasting Corporation (1995-96) 185 CLR 183 Browne v Bank of Australasia [1881] 2 NSWLR 325 Carson v John Fairfax & Sons Limited (1993) 178 CLR 44 Commonwealth v Amann Aviation Pty Limited (1991) 174 CLR 64 Coyne v Citizen Finance Limited (1990-91) 172 CLR 211 Davidson v Barclays Bank Ltd [1940] 1 All ER 316 Foaminol Laboratories Ltd v British Artid Plastics Ltd [1941] 2 All ER 393 Greek Herald Pty Ltd v Nikolopoulos and Others (2002) 54 NSWLR 165 Hadley v Baxendale (1854) 9 Exch 341 Harvey v John Fairfax Publications Pty Ltd [2005] NSWCA 255 Hebditch v MacIIwaine [1894] 2 QB 54 Herbert Clayton and Jack Waller Ltd v Oliver [1930] AC 209 Howe and McColough v Lees (1910) 11 CLR 361 Hughes v Mirror Newspapers Ltd (1985) 3 NSWLR 504 Hunt v Great Northern Railway Company [1891] 2 QB 189 Jamoo v Nationwide News Pty Ltd [2004] NSWSC 126 John Fairfax Publications Pty Ltd v O'Shane [2005] NSWCA 164 Justin v Associated Newspapers Limited (1966) 86 WN (Pt 1) (NSW) 117 CASES CITED : Kpohraror v Woolwich Building Society [1996] 4 All ER 119 Levy v Union Bank of Australia Ltd (1896) 21 VLR 738 Lloyds Bank v Rogers (unreported, 20 December 1996, English Court of Appeal) March v E & MH Stramare Pty Limited and Another (1990-91) 171 CLR 506 M'Nickle v Bank of New South Wales [1881] 2 LR (NSW) 7 Morgan v John Fairfax & Sons Ltd (No 2) (1991) 23 NSWLR 374 New South Wales Aboriginal Land Council v Perkins (1998) 45 NSWLR 340 Palmer Bruyn & Parker Pty Limited v Parsons (2001) 208 CLR 388 Pyke v The Hibernian Bank Limited [1950] IR 195 Raafbye Corporation Pty Ltd & Ors v Westpac Banking Corporation Ltd (unreported, 21 October 1994) Roberts and Another v Bass (2002) 212 CLR 1 Robinson v Harman (1848) 1 Exch 850 at 855 Rose v Boxing New South Wales Inc and Anor [2007] NSWSC 20 Sattin v Nationwide News Pty Limited (1996) 39 NSWLR 32 Sims v Wran [1984] 1 NSWLR 317 Skalkos and Anor v Joseph Assaf and Anor [2002] NSWCA 14 Speight v Gosnay (1891) 60 LJQB 231 Stephens v West Australian Newspapers Ltd (1994) 182 CLR 211 Sullivan v Moody and Others (2001) 207 CLR 562 Toogood v Spyring (1834) 1 Cr M & R 181 Toomey v Mirror Newpapers Ltd (1985) 1 NSWLR 173 Uren v John Fairfax & Sons Pty Limited (1965-66) 117 CLR 118 Vacik Distributors Pty Limited & Anor v Australian Broadcasting Corporation & Anor No. 8 [2000] NSWSC 732 Watts v Rake (1960) 108 CLR 158 Wilson v United Counties Bank Ltd [1920] AC 102 Paul Uysal Aktas (1st Plaintiff) PARTIES : Homewise Realty Pty Limited (2nd Plaintiff) Westpac Banking Corporation Limited (Defendant) FILE NUMBER(S) : SC 2002/20552 COUNSEL : T Hale SC/D Caspersonn (Plaintiffs) J Sackar QC/K Smark/R Hardcastle (Defendant) SOLICITORS : Penhall & Co (Plaintiffs) Mallesons Stephen Jaques (Defendant) IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION CIVIL LIST FULLERTON J 7 NOVEMBER 2007 2002/20552 PAUL UYSAL AKTAS & 1 ORS v WESTPAC BANKING CORPORATION LIMITED JUDGMENT HER HONOUR: 1 The plaintiffs, respectively Paul Uysal Aktas and Homewise Realty Pty Ltd ("Homewise") sue the defendant, Westpac Banking Corporation Ltd ("Westpac") for damages following a section 7A hearing (Defamation Act 1974) where a jury found Westpac had published four defamatory imputations in respect of each plaintiff. Homewise also sues Westpac for damages for breach of contract and, in the alternative, in negligence. 2 The damages claimed in each of the three causes of action are based upon the admitted fact that on 1 December 1997 Westpac wrongly dishonoured 30 cheques drawn on a Homewise account maintained at it's Auburn branch and, in so doing, wrongly nominated each of the cheques "Refer to Drawer". It will be necessary, however, to deal with each of the three causes of action separately since different considerations apply in determining whether liability for damages in the particular cause are made out, whether the damages that are said to flow under various heads of damage relevant to each cause of action are established and, if so, in what amount. That said, the proceedings have been conducted on the basis that the action in defamation is the primary cause of action. 3 To meet the case Mr Aktas brings for damages to compensate for his hurt to feelings and harm to his reputation and to vindicate him for the falsity of the imputations (see Carson v John Fairfax & Sons Limited (1993) 178 CLR 44 at 60-61), and to meet the case Homewise brings for special damages it claims to have suffered from the publication of the defamatory material, Westpac raises the common law defence of qualified privilege. In the event that the defence of qualified privilege fails, Westpac contends that any award of damages should be heavily discounted by reason of Mr Aktas's failure to mitigate such damage as might be found to have resulted from the publication of the defamatory material both on his own behalf and on behalf of Homewise. The relationship between Homewise and Mr Aktas 4 From early 1992 Homewise conducted a real estate business known as Century 21 Homewise Realty ("Homewise Realty") from commercial premises at 64 Auburn Road, Auburn. From that time until April 1998 the business was conducted pursuant to a franchise agreement with Century 21 Australia. From April 1998 until the present time Homewise has conducted its real estate business from the Auburn premises under the name of Australian Real Estate Auburn and/or Network Australian Real Estate Auburn. For all practical purposes it was a profitable business. 5 Mr Aktas is the sole shareholder in Homewise and from time to time was one of its directors. It was not in contest that Mr Aktas was well known as the alter ego and chief executive of Homewise. Mr Aktas was not a licensed real estate agent but for all material purposes was the principal of Homewise's business and controlled its daily operations. In 1992, he executed the franchise agreement with Century 21 on behalf of Homewise and was the person with whom the franchisor dealt during the currency of that agreement. From the time that Homewise commenced operations from the Auburn premises, the licence to conduct the real estate business was held by a Mr Branley. Mr Branley left Homewise in April 1998 and, together with another employee, Mr George Kong, opened an office in Lidcombe a neighbouring suburb to Auburn under a franchise arrangement with Century 21. Since that time Ms Zohra Pirzad, the property manager, has taken on the responsibilities as licensee of Homewise. 6 As at 1 December 1997 Homewise employed a number of staff, each of whom had designated duties either in sales, property management or the general administration of the business. Mrs Aktas also assisted the administrative staff on a daily basis. Mr Aktas was actively engaged in the sales area and was a successful and accomplished salesman. It would appear that Mr Aktas did not draw a weekly wage. Those of Homewise's employees who were engaged in sales were paid a wage and commission. The number of people employed in the business at any one time up to December 1997 varied depending upon the number of properties listed for sale and, to a lesser extent, upon the number of rental properties under management. 7 By June 1998, a number of employees had left Homewise. They included Mr Branley, Mr Kong, Mr Shi and Ms Wheat. The plaintiffs claim that the loss of staff was a direct result of the defendant's conduct. The reason for, and the timing of, their departure was in issue in the proceedings. I propose to resolve that matter at the outset. 8 So far as Mr Branley, the licensee, and Mr Kong, a senior sales representative, are concerned I have already noted that their departure was in order to set up a Century 21 office in Lidcombe in the first quarter of 1998. I am not satisfied that the events of early December 1997 had any ultimate bearing on their decision to leave although I accept, having regard to the evidence of Mr Nagle, that in Mr Branley's case the cheque dishonourings operated as something of a catalyst. It appears from such evidence as bears on the question, however, that there were a range of other reasons fortifying Mr Branley in his resolve to leave Homewise. In the result, and despite the evidence of Mr Nagle to the effect that Mr Branley reported that the dishonouring of the cheques was a source of professional embarrassment to him, I am not persuaded that the defendant's conduct had any ultimate bearing upon his decision to take up a position as licensee with Mr Kong's franchise with Century 21 in the neighbouring suburb. I am also satisfied in so far as Mr Kong is concerned, his decision to leave Homewise was a career choice. The fact that neither Mr Kong nor Mr Branley were called in the proceedings does not in my view ground an inference favouring either of the parties. 9 In addition, I am not able to be satisfied on the probabilities that the position of Mr Shi is of any materiality to the plaintiff's case since, although he left in March 1998, the wages book shows that he returned and resumed duties for two periods in April and June 1998. I note that the only remaining sales person, Ms Wheat, left Homewise's employ for entirely unrelated reasons. The relationship between Mr Aktas and Westpac and Homewise and Westpac 10 At all relevant times Westpac was the banker to Homewise. As at December 1997, Homewise operated three bank accounts with Westpac from its Auburn Branch. They were, respectively, an account known as the "Homewise Rent Trust Account", an account known as the "Homewise Sales Trust Account" and a "Homewise General Account". 11 The Homewise Rent Trust Account was an account Homewise was legally obliged to maintain on behalf of those of its clients for whom rental properties were managed pursuant to the Property, Stock and Business Agents Act 1941. Both Mr Aktas and Mr Branley were signatories to this account. Mrs Aktas, Mr Aktas and Ms Zohra Pirzad, the property manager, were signatories to the General Account. This account was used for the purposes of the business. 12 Monies deposited to the Rent Trust Account comprised the rents collected by Homewise and held on behalf of landlords. It was an account operated in such a way that any management fees and/or any miscellaneous repairs or other costs associated with the management of a client's rental property were deducted by Homewise from the rent monies received with the balance drawn by a cheque in the client's favour and paid either on a fortnightly or monthly basis. An income and expenditure statement was also prepared for and mailed to each client. The rent cheques to which the statements were referable were drawn by Ms Pirzad as property manager and were then signed by the licensee, Mr Branley, and countersigned by Mr Aktas. Ms Pirzad would either deposit the cheques directly into the client's designated account with a bank or other financial institution or mail the cheque to the client's residential or business address as instructed. By far the greater number of Rent Trust Account cheques were directly deposited to the client's nominated account. Some of these were with Westpac. 13 Consistent with this system, on 1 December 1997, Ms Pirzad drew 30 trust account cheques. They were countersigned by Mr Aktas and Mr Branley and either directly deposited or mailed to Homewise's clients. None of these cheques were honoured on presentation. Some clients apparently came to learn of the dishonour when they attempted to draw on the funds they expected would be credited to their accounts and other clients when they received correspondence from their own bank or financial institution advising them that the trust account cheque was not met. Some correspondence from collecting banks was dated as late as 8 December 1997. The relationship with Century 21 and the garnishee order 14 The relationship between Homewise as franchisee and Century 21 as franchisor deteriorated in 1997 as a result of persistent disputes in respect of certain payments Century 21 claimed were due under the franchise agreement. For their part, Homewise claimed that Century 21 had failed to give credit for commissions due to it as a result of the introduction of customers to St George Bank. 15 At some time between July 1997 and November 1997, Century 21 obtained default judgment against Homewise in respect of proceedings for a liquidated claim in the amount of $35,238.40 brought under the Local Court (Civil Claims) Act 1970 (since repealed). Section 47 of that Act relevantly provides: "(2) A garnishee order shall take effect upon it being served on the garnishee, and upon its being so served: (a) … shall operate to attach in the hands of the garnishee, to the extent of the amounts specified in the order, all debts which are due or accruing from the garnishee to the judgment debtor at the time of service of the order (whether or not they were so due or accruing at the time when the order was made), … (4) A garnishee order shall: (a) specify the unpaid amount of the judgment debt owing to the judgment creditor, and (b) require the garnishee to pay, in accordance with this Act and the rules, the debt, wage or salary attached or so much of it as may be sufficient to satisfy that unpaid amount after deducting such amount (if any) as may be notified in writing to the garnishee by the judgment creditor or the registrar as having been paid or credited to the judgment creditor on account of that unpaid amount otherwise than under the order." 16 On 24 November 1997, a garnishee order was issued to Westpac by the Fairfield Local Court in which Homewise was identified as the judgment debtor. The relevant terms of the order are as follows: "All debts due and accruing from the garnishee to the judgment debtor … other than any wage or salary, are attached to the extent of $35,238.40 to answer a judgment recovered in this action … It is alleged that the garnishee is indebted to the judgment debtor in respect of: ANY MONIES DUE, OWING, ACCRUING AND NOT PAID IN RELATION TO AN ACCOUNT IN THE NAME OF THE JUDGMENT DEBTOR, NAMELY ACCOUNT NUMBER 032 070 105613 AND/OR ANY OTHER ACCOUNTS HELD IN THE NAME OF THE JUDGMENT DEBTOR. If the garnishee does not comply with this order the garnishee may be summonsed to show cause why judgment should not be given against the garnishee for the amounts attached." 17 The order was drawn in accordance with the operating provision of the Local Courts (Civil Claims) Act extracted above. Westpac's receipt of the garnishee order 18 On 1 December 1997, the garnishee order was forwarded to Ms Kim Lidgard, an officer within Westpac's Account Verification Branch, under cover of a facsimile header in the form of a letter signed by Ms Helen Lawless, Assistant to the Manager of Westpac's Legal branch. The subject matter of the correspondence was described as "Garnishee Order (Action Immediately)" with the judgment creditor identified as Century 21 Australia Pty Ltd and the judgment debtor identified as Homewise Realty Pty Ltd t/as Century 21 Homewise Realty. The letter does not in its terms nominate the accounts held by Homewise with Westpac as garnishee, neither does it discriminate in any way between accounts that may properly be the subject of attachment under the garnishee order and those that may not. In the body of the correspondence, however, Ms Lawless invited Ms Lidgard to contact Mr Morthorpe of NSW Policy and Advice on a nominated telephone number should she have any queries, presumably as to what action she should take pursuant to the garnishee order were she in any doubt. 19 A handwritten note on the facsimile header sheet records the following: "Fax received 1.12.97. All 3 accounts PCO'd (needed to check with Policy & Advice as to whether funds were attachable) Spoke to Paul Thompson on 2.12.97 – lifted PCO's on trust accounts when advised unable to attach funds." 20 I am satisfied that this note was made by Ms Lidgard and that she in fact made inquiries of a Westpac officer in the nominated department before 'actioning' the garnishee order and imposing PCO's ("post credits only") on the three Homewise accounts. In the result, all three accounts in the name of Homewise as the judgment debtor, being the "Homewise Rent Trust Account", the "Homewise Sales Trust Account" and a "Homewise General Account", were made subject to the garnishee order. 21 In the ordinary course of Westpac's business, customer accounts are designated as "normal" which indicates there are no special circumstances affecting the account. In certain circumstances, however, Westpac's internal protocols provide for a change in the designation of a customer's account from "normal" to "PCO". This has the effect that only credits would be allowed on the account and, relevantly, that customer-initiated debits will not be allowed. Of some significance, as will become clear later in this judgment, Westpac's transaction processing and account maintenance computer systems both in 1997 and currently, are designed to deal differently with the situation where a cheque transaction on a given account is invalid for one of a variety of reasons and where there are insufficient funds in an account to satisfy a cheque being honoured on presentation. In short, in the former case, the transaction would not appear on the customer's bank statement but would be recorded in an "unposted items report" sent from the central processing unit to the relevant branch. In the case of there being insufficient funds in the account, either because the account is in debit or would be placed in debit were the cheque to be met, the system records the fact of the cheque being dishonoured on presentation on the customer's bank statement. A dishonour fee is also recorded on the customer's statement in these circumstances. It is of some significance in this case is that since there were never insufficient funds in the Rent Trust Account, the Homewise statement did not record the fact that trust account cheques were dishonoured when presented on 1 December 1997. Westpac dishonours the cheques 22 At 5:17 pm on 1 December 1997, the Rent Trust Account and the Homewise General Account were changed from "normal" to "PCO" by Ms Lidgard as reflected in her handwritten note extracted above. One minute later, at 5:18 pm, the Homewise Sales Trust Account was altered from "normal" to "PCO". While it is only the Homewise Rent Trust Account that is of significance in these proceedings (since it was on this account that the 30 dishonoured cheques were drawn), it is clear that the Homewise Sales Trust Account was also made subject to the garnishee order although there were no cheques drawn on this account and therefore none dishonoured before the PCO was reversed. By its letter of 19 January 1998, Westpac responded to a query from the plaintiffs' solicitors confirming that the garnishee order remained attached to Homewise's General Account and that cheques drawn on that account were dishonoured. The evidence was silent as to how many cheques were dishonoured on this account. It would appear that the garnishee order was lifted some time in the first quarter of 1998 following resolution of the litigation involving Homewise and Century 21. 23 At 10:19 am on 2 December 1997, the Homewise Rent Trust Account was changed by Ms Lidgard from "PCO" back to "normal" and, one minute later, the PCO on the Homewise Sales Trust Account was also reversed. This is reflected in Ms Lidgard's note as set out above. 24 The precise chain of circumstances which resulted in the imposition of the PCO's on 1 December 1997 and their reversal the following day is not established by the direct evidence. While I am satisfied that Ms Lidgard made inquiries of an officer within Westpac's Department of Advice and Policy before imposing the PCO's, there is no evidence as to what advice Ms Lidgard sought, what advice she was given or the position of the person who provided the advice. Ms Lidgard was not called as a witness. Neither was Mr Paul Thompson, the person to whom she apparently spoke on 2 December 1997 before she converted the status of the two trust accounts back to "normal". Plainly enough, the advice Ms Lidgard received on 1 December 1997 was wrong and was countermanded the following day. 25 Lifting the restriction on drawing funds from the Rent Trust Account the day after the cheques were presented may, in other circumstances, have operated to substantially ameliorate the impact of the defamatory publication. However, for reasons that are not explained by the evidence, that did not happen in this case. Rather, under cover of what is described as automatically generated correspondence dated 3 December 1997, Westpac returned the cheques with the endorsement "Refer to Drawer" stamped on the reverse side to its own customers and, for those cheques which were presented by a collecting bank, it returned the cheque stamped "Refer to Drawer" with an automatically generated slip of paper marked in the same way. Where the correspondence was to its own customers the letter provided as follows: On 1 December 1997 you deposited a cheque for [stated amount]. The cheque [details supplied] has been returned unpaid with the answer "Refer to Drawer". The cheque is enclosed and the amount has been reversed from account number [number specified]. A fee of $9.00 is applicable and has been charged to the account number [as specified]. If you would like to obtain information on this matter, please do not hesitate to call Westpac Telephone Banking on [number supplied]. 26 Plainly enough, the reversal of the PCO's was not notified to the Westpac's Data Centre Department, the department identified as the sender of the automatically generated correspondence set out above. There was no evidence as to how or why this occurred. To compound the error, and again for reasons that are not explained by the evidence, when Mr Aktas personally attended the Auburn branch of Westpac on 2 and 3 December 1997 he was given a less than satisfactory explanation for what the bank must have known was an error and little confidence that the matter would be speedily resolved. The staff at the Auburn branch supplied Mr Aktas with telephone numbers so as to facilitate contact with agencies or departments of Westpac but he was given no satisfactory explanation as to why the trust account cheques were not honoured. I am satisfied that he also telephoned other agencies, including the banking ombudsman, in an effort to seek assistance. While it is clear that the PCO had been reversed by 2 December 1997, Mr Aktas was not told when it was imposed and why and when it was reversed. Neither was he told the reason it was imposed in the first place. In fact, it is not at all clear that it was generally known in the Auburn branch, or in any of the departments to which Mr Aktas was referred what the true situation was. Mr Aktas made clear in his letter to Westpac dated 4 December 1997 (a Saturday) that he learnt the previous day that a garnishee order had been imposed on the Rent Trust Account and that it had since been lifted, but that he was given no explanation as to why this had affected transactions on the Rent Trust Account. 27 On one view of the case the plaintiffs bring, I do not regard the absence of Mr Thompson, Ms Lidgard or an officer from Westpac's Data Centre as material since it was ultimately conceded by the defendant that the PCO's were imposed by Ms Lidgard in error. This was so because, irrespective of the terms of the order obliging Westpac to attach the debt to "AND/OR ANY OTHER ACCOUNTS HELD IN THE NAME OF THE JUDGMENT DEBTOR", (words which may have been thought to justify or even compel the imposition of a PCO on the rent trust account held in Homewise's name), by operation of s 36(2) of the Property, Stock and Business Agents Act 1941 the funds held in trust under the Act were not liable to attachment under the garnishee order. On the other hand, as I have noted, the evidence fails to make clear why Westpac's was unable to rectify the situation so as to restore the account to its proper functioning on 2 December 1997 or to at least make it obvious to anyone accessing Westpac's internal records that there had been an error on 1 December that had been reversed the following morning. I will have something further to say about this aspect of the case when considering the question of damages. 28 Section 36(2) of the Property, Stock and Business Agents Act 1941, reads as follows: "(1) All moneys received for or on behalf of any person by any licensee shall be held by the licensee or, where the licensee is employed by a corporation, by the corporation, exclusively for such person, to be paid to such person, or to be disbursed as the person directs, and until so paid or disbursed the moneys shall be paid into a bank, building society or credit union operating in New South Wales to a trust account, whether general or separate, and retained therein. In any case where the licence is held by a corporation the trust account shall be in the name of the corporation and in any other case the trust account shall be in the name of the licensee or of the firm of licensees of which the licensee is a member. The words "Trust Account" shall appear in the name of the trust account and in the description of the trust account in the books and records of the licensee and also on all cheques drawn on the trust account. (1A) When opening a trust account at a bank, building society or credit union for the purpose of complying with subsection (1), the licensee concerned must ensure that the bank, building society or credit union is notified in writing that the account is a trust account required by this Act. (1B) … (2 ) The moneys shall not be available for the payment of the debts of the licensee to any other creditor of the licensee, or be liable to be attached or taken in execution under the order or process of any court at the instance of any such other creditor . (emphasis added) (3) Nothing in this section shall be construed to take away or affect any just claim or lien which any licensee may have against or upon any of the moneys. (3A) A licensee must, within 14 days after closing a trust account, notify the Director-General in writing of the closure. (3B) … (4) Any licensee who neglects or fails to comply with any of the provisions of this section shall be guilty of an offence against this Act. (4A) Where any licensee neglects or fails to comply with any of the provisions of this section by reason of the licensee's neglect or failure to pay any moneys into a bank, building society or credit union operating in New South Wales to a trust account or to retain any such moneys therein, the offence shall continue until the said moneys are paid to the person for or on whose behalf they were received, or disbursed in such manner as may be directed by such person. (5) (Repealed) (6) …" 29 It is beyond question that Westpac made an error when it imposed a PCO on the Rent Trust Account, an error which in turn resulted in the defamatory publication of the words "Refer to Drawer" on 30 cheques drawn on that account. This is determinative of its liability in contract and of considerable significance on the question whether the defendant can avail itself of the defence of qualified privilege when the duty or interest it claims as grounding the occasion of qualified privilege was a result of its own error. Homewise and Mr Aktas learn of the dishonoured cheques 30 It would appear that Mr Aktas first learnt of what was to become a total of 30 dishonoured trust account cheques on 2 December 1997 when he was informed by Mr Shi, an employee, that his own trust account cheque had bounced. Ms Pirzad gave evidence that Mr Shi first approached her about the matter on the morning of 2 December 1997. She immediately went to Westpac's Auburn branch to collect the daily bank statement to satisfy herself that the relevant account was in credit. Mr Shi was informed of Ms Pirzad's inquiries of Westpac. When the matter remained unresolved, and as further dishonoured cheques surfaced, Ms Pirzad made repeated inquires of the management at Westpac by telephone without receiving any satisfactory resolve or explanation. Mr Aktas also said that when he learnt of the situation (at this time limited to the fact that Mr Shi's cheque had bounced) he also went to the Auburn branch and spoke with Mr David Lemon, a bank manager at that branch. Mr Aktas was also informed by Mr Lemon that there were sufficient funds and that there was no reason why the cheque would not be honoured. When Mr Aktas returned to the office of Homewise that morning he was informed that a trust account cheque of one of Mr Shi's clients had also bounced. The fact that the Homewise Rent Trust Account statement showed the account in credit without any dishonour notations added to the confusion and, it seems, did nothing to dispel the suspicion that was gathering, and directed at Mr Aktas, as to why the funds were not able to be drawn upon. 31 Over the balance of 2 December 1997, and for some days thereafter, many disgruntled and irate clients attended the office of Homewise demanding to know why their respective trust account cheques had not been met on presentation. Mr Aktas dealt with some clients whilst Ms Pirzad spoke with others. Other clients were spoken to by telephone. Westpac does not put in issue that Mr Aktas was genuinely distraught, confused, frustrated and angry at the situation in which he found himself, a situation which could not in any sense be said to be of his own making. Whatever might be said of his failure to properly manage Homewise's relationship with Century 21, or to deal responsibly with the threat of legal action being taken by them to recover the debt they claimed was due, and irrespective of the fact that that Mr Aktas was aware that proceedings had issued against Homewise in 1997 (even if he chose to ignore that fact and its consequences), he was entitled to proceed on the basis that clients' funds would be immune from those consequences. His frustration and humiliation was no doubt compounded by the fact that Westpac's error was neither readily acknowledged nor rectified with any efficiency. 32 In addition it would appear that because Westpac did not, or could not, supply Homewise with an accurate bank statement for the Rent Trust Account for some time (perhaps for some weeks with Christmas and New Year intervening), Mr Aktas was not in a position to know with any certainty which of the cheques issued on 1 December should be replaced. He gave evidence that this also did nothing to restore his relationship with his clients. 33 The extent to which Mr Aktas's reactions at this time are compensable in damages for defamation was at issue in the proceedings. In so far as the action in contract is concerned, while breach is not in issue, the extent to which Homewise is entitled to recover damage to its trading or business reputation is also contentious. Another matter very much in dispute was whether Mr Aktas's effective refusal in late January /early February 1998 to accept Westpac's offer to publish acknowledgment of its error was so unreasonable as to constitute a failure to mitigate the damages Mr Aktas claims to have suffered and the special damages said to be suffered by Homewise. The action in defamation brought by Mr Aktas and Homewise 34 I propose to deal with the action in defamation first since, as I noted earlier, in the way the case has been pleaded, and the way in which the proceedings before me have been conducted by the parties, it was the primary cause of action for which relief in damages were sought. 35 It was common ground between the parties that the publication of the defamatory matter occurred on multiple occasions on or about 1 December 1997 when the words "Refer to Drawer" were stamped or endorsed on 30 Homewise Rent Trust Account cheques by the defendant either after they were presented for payment by its own customers or when they were deposited to a collecting bank. Westpac also acknowledged its liability as re-publisher where the collecting bank published the fact that the cheque was marked "Refer to Drawer" to its customers. In each case, Mr Aktas was identified by the publication or republication by his signature appearing on the cheque and/or by reason of being the alter ego and chief executive of Homewise. 36 The plaintiffs' claims in defamation are governed by the Defamation Act 1974 (NSW) ("the Act"). In strict accordance with s 9 of the Act, the causes of action are comprised of the publication of defamatory imputations as distinct from the publication of the matter which conveyed those imputations. The imputations the plaintiffs elected to plead were the focus of the proceedings before the jury at the s 7A hearing since it was the jury who were charged with the task of determining, by reference to the imputations, how the twofold question posed by s 7A should be answered. That involved the jury considering whether the words "Refer to Drawer" as they appeared on each of the 30 cheques carried the imputations contended for by the plaintiffs and, if so, whether the imputations were defamatory. Under the Act these are matters for prior and conclusive determination by a jury. The jury considers only those imputations raised by the plaintiff and, in determining whether those imputations were conveyed in this case, the jury was directed to assess the position of the ordinary reasonable person, who is "neither perverse … nor morbid or suspicious of mind … nor avid for scandal": Amalgamated Television Services Pty Ltd v Marsden (1998) 43 NSWLR 158 per Hunt CJ at CL at 165. The imputations the jury found were conveyed by the words "Refer to Drawer" 37 In so far as concerns Homewise as the second plaintiff, the jury found the following defamatory imputations proved: (a) That Homewise Realty Pty Limited was unable to pay its debts as they fell due. (b) That Homewise Realty Pty Limited was unable to meet its obligations to clients entitled to payment of moneys from its trust account. (c) That Homewise Realty Pty Limited had defaulted in the payment to the clients of moneys from its trust account. (d) That Homewise Realty Pty Limited had passed a valueless trust account cheque. 38 In so far as concerns Mr Aktas as the first plaintiff, the jury found the following defamatory imputations proved: (a) That Mr Paul Aktas had caused Homewise Realty Pty Limited to pass a valueless trust account cheque. (b) That Mr Paul Aktas had failed to ensure that Homewise Realty Pty Limited was able to meet its obligations to clients entitled to payment of moneys from its trust account. (c) That Mr Paul Aktas had failed to ensure that Homewise Realty Pty Limited did not default in the payment to clients of moneys from its trust account. (d) That Mr Paul Aktas had failed to ensure that Homewise Realty Pty Limited paid its debts as they fell due. 39 The plaintiffs initially raised imputations which included that Mr Aktas knew that there would not be available funds when drawing the trust account cheques. This, in turn, gave rise to generalised imputations of dishonesty, although still falling short of imputations of criminality (see the original statement of claim filed 26 November 2002 containing imputations 6(a) ("the First plaintiff passed a cheque that he knew to be valueless") and 6(b) ("the First plaintiff passed a trust account cheque that he knew would not be honoured on presentation at the bank"). The amended statement of claim filed on 16 April 2004 raised imputations substantially the same as those relied on by the plaintiffs before the jury but, importantly, without knowledge of an insufficiency of funds being attributed to Mr Aktas and without any imputations of insolvency, much less imputations of impropriety or dishonesty. The amendments were made pursuant to a grant of leave and after argument (see Aktas & Anor v Westpac Banking Corporation [2004] NSWSC 218 per Levine J). I note that no imputations identifying the plaintiffs as insolvent were ever pleaded, notwithstanding that in Raafbye Corporation Pty Ltd & Ors v Westpac Banking Corporation Ltd (unreported, 21 October 1994), Levine J held that the words "Refer to Drawer" in their ordinary and natural meaning are capable of conveying that imputation. 40 In Greek Herald Pty Ltd v Nikolopoulos and Others (2002) 54 NSWLR 165, both Mason P and Young CJ in Eq emphasised the importance of pleading the actionable imputations with reasonable precision in a s 7A hearing. In that case, the imputation in the defendant's newspaper that was established to be defamatory was simply that the plaintiffs, as directors of the Canterbury-Marrickville Olympic Soccer Football Club Ltd, lied to members of the Club. While the publisher accepted that the newspaper article in its entirety was relevant to the jury deciding whether the imputation was conveyed, it submitted that the jury ought not have recourse to the entire article in deciding whether the imputation was defamatory. The Court of Appeal was concerned with whether it was open to the defendant to seek a direction in the s 7A hearing that a jury must confine itself to the terms of the imputation alone when deciding whether they were defamatory, without importing into the words any significance the reader may have gleaned from the newspaper article in which the imputations were published or of the subject matter of the article generally. The Court held that the direction was properly refused and that the imputations pleaded must be understood and construed in the context of the entire matter complained of. In the course of his judgment, Mason P said (at 172) as to the importance of pleadings: "The pleader's task is to capture the essence of the specific matters imputed in relation to the plaintiff. Necessarily there will be questions of degree and "if a problem arises, the solution will usually be found in considerations of practical justice rather than philology" (per Gleeson CJ in Drummoyne Municipal Council v Australian Broadcasting Corporation (1990) 21 NSWLR 135 at 137). In this as in other areas, pleadings serve the ends of justice: they must not be permitted to assume an independent self-referential function. The pleaded imputation remains "the statement which, as the plaintiff alleges, the publication gives the reader or viewer to understand" (per Mahoney JA in Singleton v Ffrench (1986) 5 NSWLR 425 at 428). It is not a straitjacket, although the rules of procedural fairness place limits upon judge and jury's capacity to enlarge the issues. A plaintiff's pleaded imputations set the scene for the contest which follows. The defendant's pleadings will respond to the asserted causes of action. The jury will have to decide whether the matter complained of carries the imputation and, if so, whether it is defamatory or the plaintiff. Defences as to truth, contextual truth and comment are also responsive to the pleaded imputations ( Defamation Act , s 15(2), s 16(2), New South Wales Aboriginal Land Council v Perkins (1998) 45 NSWLR 340). But even here, the plaintiff will be bound by the substance, as distinct from the precise words of the pleaded imputation (see Morosi v Mirror Newspapers Ltd [1977] 2 NSWLR 749 at 771)." His Honour went on to say (at 173): "The principle which I would uphold in this appeal must not become the passport to sloppy or ambiguous pleading of imputations. It is, however, incumbent on the parties to thrash out the true issues at the pre-trial stages. If a pleaded imputation lacks a sting or if the sting has multiple barbs, then the plaintiff should be challenged to clarify the pleaded imputation." 41 On the importance of pleadings, Young CJ in Eq said (at 176): "In Cinevest Ltd v Yirandi Productions Ltd (2001) Aust Torts Reports ¶81–610 (67,031) at 67,035 [21], Spigelman CJ, with whom Meagher JA and Handley JA agreed, said that the Defamation Act , s 7A(3), must be construed as if the words read "[t]he jury is to determine whether the matter complained of carries the imputation pleaded by the plaintiff and if it does, whether the imputation is defamatory of the plaintiff " (emphasis added). Although I have quoted this out of context, it again focuses attention that in this Act one must look to the way in which the imputation is pleaded. In the present case the imputation was pleaded very generally and that I believe is the source of the problem. However, in Australian Broadcasting Corporation v McBride (2001) 53 NSWLR 430 at 439 [47], this Court, consisting of Beazley JA, Ipp A-JA and Fitzgerald A-JA, had to consider a pleading point in a defamation action. Ipp A-JA said (at 439 [47]): "A transcript of the … program in question is annexed to the statement of claim. The transcript forms part of the context in which the pleaded imputations are to be understood. It is relevant and admissible for the purposes of demonstrating the force and effect of the imputations pleaded and giving colour to and explaining the significance of them". His Honour supported that statement by citing Dougherty v Nationwide News Pty Ltd (1968) 88 WN (Pt 1) (NSW) 146 at 149; Ron Hodgson (Trading) Pty Ltd v Belvedere Motors (Hurstville) Pty Ltd [1971] 1 NSWLR 472 at 477 and A B Parry & Sons Pty Ltd v K G Murray Publishing Co Pty Ltd (Hunt J, 10 April 1980, unreported). At first blush this passage appears to support the respondents' point of view. However, when one looks at it a little more deeply one can see that the pleading in Australian Broadcasting Corporation v McBride actually set out the newspaper concerned. There is no doubt at all in the instant case that had the imputation been widely pleaded, the point would not have arisen. Mr Molomby's point is that the matter arises because of the imprecise way in which the imputation was pleaded." 42 While Westpac accepted, as it must, that the jury found that the imputations contended for by both plaintiffs were conveyed by the words "Refer to Drawer" and that they were defamatory, it submitted that the case that the plaintiffs have sought to make out in the proceedings before me on the question of damages extended beyond the imputations pleaded. In particular, it is submitted, that to the extent that the harm to the reputation of the plaintiffs is in relation to imputations either not pleaded, or not substantially based on the imputations pleaded, the plaintiffs cannot recover damages. The defendant referred me to George Jamoo v Nationwide News Pty Ltd [2004] NSWSC 126 as authority for this proposition. The application of the statement of principle in that case to the facts of this case was initially the subject of debate in the course of the proceedings when objection was taken by Westpac to the admissibility of evidence the plaintiffs sought to lead from various witnesses who either themselves reacted in particularly hostile ways to the publication of the defamatory material, or who heard and/or understood others to react in similarly hostile ways at the expense of Mr Aktas's reputation for honesty and integrity. I resolved at that time to receive the evidence of these witnesses provisionally, on the understanding that detailed argument on the issue would be reserved until final submissions. Before I turn to consider those submissions on what is essentially a causation question (a question that extends beyond the action in defamation and impacts upon the claim for damages in contract and in negligence), I propose to deal with the defence of qualified privilege. The defence of qualified privilege 43 In its filed defence, Westpac pleaded that the matters complained of were published on an occasion of qualified privilege both at common law and pursuant to s 22 of the Defamation Act 1974. In either event, the test as to whether the occasion is a privileged one is objective with the defendant bearing the onus of proof on the balance of probabilities. 44 In final submissions the statutory defence of qualified privilege was not pressed. In relation to the statutory defence, the defendant's particulars were drawn consistent with the requirement that it must prove that it was both reasonable to publish the matter complained of and that the extent of the publication was reasonable. In this case, that would necessarily have involved the defendant calling evidence to establish that proper inquiries were made by Ms Lidgard before she imposed PCO's on each of the three Homewise accounts on 1 December 1997 (including the two trust accounts) and that the conclusion that the trust accounts should be changed from "normal" to "PCO" was fairly and reasonably based on that information (see Morgan v John Fairfax & Sons Ltd (No 2) (1991) 23 NSWLR 374 at 387-8). The defendant did not call evidence going to these matters. The tender of the handwritten note of Ms Lidgard on the facsimile header sheet did not establish any more than that she made an inquiry of a bank officer. It provided no basis upon which it was open to test the reasonableness of her conduct. She was not called as a witness and no other evidence was tendered by the defendant going to the issue of reasonableness. 45 In the result, only the common law defence of qualified privilege was relied upon. If the common law defence is made out the case each of the plaintiffs bring in defamation will be defeated, although, as I have noted, the case Homewise brings in contract and, in the alternative, the case it brings in negligence, remain to be considered. Qualified privilege at Common Law 46 In Roberts and Another v Bass (2002) 212 CLR 1 at [62], Gaudron, McHugh and Gummow JJ said this about qualified privilege at common law: "The common law protects a defamatory statement made on an occasion where one person has a duty or interest to make the statement and the recipient of the statement has a corresponding duty or interest to receive it [citing Adam v Ward [1917] AC 309 at 334 per Lord Atkinson]. Communications made on such occasions are privileged because their making promotes the welfare of society" [citation omitted]. 47 The passage in Adam v Ward (at 334), referred to by the High Court in Roberts v Bass is as follows: "It was not disputed, in this case on either side, that a privileged occasion is, in reference to qualified privilege, an occasion where the person who makes a communication has an interest or a duty, legal, social, or moral, to make it to the person to whom it is made, and the person to whom it is so made has a corresponding interest or duty to receive it. This reciprocity is essential." 48 In Bashford v Information Australia (Newsletters) Pty Limited (2004) 218 CLR 366 at 373, Gleeson CJ, Hayne and Heydon JJ, extracted in full the seminal statement of principle from Toogood v Spyring (1834) 1 Cr M & R 181 which provides, in part, that where qualified privilege is pleaded, the material inquiry is whether the defamatory matter was published: "…in the discharge of some public or private duty, whether legal or moral, or in the conduct of the publisher's own affairs in matters where his interest is concerned." 49 Their Honours then observed that while the principles to be applied in determining whether there was publication on an occasion of qualified privilege were well established (inclusive of the necessity to identify a reciprocity of a relevant duty or interest between the publisher and the recipients on the occasion of the publication) the principles are stated at a high level of abstraction and generality. Their Honours said (at 373): "Concepts which are expressed as "public or private duty, whether legal or moral" and "the common convenience and welfare of society" are evidently difficult of application. When it is recognised, as it must be, that "the circumstances that constitute a privileged occasion can themselves never be catalogued and rendered exact", it is clear that in order to apply the principles, a court must "make a close scrutiny of the circumstances of the case, of the situation of the parties, of the relations of all concerned and of the events leading up to and surrounding the publication" (citations omitted). 50 In Bashford, McHugh J noted that after considering the circumstances of the particular case such as to enable the Court to make a judgment as to whether the publisher had a duty or interest that justified making the publication, and whether the recipients had a duty to receive or an interest in receiving it, questions of public policy usually arise, since the relevant interest must be a matter of substance and not a mere interest as a matter of 'gossip or curiosity' and to be sufficiently tangible for the public interest to require its protection (see Howe and McColough v Lees (1910) 11 CLR 361 at 377 and 398). It is not enough that that the publisher believed or might be taken to have believed that the recipient had a relevant interest, it must in fact have a corresponding interest (see Hebditch v MacIIwaine [1894] 2 QB 54 at 59). As to the significance of the public interest, McHugh J said in Bashford (at 386-387): "In Toogood v Spyring , Parke B said that "[i]f fairly warranted by any reasonable occasion or exigency, and honestly made, such communications are protected for the common convenience and welfare of society". Griffith CJ cited this passage with approval in Howe & McColough v Lees . There, Griffith CJ explained that the reference to the welfare of society did not mean that the person who made the communication was under an obligation to publish and was justified in publishing it to the public at large. Rather, according to his Honour, the phrase means that the interests of society in general require that a communication made under the particular circumstances to the particular person should be protected. It is of the first importance to understand that references to concepts such as "the common convenience and welfare of society" and similar phrases record a result and explain why the communication and the relevant duty or interest gave rise to an occasion of qualified privilege. Such concepts are not the determinants of whether the occasion is privileged. They must be distinguished from the question whether society would recognise a duty or interest in the publisher making, and the recipient receiving, the communication in question." 51 In warning against posing the question of whether the communication is for the common convenience and welfare of society (the correct question being whether the interests of society require that the particular publication to the particular recipients be protected), his Honour emphasised (at 389) that the occasion of qualified privilege must be defined concretely and precisely with the primary focus to identify the particular publisher, the particular publication and the particular recipients, as it is only then that the issues of duty, occasion, relevance and malice are able to be determined. 52 The need for a close scrutiny of all relevant circumstances is of particular potency in this case due to the unusual interplay of factors said to give rise to the occasion of qualified privilege. The peculiar circumstances of this case have also served to underscore the importance of identifying what it is that the defence of qualified privilege at common law operates to protect. In that connection, after I had heard oral submissions at the conclusion of the proceedings, and even after I had received further submissions in writing bearing upon the significance of s 36 of the Property, Stock and Business Agents Act 1941, the parties were invited by me to address that specific question. To what does the Common Law defence of qualified privilege refer 53 Put simply, and with particularity in the context of this case, the question I raised was whether the defence of qualified privilege at common law falls to be considered by reference to the matter complained of, that is, by the endorsement of the words "Refer to Drawer" on each of the 30 cheques, or alternatively, by reference to the imputations found by the jury to arise from that publication. I invited submissions on the question since I was satisfied that there was no clear statement of principle in the authorities to which the parties had referred me in the course of argument, and neither party had addressed the precise question in their extensive oral and written submissions. I was concerned that if I were to focus my inquiry on the defamatory imputations, and the approach was later found to be in error, a rehearing would be inevitable since the defendant accepted that it had no relevant interest or duty to publish the imputations suggestive of the fact that Mr Aktas was an incompetent manager or that Homewise had otherwise failed to discharge its obligation as trustee. On the other hand, if my focus should properly be on the matter complained of, that is the endorsement "Refer to Drawer", then that would leave the way clear to address the question as to whether, in the circumstances of this case, the defendant published those words on an occasion of qualified privilege as an answer to the plaintiffs' case. 54 Although, in the result, I am satisfied that the common law defence of qualified privilege is referable to the publication of the matter complained of, in this case the endorsement "Refer to Drawer" on the 30 trust account cheques and not to the imputations that the publication gave rise to, given the detailed submissions I received on the question I propose to set out, in summary, the arguments advanced by the parties. 55 The parties took diametrically opposed positions. The plaintiffs submitted that having regard to the retention of the common law defence of qualified privilege in the Defamation Act and the fact that the Act and the statutory defences are referable to the defamatory imputations, the common law defence of qualified privilege should be pleaded to the publication of the imputations. The defendants submitted that it is the publication of the matter complained of which attracts the common law privilege since the doctrine speaks of whether the publication was on an occasion of qualified privilege not whether the imputations are themselves privileged. The defendant also submitted that there is only one common law of Australia and that the defence of common law qualified privilege is expressly preserved by s 11 of the Act. Accordingly, the common law defence must be the same in, for example, Victoria and New South Wales, with the result that the traditional formulations of the privilege, couched in terms of publication on an occasion of privilege, are applicable in New South Wales. 56 The parties took me to various authorities, although, as I noted above, none was definitive of the issue I raised. Westpac regarded this as supportive of its position. It submitted that those cases that concerned qualified privilege at common law and governed by the Act simply proceeded on the assumption that the matter complained of is the focus of consideration, and, because of the prevalence of this assumption, direct authority for the proposition that the defence focuses on the matter complained of rather than the imputations is not abundant. The defendant submitted that it is the absence of any authority to the contrary which shows the settled position. 57 In this connection, Westpac referred me to Harvey v John Fairfax Publications Pty Ltd [2005] NSWCA 255, where Hunt AJA at [119], in the course of a review of the role of imputations under the 1974 Act generally, noted that the defence of statutory qualified privilege is not pleaded to the plaintiff's imputations. His Honour did not however refer to common law qualified privilege, despite the apparently exhaustive nature of the list. In John Fairfax Publications Pty Ltd v O'Shane [2005] NSWCA 164, Giles JA specifically noted (at [21] and [36]) that the defence of comment was referable to the imputations rather than the matter complained of, but also made no such observation in relation to qualified privilege, referring instead to the defence relating to a "defamatory statement" (at [74]). The judgment of Young CJ in Eq at [171] and [213]-[221] was submitted by Westpac to similar effect. The same point was made by reference to the judgment of Mason P in Greek Herald Pty Ltd v Nikolopoulos and Others (2001) 54 NSWLR 165, at [19], where reference to the defence of qualified privilege was noticeably absent, when his Honour said: "A plaintiff's pleaded imputations set the scene for the contest which follows. The defendant's pleadings will respond to the asserted causes of action. The jury will have to decide whether the matter complained of carries the imputation and, if so, whether it is defamatory or the plaintiff. Defences as to truth, contextual truth and comment are also responsive to the pleaded imputations ( Defamation Act , s 15(2), s 16(2), New South Wales Aboriginal Land Council v Perkins (1998) 45 NSWLR 340)." 58 In Sims v Wran [1984] 1 NSWLR 317, Hunt J reviewed the particulars that were by operation of Part 67 of the Supreme Court Rules (since repealed) required to be given for various defences to an action in defamation. At 326G-327B, his Honour dealt with common law qualified privilege and, at 327C-328B, with statutory qualified privilege. Westpac emphasised that no requirement for either defence to be directed to the imputations was specified. 59 In short, Westpac submitted that there was no authority in which the common law defence of qualified privilege was approached in the way contended for by the plaintiffs other than the obiter and general observation of Meagher JA in New South Wales Aboriginal Land Council v Perkins (1998) 45 NSWLR 340 where his Honour said (at pp 348-349): "The Defamation Act 1974 was a revolutionary change in the laws of defamation in New South Wales. Before that Act a plaintiff merely stated that the publication of which he complained and sought damages for loss of reputation flowing therefrom. After the 1974 Act a plaintiff no longer sued on the publication, but on the imputations which he alleged arose from it. Each imputation was a cause of action. Consequently, one would have thought, any successful defence must be a defence to the imputation. Otherwise the defendant would be answering a cause of action which the plaintiff does not rely on (viz, the publication), and the cause of action on which he does rely (viz, the imputation) would go unanswered." 60 Westpac also referred me to what Priestly J said (at p 343) in the same case, namely: "Because of his view that the defamatory imputations had not been made by the published matter, it was not necessary for Glass JA to deal with the defendant's comment grounds of appeal. However, at some length, he considered, amongst other questions relating to comment, the question raised in the present appeal, whether the defence of comment should be directed to the imputations relied on by the plaintiff or to the published matter by which they are made. The bare bones of Glass JA's answer to the question were that: (a) s 9(2) of the Defamation Act made each defamatory imputation made by the published matter and relied on by the plaintiff an independent cause of action; and (b) the defence of comment must be pleaded as a defence to a cause of action, that is, to a defamatory imputation relied on by the plaintiff." 61 It is not clear to me that Meagher JA was intending to sweep a review of the operation of the common law defence of qualified privilege within his review of the changes wrought by the Defamation Act. Similarly, I am not satisfied that what Priestly J said should be interpreted in that way. The defendant submitted that because their Honours did not address the operation of the common law defence of qualified privilege within the auspices of the Defamation Act, their judgments in Perkins did not assist in the resolution of the issue at hand. Notwithstanding the significance of Perkins, I do not consider the judgment has the force contended for by the plaintiffs. 62 Westpac also submitted that the recent case law to which the plaintiffs referred (namely Bashford and Bellino v Australian Broadcasting Corporation (1995-96) 185 CLR 183) does not, on a careful reading, support the position for which the plaintiffs contend. I am urged to the view that in referring me to these two authorities the plaintiffs confused or elided the question of whether the publication is on an occasion of qualified privilege with the question of whether the occasion has been used excessively such that the protection of the privilege falls away. It seems to me to be patent from the established authorities on the operation and scope of qualified privilege that it is only where there is a question of excessive use of an already established occasion where the privilege might obtain that there has been a need to review the imputations conveyed by the publication, and only then to identify their relevance to the occasion, since it is well established that the common law privilege attaches only to those defamatory imputations that are relevant to the privileged occasion (see Theodore Skalkos and Anor v Joseph Assaf and Anor [2002] NSWCA 14 in particular at [23] and [28]). 63 In Bashford, at [135] Gummow J referred to the joint judgment of McHugh and Dawson JJ in Bellino, with which he agreed, where he said: "It is clear that both the primary judge and the Court of Appeal proceeded on the assumption that it was first necessary to establish that the principal part of the article was published on an occasion of qualified privilege and only then to consider whether the defamatory imputation, although not contained within the principal part of the article, nevertheless, was relevant to it. In my view, such an approach requires caution. The defence of qualified privilege is a plea in confession and, as such, is predicated upon the existence of a defamatory imputation to which the privilege attaches. To speak of qualified privilege attaching to a non-defamatory statement is to ignore this fundamental characteristic. It follows that questions of relevance, in the sense in which that term was used by the judges below, will ordinarily only arise where two or more defamatory imputations are published on a single privileged occasion. In such circumstances, it will be necessary to determine whether each imputation falls within the umbrella of the applicable privilege or whether one of the imputations is not relevant and, therefore, not covered by the defence. In the present case, only one defamatory imputation has been found to have been conveyed. It is therefore necessary to consider whether that imputation was made on an occasion giving rise to a defence of qualified privilege arising out of a reciprocal duty or interest." 64 The observations of Kirby J in Bashford at [191]–[194] are said by the plaintiffs to be to the same effect. As the defendant points out, however, his Honour posed the question: "…was the defamatory imputation germane to the occasion …or did it…take…the publication outside the protection of the privilege" (emphasis added). This also serves to demonstrate that reference to the imputations in that case was in the context of relevance and then only because it was accepted that the publication was otherwise capable of being privileged . At [196] his Honour stated: "In order to secure … the defence of qualified privilege, it remains in each case for the publisher to demonstrate that the defamatory imputations are "relevant to the privileged occasion". It must be left to the common sense of judges (and, where they still decide such matters, juries) to evaluate in the particular case whether the defamatory imputation is "relevant" or "germane" to the occasion or not". 65 It is common ground in the instant case that the matter complained of consisted simply and exclusively of the words "Refer to Drawer". For that reason there is no call for any inquiry into whether the occasion was used excessively. Accordingly, there is reason to inquire whether the defamatory imputation is "relevant" or "germane" to the occasion. It was submitted by the defendant that the words "Refer to Drawer" are an extreme form of the dichotomy between what is published and what the words published might be taken to mean in cases where qualified privilege is claimed at common law. I am of the view that while dichotomy, wherever it presents, may not always be productive of clarity, in this case it serves to eschew any inquiry into whether the publication was excessive to the occasion. 66 While I am satisfied that the defence falls to be determined by reference to the matter complained of that is not to say that what was published is irrelevant to a determination as to whether an occasion of qualified privilege is ultimately made out. To the contrary, those words then become the focus rather than what they might convey by way of imputation. Has the defendant established the common law defence? 67 What I have earlier referred to as the ultimate question, namely whether the occasion of the publication of the endorsed cheques was an occasion of qualified privilege, was also a question that was not without difficulty. The defendant described it, without exaggeration, as one of the central questions in the case. I have already noted above that the peculiar facts of this case raise the question whether it is open to the defendant to invoke the defence in circumstances where it is not in dispute that the offending material was published in error. In that connection, however, the issue is not whether what was published was true or false (a consideration irrelevant to determining whether the occasion was one of qualified privilege: Howe v Lees (1910) 11 CLR 361 at 378). In addition, since it does not follow that there may never be a relevant duty or interest to publish that which is false or untrue, then there is no prohibition, per se, in the defendant claiming immunity from the consequences of its error. Rather, the question is whether, in circumstances where the occasion for the publication itself is grounded in error, it necessarily follows that no duty or interest to communicate the matter complained of arises. 68 This question has been decided by the Court of Appeal in England in Davidson v Barclays Bank Ltd [1940] 1 All ER 316, a case that is not factually distinct from this case, and, it must be said, contrary to the position contended for by the defendant. I am invited by Westpac, however, not to follow Davidson by reason of the doubt that has been cast over its correctness and instead to decide the question in accordance with first principles. I will return to discuss the authorities presently. It is instructive to first set out the submissions of the parties. 69 The plaintiffs contended that Westpac cannot claim the protection of the privilege where, as here, it published the defamatory statements to the payees and collecting banks in circumstances where it misconceived its obligation as banker to the plaintiffs and where it acted contrary to relevant provisions of the Cheques Act 1986 (Cth) which oblige a bank to pay on presentation of its customer's cheques in circumstances where the account contains sufficient funds and the cheque is properly drawn. The plaintiffs submitted that it is not to point that the publication of the words "Refer to Drawer" was a result of Westpac's administrative error and further, that it is wholly irrelevant to determining whether the occasion was privileged that Westpac may have been acting in a mistaken belief that it was entitled, even obliged, to dishonour the cheques because of its receipt of the garnishee order, since the nature or existence of the relevant duty or interest with which the defence is concerned is tested objectively. In Justin v Associated Newspapers Limited (1966) 86 WN (Pt 1) (NSW) 117 per Walsh JA said at 33: "It should be added that, in my opinion, the tests at common law as to the existence of a privileged occasion were primarily objective ones. By this I mean that the point was whether there was in fact the requisite situation, not whether the defendant believed that there was." See also Stephens v West Australian Newspapers Ltd (1994) 182 CLR 211 at 238 and Hebditch v MacIlwaine (1894) 2 QB 54 at 59-61, 63-64. 70 The plaintiffs submitted that, save for Westpac's own error, there was no relevant duty or interest it can rely on which called for a communication with the payees of the cheques or the collecting banks, much less a duty to communicate to those seeking payment that they should go to the drawer and seek payment from them. In short, the plaintiffs submitted that consistent with Davidson v Barclays Bank Ltd, I should find that the defendant cannot protect itself from the consequences of the defamation by relying on its own error. 71 In final submissions (although only after the operating provisions of the Property, Stock and Business Agents Act 1941 were drawn to its attention) Westpac conceded that on the occasion of the publication, it had no proper basis for dishonouring any of the trust account cheques. It conceded that this was so irrespective of the breadth of the terms of the garnishee order which, were it not for the mandatory words of s 47 of the Property, Stock and Business Agents Act, might have compelled it to attach Homewise's trust accounts. It is submitted, however, that this concession was not fatal to the question as to whether an occasion of qualified privilege arose. Notwithstanding the fact that it had no proper basis upon which to dishonour the cheques, Westpac submitted that the occasion of qualified privilege arose in the first instance because the drawing of each cheque by Homewise created a business or commercial connection between it and the third parties who were, prima facie, entitled to receive the monies under the cheques. The reciprocity of duty or interest, that aspect that is foundational to the protection that the privilege affords, is then said to arise either from a private interest Westpac has as a bank and as a member of the business community, or a social interest referable to its place within the institutional structure of ordinary commerce. The particular and identifiable duty or interest Westpac claimed was to convey information in relation to cheques presented to it for payment, information that third party payees or the collecting banks of those payees had a corresponding interest to receive. 72 Westpac further identifies the particular reciprocity of duty or interest between it and the payees of the cheques (or their collecting banks) on the basis that it was entitled and/or obliged to advise the payees (or collecting banks) to refer the cheque for payment to the drawer when it had determined on 1 December 1997 (albeit mistakenly) that the only activity it would permit on the Homewise trust account was the posting of credits. The evidence makes it clear that Westpac made no mistake as to the identity of the persons to whom it was publishing the information. It did not, for example, publish the words "Refer to Drawer" to an extraneous third party who was not entitled to receive the cheque. It is the plaintiffs' case (which Westpac admits) that each of the recipients of the communications "Refer to Drawer" was a landlord who was a customer of Homewise, and who would, but for Westpac's action following receipt of the garnishee order, have been entitled to receive a rental cheque from Homewise drawn on the Rent Trust Account. 73 There is limited judicial consideration of the application of the doctrine of qualified privilege in a case analogous to this although, as I have noted, Davidson v Barclays Bank Ltd is inconsistent with the proposition advanced by the defendant, namely, that an occasion of privilege may arise in such circumstances. 74 The question whether a privileged occasion arises in circumstances where a cheque is wrongly dishonoured by reason of bank error of one kind or another has been the subject of a series of decided cases but in each case the facts are distinguishable from those here (see Ballin v Bank of Australasia (1895) 16 NSWLR 15; Levy v Union Bank of Australia Ltd (1896) 21 VLR 738; M'Nickle v Bank of New South Wales [1881] 2 LR (NSW) 7; Browne v Bank of Australasia [1881] 2 NSWLR 325). While neither of the parties referred me to these cases in argument, I do note that in the cases of Ballin and Levy it did not seem to be doubted that an occasion of privilege arose upon presentation of a cheque for payment and, more particularly, that in Levy the Court was of the view (although it would seem obiter) that the privilege is not taken away by circumstances which show that the communication was untrue. 75 In the more recent case of Davidson (the case to which the parties directed their submissions) the plaintiff drew a cheque on his commercial bank account, which at the time had sufficient funds to cover the cheque. The bank returned the cheque to the payee with the notation "Not Sufficient". The bank argued that this was an honest mistake and claimed qualified privilege. Hilbery J found that the bank could not rely on its own mistake and thereby create the occasion of qualified privilege for making the communication. His Lordship considered that for a privilege to arise, it is necessary that the occasion already be constituted before the defamatory communication is made. His Lordship stated at 321-322: "One may make a mistake in a communication which one makes in good faith on a privileged occasion, and it is an answer, if that mistake is a defamatory one, to say: "The occasion was one of qualified privilege, and I made the mistake, but it was an honest mistake, made in the honest belief that it was true." However, you cannot, by making a mistake, create the occasion for making the communication, and what the bank seeks to do here is to create an occasion of qualified privilege by making a mistake which called for a communication on their part. That is the difference – the essential difference – between this case and such a case as that which counsel for the defendants was putting in argument – namely, the case where a person comes to another for a character, or where, in the other example which counsel gave, and upon which he argued, the customer of a bank gives the name of the bank manager as a reference to the person from whom he proposes to rent premises. In either of those examples, when the request for the character is made, the occasion which is qualified privilege is already constituted, and, if on those occasions, once has been constituted through the circumstances, there is made a communication which is mistakenly defamatory, subject to the other qualification which I have mentioned, of course, the occasion is one of qualified privilege." 76 Thus, it appears that on this approach, there is a distinction to be drawn between a mistaken allegation on an occasion which is privileged and relying on a mistake as giving rise to the occasion of privilege itself. The difficulties inherent in such a distinction were considered in Pyke v The Hibernian Bank Limited [1950] IR 195, where Black J referred to Davidson and commented at (221-222): "Hilbery J overlooked, I think, that such cases of privileged occasion are not exhaustive and that there are other cases of clearly privileged occasions where this distinction does not exist, and where there would be no privileged occasion but for the mistake of the party seeking to rely upon it. [Counsel for the appellant] instanced the case of communications made bona fide alleging misconduct on the part of public officials which turn out to be untrue. In such cases the occasion is privileged, although in many of them there would be no occasion to make any communication but for the mistake of the person making it. The same applies to bona fide communications charging a person with a crime, if made to officers of the law whose duty it is to detect and prosecute criminals. Yet, in most cases of the kind the maker of the communication would have no duty to make, or interest in making, any communication whatever about the person in question, were it not for his own mistake in thinking that the person had committed a crime." 77 Black J considered that it was not possible to sustain the general proposition advanced by Davidson. Rather his Honour considered that the governing principle is that: "[T]he principle that a privileged occasion exists wherever there is a reciprocity of duty or interest between the maker and receiver of the communication is wide enough to cover every case where that reciprocity is established. To make an arbitrary exception of cases where the relevant parties are bankers and payees of cheques would, in my view, be to make laws by introducing new exceptions to a settled principle, which is beyond the function of the Courts." 78 In Lloyds Bank v Rogers (unreported, 20 December 1996, English Court of Appeal), Simon Brown LJ observed (obiter): "…the correctness of Hilbery J's decision in Davidson has been doubted and never yet tested". 79 Westpac urged me not to follow Davidson and reminded me that there was no case to which the plaintiffs could refer the Court where Hilbery J's analysis had been applied. Indeed, on close analysis, Westpac submitted that Davidson was unpersuasive since his Lordship's reasoning was without any considered analysis of the law on qualified privilege and his approach was inconsistent with the fundamental principles that underpin it. Moreover, the judgment was delivered ex tempore and his Lordship acknowledged that he did not have the benefit of having the authorities on qualified privilege before him (see at 321B-C). Most significantly, his Lordship appears to have misconceived or failed to properly identify the nature of the occasion that created the privilege in the case before him. As Black J pointed out in Pyke, if a person who complains to the police about someone on the basis of an honest but mistaken belief as to what that person had done does so on an occasion of privilege, why does not a banker who mistakenly reports to his customer that there are funds lacking in an account also have the protection of the privilege? 80 It is beyond argument that the defence of qualified privilege implies that the defendant has uttered a falsehood, or at least is unable to establish a defence of truth. If the utterance were not defamatory, there could be no action for defamation and if the utterance were true it might otherwise be justified. In the present case, Westpac has not sought to prove as true the particular imputations pleaded by the plaintiff and accepted as conveyed, as defamatory by the jury. O'Connor J noted as much in Howe v Lees (1910) 11 CLR 361 at 378, when he observed: "…[t]he learned Judge in the Court below seems to have held that such a privilege, if it existed, could only protect statements that were true in fact. But such a limitation would render the privilege useless." The defence of qualified privilege is made out 81 I am satisfied that if a privileged occasion can be created by the communication itself, then it does not follow that no privilege can be said to arise because the information conveyed by the communication was false or mistaken. Were it otherwise, the defence would have a limited scope within which to operate. As Lord Esher MR said in Hunt v Great Northern Railway Company [1891] 2 QB 189 at 191, a privileged occasion arises: "… if the communication was of such a nature that it could be fairly said that those who made it had an interest in making such a communication, and those to whom it was made had a corresponding interest in having it made to them. When those two things co-exist, the occasion is a privileged one." 82 This statement of principle provides that the communication itself can create the occasion of privilege. The fact that Westpac officers imposed a PCO on the Rent Trust Account in error (an error which was compounded when it declined to honour the cheques and returned them with the endorsement "Refer to Drawer"), is not such as to deprive it of the protection of the privilege since I am satisfied that the occasion of the publication was otherwise privileged. The relationship Westpac had with each of the payees and the collecting banks (namely, as the paying bank) warranted the communication of information about its attitude to the presentation of the cheques, notwithstanding that such information – but not the existence of the relationship between them and the reciprocity of interest they shared – was premised on a mistake. 83 I intend to record in a summary way my findings on the question of damages in the defamation action in the event that my finding that the defence of qualified privilege is made out is the subject of appellate review. I do not intend to analyse the evidence with the same degree of scrutiny as would have been necessary were I to have come to a different view. However, since there is considerable overlap in the evidence relied upon by the plaintiffs to ground the claim in damages for defamation on the one hand, and the damages said to result from breach of contract (and perhaps in negligence) on the other, it will be necessary to refer to the same body of evidence in any event if I am satisfied that the second plaintiff has made out a case in either contract or tort. 84 The principles of causation generally (and, in a related sense, remoteness of damage) arise in different ways in the law of defamation to that of contract and tort. There is nevertheless some interweaving of these principles as they apply to the facts in this case. I have already referred to the objection the defendant took to the admissibility of certain evidence that the plaintiffs sought to lead on the issue of hurt to feelings and damage to reputation and the sense in which I regarded this as essentially a causation issue. While the causation issue in contract is cast differently, namely what pecuniary loss to Homewise's credit and trading reputation can be shown to have flowed from the incorrect marking of the trust account cheque "Refer to Drawer" (see Kpohraror v Woolwich Building Society [1996] 4 All ER 119), the question of likely meanings that might attach to those words by the recipients of the cheques cannot, as a matter of common sense, be different to the way that question is posed in the context of the defamation action where damages for loss of reputation simpliciter are under consideration. 85 In addition, Westpac submitted that the evidence reveals different or competing reasons to explain Homewise's downturn in business in 1998 and the years that followed, reasons entirely unrelated to its conduct, and that for this reason alone the plaintiffs have failed to substantiate the quantum of the claim for Homewise's economic loss in the defamation action. Similarly, if it be the case that there are competing causes such as may explain Homewise's downturn in business in 1998, then this may either deprive Homewise of recovering other than nominal damages for breach of contract or it may operate to reduce the quantum of any award. 86 Finally, the plaintiffs' failure to mitigate their loss, if established, will bear equally on an assessment of damages for defamation as it will for the other causes of action that are pleaded. What aspects of Mr Aktas' claim for damage to reputation and hurt to feelings are compensable? 87 To restate the position, the jury found the following defamatory imputations proved: (a) That Homewise Realty Pty Limited was unable to pay its debts as they fell due (and that Mr Aktas had failed to ensure that it would pay its debts as they fell due). (b) That Homewise Realty Pty Limited was unable to meet its obligations to clients entitled to payment of moneys from its trust account (and that Mr Aktas had failed to ensure that it was able to meet its obligations in that regard). (c) That Homewise Realty Pty Limited had defaulted in the payment to the clients of moneys from its trust account (and that Mr Aktas had failed to ensure that it would not default in this way). (d) That Homewise Realty Pty Limited had passed a valueless trust account cheque (and that Mr Aktas had caused it to pass a valueless trust account cheque). 88 In summary, the defendant submitted that the plaintiffs are bound by the case they pleaded and advanced before the jury in the s 7A hearing. Accordingly, it is submitted that Mr Aktas should not be permitted to recover damages for hurt to his feelings and damage to his reputation, nor Homewise the damage to its trading reputation and the consequent loss of profit, unless the damage is shown to be referable to the defamatory imputations pleaded (which are meanings the jury were satisfied the ordinary reasonable reader would have drawn from the words "Refer to Drawer") or referable to meanings which are not substantially different from and which carry the same sting as the imputations found by the jury. 89 With regard to the case advanced by the plaintiffs before the jury, my attention was taken to the transcript of counsel's closing address. I consider the position there articulated to be of sufficient importance to set out at length. Counsel for the plaintiff submitted by reference to the imputations pleaded, that: "The immediate reaction, you could imagine, is that something has gone terribly wrong and we suggest these meanings, not wishing to be over dramatic, you might think they are very conservative meanings, you might think there could be much worse meanings that in fact might have been considered by the customer in those circumstances. But they have not been included, so you put those to one side. What these are are pretty conservative and sensible, we would suggest to you, meanings. For example, they don't suggest a wrongdoing, other than a failure to meet particular obligations in relation to trust accounts." 90 Having regard to the authorities to which I have earlier referred, there is no conclusion open other than that counsel elected to limit the plaintiffs' case to the imputations pleaded for sound and considered forensic reasons. 91 Westpac places reliance on what Nicholas J said in Jamoo (at [64]): "In New South Wales, of course, pursuant to s 9(2) of the Act, the actionable imputation or wrong is the imputation which has been found by the jury under s 7A(3) to be carried by the matter complained of and to be defamatory. The pleaded imputations are meanings which the Plaintiff alleges the reasonable reader will give to the article and the Plaintiff having thereby set the scene for the contest will be bound by the substance of them. ( Greek Herald Pty Ltd v Nikolopoulos (2001) 54 NSWLR 165 per Mason P paras 18, 19). Thus the Plaintiff's claim for damages is limited to the harm resulting from those imputations and not others. The approach to be taken by the Court as indicated in Hughes , Selecta , and Chakravarti is consistent with statements which hold that a publisher is liable for the reasonable reader's understanding of what the matter is saying but not for judgments or conclusions which he may reach as a result of his own beliefs and prejudices. ( Harrison v Mirror Newspapers Ltd (1982) 149 CLR 291 at p 301; Amalgamated Television Services Pty Ltd v Marsden (1998) 43 NSWLR 158 at p 172). It follows that the Plaintiff's hurt from the belief or knowledge that a person understood the matter to convey a meaning which is not open, or is substantially different from the found imputation, is not compensable." 92 Expressed in this way, the principle enunciated by Nicholas J is simply a reflection of the general concern of the law that the liability of a defendant should not be regarded as the effective cause of harm to a plaintiff merely because the defendant's conduct is (or may be) a sine qua non of that harm arising: March v E & MH Stramare Pty Limited and Another (1990-91) 171 CLR 506, per Mason CJ at 509-510, 515-517; per Deane J at 522-524. The underlying principles are also said to find expression as part of the uncontroversial requirement that for a defendant to be liable for a republication of a defamatory statement, he must have: (a) intended the republication; (b) authorised the republication; (c) the republication must be the natural and probable result of the initial publication; or (d) where the recipient of the initial publication was under a duty to repeat it: Speight v Gosnay (1891) 60 LJQB 231; Tobin & Sexton, Australian Defamation Law and Practice , at [5360]-[5370]. 93 Westpac accepted that the overwhelming tenor of the evidence adduced by the plaintiffs was that people in Auburn (especially, but not only, members of the Turkish community) reacted adversely and with some hostility to Mr Aktas from the first week of December 1997 when it became known that various trust account cheques drawn on the Homewise account were not met on presentation. It sought to emphasise however that the nature and intensity of the adverse reaction and the fact that it appeared to be sustained beyond the first week of December 1997 was not because of any suggestion that Mr Aktas was an incompetent or inattentive manager of the affairs of Homewise's clients (the effect of the imputations as pleaded and proved) but because he was thought to be guilty of criminal conduct, notably theft. Westpac submitted that imputations of criminal conduct, or even generalised dishonesty, formed no part of the case pleaded and that this reaction was substantially different from, and carried a sting materially different to, any sting carried by the imputations found by the jury. The evidence the defendant pointed to in support of this submission is summarised as follows: (a) Mr Mark Williams recalled that his mother-in-law had asked "was Paul going to jail". (b) Mr Adil Varisili recalled that staff would ask him questions such as "What's going on? Do you know anything that Paul's not telling us? We think that monies are being taken." Mr Varisili stated that people in the community "would basically say that he is either stealing or he is either gambling". Mr Varisili recalled that Mustaffa Doladitch had asked "Why are you working with him? Don't you know he is stealing?". Mr Varisili also said that the impression from the Turkish community, employees and customers was that Mr Aktas "had, in fact, stolen money from the trust account". (c) Mr Tom Aktas recalled that he heard a customer say to Mr Aktas "Bullshit. You pinch from me." Mr Tom Aktas also gave evidence that the overwhelming impression from the customers was that Mr Aktas had "stolen money". (d) Ms Zohra Pirzad recalled that people asked her "What's happened? I heard he's going to jail?" and that the people who had complained thought that Mr Aktas "had stolen money or had been dishonest". (e) Mr James Trevor Hassett recalled that in many conversations he heard there were suggestions that Mr Aktas had "pinched money", "knocked off money" and that he "was a crook". (f) Mr Peter Nagle recalled that Mr Hameed told him that "Paul has stolen from his trust account" and while Mr Nagle was standing at a Westpac branch to deposit money he overheard a conversation where a customer said "Well he'll go to jail for stealing from his trust account". Mr Nagle recalled a conversation with Savas Demircileri who said to him that if Mr Aktas has "stolen from his trust account, he'll go to jail". Mr Nagle also recalled a conversation with the President of the Turkish Welfare Association in which the President had stated "Paul has stolen money from his trust account". Mr Nagle said that most of the commentary he heard was that the dishonourings and theft were linked in the same breath. (g) Mr Tarik Erzin stated that "his reputation was that he was a thief and stole money from trust accounts" (h) Mr Aytekin Habiboglu recalled two Turkish people talking about Mr Aktas. The first person said words to effect of "I got a cheque, it bounced, he stolen our money, he's a thief" and Mr Aktas has "stolen our money. He looks like, like a thief". The second person said words to the effect of "our money may have been stolen or is stolen". (i) Mr Isikalar said that his mother told him, after talking to others, that Mr Aktas had stolen money from the real estate and because of bounced cheques was in trouble with Westpac. He went on to say that various people were saying that Mr Aktas was a crook and that he stole people's money. (j) Mr Aktas gave evidence that a fellow trader, Mr Arabaci, in a neighbouring shop reported that quite a few people were talking about him to the effect that he had "cleaned out the trust account and many many people's cheques were bouncing". He went on to tell Mr Aktas that he had heard that he was caught at the airport trying to leave the country and that he was going to jail. When Mr Aktas said that it was Westpac's fault, Mr Arabaci said that he had been banking with Westpac and that Westpac didn't dishonour the cheques drawn on his account. He accused Mr Aktas of not telling the truth. 94 Westpac also drew attention to the fact that there was evidence that members of the community thought that Mr Aktas was, or was liable to become, bankrupt and that this imputation also formed no part of the case pleaded. 95 In addition, Westpac submitted that it was not open to the plaintiffs to rely upon the "grapevine effect" as a means of attributing liability for the spread of the defamation in this case. I accept that the so-called "grapevine effect" is not a separate doctrine of law, but merely a description of the ordinary process of legitimately drawing inference from direct evidence. As Gummow J observed in Palmer Bruyn & Parker Pty Limited v Parsons (2001) 208 CLR 388 at 416-417: "[88] The expression "grapevine effect" has been used as a metaphor to help explain the basis on which general damages may be recovered in defamation actions; the idea sought to be conveyed by the metaphor was expressed by Lord Atkin in Ley v Hamilton as follows: "It is precisely because the 'real' damage cannot be ascertained and established that the damages are at large. It is impossible to track the scandal, to know what quarters the poison may reach: it is impossible to weigh at all closely the compensation which will recompense a man or a woman for the insult offered or the pain of a false accusation." [89] The "grapevine effect" may provide the means by which a court may conclude that a given result was "natural and probable". However, this will depend upon a variety of factors, such as the nature of the false statement and the circumstances in which it was published. The "grapevine effect" does not operate in all cases so as to establish that any republication is the "natural and probable" result of the original publication. This was what was meant by Heydon JA, when his Honour referred to the appellant's submissions being put "as though the grapevine effect was some doctrine of the law, or phenomenon of life, operating independently of evidence". As Heydon JA correctly identified, the appellant can point to no evidence that the "grapevine effect" operated in this case." 96 Understood in this way, it is clear that the ordinary requirements attracting liability for republication apply, including, importantly, that the asserted republication preserves the sense and substance of the original publication. In this case, that requirement has the effect of simply restating the matter in issue, namely whether a belief that Mr Aktas was a thief, dishonest or duplicitous is to be taken into account on the question of harm to reputation and hurt to feelings, or whether it was a reaction by people, for cultural or other reasons, that differed in substance from the imputations that the jury found established and therefore is to be ignored on the question of an assessment of damages. The requirement that republication preserves the sense and substance of the original publication is essential to the law of defamation. Were it otherwise a defendant who published words which were critical but not defamatory of a plaintiff could be held liable in defamation upon their exaggerated recounting. Similarly, a defendant who published words that were mildly defamatory of a plaintiff, or defamatory of him in one respect, but not another, could be held liable for an exaggerated or distorted version of those words. In either case, it would impose an almost impossible burden on persons who communicated about the affairs of others in almost any context. 97 As I understand the plaintiffs' position, they do not challenge the correctness of Westpac's identification of relevant principles. Rather, they submitted that on a proper construction of the imputations in the context and circumstances of their publication (and what is said in Greek Herald Pty Ltd v Nikolopoulos and Others (2001) 54 NSWLR 165 at 174 to be "the affair generally"), in this case it was not one cheque but 30 trust account cheques that were dishonoured and at the same time and, having regard to what they contend is the real sting conveyed or carried by the imputations, the reactions of clients and others within the community do not differ in substance from the imputations the jury found to be defamatory. In any event, the plaintiff submitted that the imputations should properly be found to flow in the ordinary and usual course of things from the publication of the defamation (see Toomey v Mirror Newpapers Ltd (1985) 1 NSWLR 173 at 183). Approached in this way, the plaintiffs submitted that there is no occasion to isolate or differentiate between what is compensable and non-compensable harm. 98 The plaintiffs submitted that in circumstances where the jury have plainly rejected an innocent explanation for the fact that clients' funds are not available (such as bank error), the imputations necessarily carry the sting that the monies held by Homewise on trust, monies that should have been available to clients upon the drawing of a cheque on the Rent Trust Account, were "gone" and that whatever might be the reason for that state of affairs, Mr Aktas was responsible. The mere fact that the imputations invited speculation as to why the funds were not available and what Homewise and/or Mr Aktas might have done with the funds is, it is submitted, the real sting. What do the imputations convey 99 I am not satisfied that the imputations and the sting that was conveyed by them are capable of suggesting otherwise than that Mr Aktas was an incompetent or careless businessman who could not be trusted to look after other people's money, irrespective of whether that was because he caused Homewise to draw cheques when rent monies had not cleared, because he failed to manage or administer the business in such a way that this did not occur, or for some other reason that may amount to improper commercial practices but falling short of dishonesty. I use 'improper' in this sense to connote a failure to deal properly with other people's money as distinct from dealing with their money improperly. I do not consider that the imputations are capable of reasonably suggesting that he stole the money due to Homewise's clients or that he was otherwise dishonest or acted improperly in his dealings with them and thus could not be trusted. I am further of the opinion that the members of the local community - both the Turkish and Chinese ethnic communities and some sectors of the business community in Auburn generally - formed the unreasonable or irrational view that Mr Aktas had stolen his clients' money and that they unfairly maintained that view even when told by him that the dishonourings were due to Westpac's error and when this fact was endorsed as the truth by others. Whatever may have encouraged this attitude and despite the fact that it materialised or surfaced after the publication of the defamatory material, I am satisfied that it was not as a result of the imputations upon which the plaintiffs have elected to base their cause of action in defamation. It may be that the plaintiffs' case was pleaded conservatively in recognition of the fact that the jury would be instructed that, in determining whether imputations of criminality or dishonesty were conveyed, they must make their assessment from the position and perspective of the ordinary reasonable person, who is "neither perverse…nor morbid or suspicious of mind … nor avid for scandal": Amalgamated Television Services Pty Ltd v Marsden (1998) 43 NSWLR 158 per Hunt CJ at CL at 165. 100 Moreover, I am also satisfied that it was substantially because Mr Aktas was viewed as untrustworthy and dishonest that he was shunned and ostracised by the Turkish community in a wider social context, an attitude that apparently persisted for some time beyond December 1997. The fact that he was treated in this way is not doubted. The fact that these imputations occasioned him embarrassment and considerable hurt and shame is not doubted. The fact that his community treated him unfairly is also acknowledged. What remains the position, however, is that the defendant is not liable for the damage to Mr Aktas's reputation and the hurt to his feelings suffered as a consequence (see Hughes v Mirror Newspapers Ltd (1985) 3 NSWLR 504 at 510). This is not only because the reaction of sections of the Turkish community was beyond the sense and substance of the imputations as pleaded but because, in my view, they were also deaf to the protestations of respected members of the community, including Mr Nagle as the then sitting member of the Legislative Assembly, that the dishonouring of the trust account cheque was in truth a bank error, and because they were apparently impervious to shifting or moderating their views. In this way those sections of the community may properly be regarded as 'avid for scandal' or 'suspicious of mind'. For this reason, and notwithstanding the fact that the defamation penetrated many quarters within the Turkish community in Auburn, the grapevine effect does not advance the plaintiffs' case. In the same way, the wholly unwarranted conclusions adverse to Mr Aktas's honesty and integrity, drawn either by Homewise clients or by those who had those views published or republished to them, could not in any sense be viewed as a natural or probable consequence of the defendant's conduct whether that be in defamation or in contract. 101 I place some considerable reliance on the insights that Mr Williams and, to a lesser extent, Mr Nagle were able to offer as to the attitudes of members of the Turkish community in coming to this conclusion. Mr Aktas's compensable hurt to feelings and damage to reputation 102 Leaving aside those of Homewise's clients and others within the community who had the belief or who had made the judgment that Mr Aktas was a thief or had otherwise dealt dishonestly with the money of others, and leaving aside the republication of those opinions within the community, I do accept that Mr Aktas suffered a compensable hurt to his feelings when confronted by clients who claimed not to believe him when he said the dishonouring was due to bank error and those who expressed doubts as to his competence or professionalism. I also accept that he suffered damage to his professional reputation for honesty and integrity by reason of the likelihood of those views being repeated, even if intermingled with the harsher and unjustified judgments to which I have referred, and that this diminished his personal drive and his capacity to maintain his commitment to Homewise's business for a period of time. 103 Mr Aktas gave evidence that some of the clients with whom he spoke directly and by telephone did not accuse him of theft per se but instead accused him of lying when he proffered the explanation that the dishonouring was as a result of Westpac's error. It would seem from what was said by some clients that they saw a distinction between a trust account cheque and a personal cheque and simply did not believe Westpac would or could dishonour a trust account cheque. Mr Branley also accused Mr Aktas of not telling the truth when he asserted that the explanation for the crisis was bank error. Mr Aktas gave evidence that other clients expressed doubts as to his professional worth and integrity as a businessman and that staff members were talking about him disrespectfully and in hushed tones. He said he felt that his authority over his staff was diminished. 104 Westpac invited me to approach Mr Aktas's evidence with some caution both because of what it submitted was his general unreliability when giving evidence about contentious matters and because of his tendency to hyperbole and exaggeration with a view to advancing his own cause (both matters about which I will have something to say in due course). I accept that Mr Aktas has generally given truthful and accurate evidence about the reactions of his clients, Mr Branley and some staff members when the trust account cheques were dishonoured. I also consider that he reliably reported the state of gossip and commentary about him in the community, as it was reported to him, as news of dishonoured cheques spread. I do not doubt that Mr Aktas was infuriated and distressed by the fact that the trust account cheques were dishonoured when he believed, correctly, that there were adequate funds in the Rent Trust Account, and that these feelings intensified because Westpac seemed unable to promptly rectify the error or give him any adequate explanation for why the error occurred. I also accept his distress at not being able to persuade others to accept the truth of his assertions that the fault lay entirely with the bank. I do not doubt that he felt that this reflected badly upon him as an otherwise competent businessman in the eyes of his clientele and that it had a negative impact on the high repute that he had hitherto enjoyed in the eyes of the community and with the greater number of his staff. I accept that he was placed in the unenviable position of having to deal with irate clients presenting at the office over a period of days to weeks which intensified the hurt to his feelings. 105 My preparedness to accept his account of these matters is reinforced by the fact that he also gave evidence that some of Homewise's clients were understanding and even sympathetic, apparently accepting his claims that Westpac was in error and that the matter would be rectified, a position which is self evidently against his interests in the proceedings. It is also supported by the evidence of Ms Pirzad. I do not accept however that the hurt and fury associated with these confrontations extended beyond the end of the second week of December 1997, at the very latest, when the evidence established that clients had either re-presented their cheques or had been issued with replacement cheques. In addition, accepting as I do the evidence of Ms Wheat, it is clear that Mr Aktas took immediate steps to have his staff contact Homewise's customers, and to reassure them that new cheques would be issued. Ms Wheat noted that the people that she spoke to were generally quite understanding and had said that they simply wanted to know when they could expect their replacement cheque. She called between 10 and 15 customers herself and overhead other staff members making similar calls. This sensible and practical intervention may well explain why it would appear that there was no significant impact on Homewise's rent roll as a result of the defamation as distinct from the movement on the roll being as a result of unrelated commercial causes. Analysis of the Homewise Month End ledgers for December 1997 and for May 1998 reveals three things: (i) First, that of those landlords who had cheques dishonoured in December 1997, only three withdrew their properties from Homewise by the end of May 1998: (1) U Alkilic; (2) K Fernandez; and (3) SP Dragon Group. Mr and Mrs Owen, also recipients of a dishonoured cheque, did withdraw their property, but it is apparent that they had committed themselves as vendors of the relevant property by the time of the dishonour. (ii) Secondly, that ten landlords (who did not have cheques dishonoured in December 1997) withdrew their properties by the end of May 1998: (1) A&F Driveshaft P/L; (2) R Chekeri; (3) MJ Conway; (4) A Habiboglu; (5) Xiu Xin He; (6) J & M He-Jiang; (7) Y Lam; (8) Li & Xie; (9) R Shalala; and (10) O Topcu. Presumably, as with Ms Coltman who gave evidence before me, they had other, unrelated reasons to be dissatisfied with Homewise's services or sold their properties, or otherwise no longer required Homewise's assistance. (iii) Thirdly, that ten additional landlords had joined the rent roll of Homewise by May 1998: (1) R & B Aktas; (2) S Ariada; (3) J Azzopardi; (4) Y Bulbulia; (5) C & M Emeli; (6) P Lasalo; (7) T Tontu; (8) V Truong & Van Nguyen; (9) Mr & Mrs Uysal; and (10) Robert Whiley. What damages should be awarded to Mr Aktas as the first plaintiff 106 Accepting that damage is presumed to flow from a defamation (see Coyne v Citizen Finance Limited (1990-91) 172 CLR 211 at 218), and that s 46(2) of the Defamation Act provides that damages are recoverable in accordance with the common law for relevant harm, the difficulty that I am presented with in this case is differentiating or isolating the compensable harm to Mr Aktas's feelings, the damage to his reputation and the extent to which he is entitled to be vindicated for the falsity of the imputations in a damages award, from what the defendant has satisfied me was hurt and harm attributable to the prejudices or judgments of others that were not reasonably referable to the imputations pleaded or the meanings that were conveyed. 107 In assessing damages I also regard myself as bound to take into account the likely duration of Mr Aktas's compensable hurt to feelings, and the depth of that hurt. In addition to these matters I am satisfied that the duration of the negative impact of the defendant's conduct on Mr Aktas personally, while not superficial as I have sought to make clear by the findings I have made, was nevertheless transitory. Certainly, by Westpac's letters of 14 January 1998 and 19 January 1998 to the plaintiffs' solicitors, it had acknowledged in writing its sole blame for the dishonouring of the cheques and offered to make this clear to all relevant persons. In my view, Mr Aktas's hurt to feelings must have been diminished by Westpac's acknowledgment and apology even if he chose to reject the bank's overtures. 108 Moreover, I am satisfied that the primary source or cause of Mr Aktas's withdrawal from Homewise's business and his loss of the dynamism and drive that had otherwise marked his approach to advancing and sustaining the business, was the fact that he was shunned and ostracised by a community whose members had formed the view that he was dishonest and not to be trusted. 109 I am also of the view that Mr Aktas was subject to other stressors as at December 1997, most particularly due to his deteriorating relationship with Century 21 from May of that year, and that this also contributed to his changed attitude and approach to Homewise's business and, to a similar extent, his irascibility and volatility. This is the most favourable view which I am able to take to Mr Aktas's letter to Century 21 of 27 March 1998 wherein he alleges, inter alia and in the plainest terms, that Century 21 have been: "…injurious to my business and to me personally both of which have suffered substantial damage in addition caused panic, insecurity, disharmony and extreme stress to my staff my business and myself." 110 I also note that in the same letter Mr Aktas attributed defamatory statements to Century 21 which he claimed caused him and Homewise financial damage. When taken at length to this letter in cross-examination he ultimately conceded that much of it was untrue and that he had deliberately exaggerated the situation with Century 21 as an act of pique. The defendant has invited me to find that the letter displays a propensity on Mr Aktas's part to hyperbole and the false attribution of blame to others, consistent with a generalised tendency to advance his own cause at any opportunity and to shape his evidence accordingly. I formed this impression during much of Mr Aktas's evidence although, in light of the decision I have made limiting recovery to the damage attributable to the defamation as pleaded, issues of reliability do not loom large. . 111 Although I accept the fact that some people appear to have formed a view adverse to him because they believed he did not ensure that his clients were paid their money on time, or that he had otherwise mismanaged their affairs, reactions which were plainly referable to the defendant's conduct and constituted compensable hurt to his feelings and damage to his reputation, I am not satisfied this had the depth of impact for which Mr Aktas contends when compared to the harsh and pervasive views and attitudes of others for which the defendant is not answerable. In the result, while I do not reject as untrue the evidence of those who observed the dramatic change in Mr Aktas's behaviour in December 1997 and into 1998, I am satisfied that the unwarranted judgments of some people that he had engaged in criminal conduct entirely overtook his reaction to the imputations upon which his action is based. Any proper assessment of Mr Aktas's damages must take account of these matters together with the other general factual background against which the claim is brought. 112 Finally, there is the question of the extent to which Mr Aktas's failure to mitigate his own loss, and that of Homewise, reduces an award of damages in their favour. The evidence on this issue also has a direct bearing on that component of a damages award that is directed to publicly vindicating him. Westpac submitted that any need to vindicate Mr Aktas's reputation is greatly diminished by its open acknowledgment from January 1998 up to the present that the cheque dishonours were caused by error on its part. It is further submitted that if the letters did not wholly vindicate Mr Aktas, it is clear that it was willing to take any further reasonable step to do so publicly and hence the need to vindicate Mr Aktas's reputation is greatly reduced and should, in the result, have no discernible impact upon any award of damages. Failure to mitigate: general principles 113 The principle is well settled that a plaintiff in a defamation action has a duty to take reasonable steps to mitigate the damage claimed to flow from a defamation, in the same way as the law obliges it to act in respect of damage said to flow from breach of contract and in tort. Limiting myself at this stage to the action in defamation, the question of fact that presents is whether I am satisfied that the compensable harm to reputation and the special damages that might otherwise have been resulted from the defamation might have been avoided by reasonable steps on the part of the plaintiffs. 114 In Watts v Rake (1960) 108 CLR 158 at 159, Dixon CJ states: "The law of course places upon a plaintiff who sues in tort for unliquidated damages the burden of satisfying the tribunal of fact of the damages he has suffered both special and general and of the quantification in money that should be adopted in the sum awarded. That is the legal burden of proof which rests upon him throughout. Only in one respect is the burden of proof upon the defendant and this is when he sets up matter in mitigation of damages. If it appears satisfactorily that damage in a particular form or to a particular degree have been suffered by the plaintiff as a result of the wrong but the defendant maintains that the plaintiff might have avoided or mitigated that consequence by adopting some course which it was reasonable for him to take, it seems clear enough that the law places upon the defendant the burden of proof upon the question whether by the course suggested the damage could have so been mitigated and upon the reasonableness of pursuing that course." Did Mr Aktas and Homewise unreasonably fail to mitigate 115 In this case, Westpac assumed the burden of proving on the probabilities that Mr Aktas (on his own behalf and on behalf of Homewise) unreasonably failed to take up an opportunity afforded him by conciliatory conduct on the part of Westpac by which his loss might have been avoided or lessened. 116 Westpac submitted that it has discharged that burden and, that in the result, it is not liable for any damage that the plaintiffs claim was suffered beyond the end of March 1998, for the following reasons: (a) On 14 January 1998, in response to a letter from the plaintiffs' solicitor of 16 December 1997, Westpac acknowledged its error and apologised for the dishonouring of the cheques. In the same letter Westpac offered to write to each of the payees and confirm that this was the case and that "there were insufficient (sic) funds in the account to meet the cheques". Westpac sought a negotiated resolution and sought an opportunity to meet to discuss the matter. It asked that the plaintiffs refrain from issuing any proceedings. (b) On 19 January 1998, Westpac wrote a further letter to the plaintiffs' solicitor correcting the mistake in its previous correspondence and seeking the plaintiffs' approval to write to the Real Estate Institute so as to confirm that the error was a bank error that should not reflect adversely on the plaintiffs. (c) On 5 February 1998, the plaintiffs' solicitor responded to Westpac's offer advising that Homewise required that a letter be sent to all of its affected clients apologising for Westpac's conduct and a similar letter forwarded to the Real Estate Services Council. The plaintiffs' solicitors also advised that they were instructed to accept the offer of negotiation and would prepare an estimate of the plaintiffs' loss. That letter sought Westpac's "urgent response" (my emphasis). (d) On 11 February 1998, Westpac responded seeking the necessary information to enable Westpac to meet the request that Homewise's clients be contacted and confirmed that in so far as the preparation of the estimate of loss is concerned, they would welcome receipt of it before the proposed meeting. (e) On 19 March 1998, Westpac wrote noting that they had received no response to their letter of 11 February 1998. (f) On 23 March 1998, the plaintiffs' solicitor responded advising that the appropriate information would be to hand in the near future. (g) No further correspondence was received from the plaintiffs before proceedings issued in November 2002. The plaintiffs supplied no client list nor confirmation that the Real Estate Institute be contacted. (h) The plaintiffs continued to bank with Westpac at its Auburn branch. There was no evidence led as to any conversation or communication with the staff or management at that branch about the matter. 117 Mr Aktas gave evidence that he regarded the offer of an apology in January 1998 as too late as, in effect, by that time the damage had been done and could not be remedied. He also said that he did not trust Westpac to correspond with his clients given that their letter dated 14 January 1998 contained an egregious error and he did not want his clients confused or misled by Westpac any further. He said that he did not take up Westpac's offer to write an apology letter because "[t]he first letter made me very angry because after so much praying, pleading, arguing, they did nothing." When Mr Aktas was asked whether he responded to the letter dated 19 January 1998 from Westpac he replied: "No, I didn't. I prepared a few weeks later when my solicitor said prepare some documents, but I was just too sick and too depressed to do anything, any preparations whatsoever, to go through all of the things. That was one dark chapter. That was one dark period and I don't want to go to that pain again." 118 It is clear, however, that the assertion by Mr Aktas that he was somehow emotionally disabled from responding to Westpac's offer cannot be accepted since he conceded in cross-examination that he specifically instructed his solicitor, Mr Hassett, to write to Westpac on 5 February 1998 to request a letter of apology to all of the affected clients. For the same reason, I do not accept that Mr Aktas was unable to consider Westpac's offer to negotiate either because he had lost control of his business or for some other reason, given that his lawyers were instructed to undertake negotiations on his behalf or on Homewise's behalf. 119 While Ms Pirzad expressed the view that it would be far more confusing to the clients, many of whom did not speak English, to receive a letter from Westpac and not understand the content of it, her views do not carry great weight when there was no draft of any letter against which she might make that assessment. In any event, her views take no account of the clients who spoke English, or those sufficiently proficient in English to be able to read and understand a letter of the kind that Westpac proposed and that Mr Aktas instructed his solicitor to have Westpac write. While Ms Pirzad's view is one open to her, I place reliance on the evidence of Mr Williams, a solicitor who has had considerable exposure to the Turkish community. The effect of his evidence was that were Westpac to have corresponded with Homewise's clients from the Turkish community, both in English and in Turkish, and to have acknowledged its error, save only for some who would stubbornly maintain an adverse view of Mr Aktas, the greater number would not have ostracised Mr Aktas. 120 It was also submitted by the plaintiffs that since Mr Aktas had embarked on a procedure of ringing the recipients of the dishonoured cheques to explain the situation, an apology letter could confuse or muddy the waters. This is a somewhat surprising submission for the inherent concession that the damage has been stemmed or at least mitigated in any event by this process. 121 Mr Aktas also maintained that the question of whether clients' details should be released was a matter for Mr Branley as licensee. Ms Pirzad says there was a conversation about the Westpac letters in January 1998 between Mr Branley and Mr Aktas and that it was her understanding that Mr Branley was to look at whether the personal details of landlords could be provided. She gave evidence that there was some concern about the application of the Privacy Act and that there was nothing in the agency agreement with clients that allowed them to give the information sought by Westpac. She formed the view that Mr Branley was not eager to provide the information or, it seems, to participate in resolving the issue because he openly said he was terrified he would lose his licence. Whether or not some unspecified provisions of the Privacy Act apply or other aspects of confidentiality arise, I am satisfied that there were any number of alternatives that could reasonably have been adopted by Mr Aktas with Westpac's cooperation to overcome any concern with providing clients' personal details. An obvious example would be to seek an open letter from Westpac which could have been sent by Homewise, under Mr Aktas's direction, to its clients. Another would be an acknowledgement of error and retraction published in the local press. 122 There can be no doubt that as at 14 January 1998, Westpac was actively seeking both the information and the permission it required in order to write to the recipients of the "Refer to Drawer" notifications (and to any other customer nominated by the plaintiffs). I proceed on the assumption that were this offer to have been accepted, the letter would have acknowledged that the cheques were dishonoured by Westpac in error, that there were sufficient funds in the account against which the cheques were drawn and that Westpac would extend its apology to the plaintiffs for the damage done to their reputation in the circumstances. Depending upon the outcome of the proposed face-to-face meeting, the letter may have gone further and confirmed the plaintiffs' bona fides as established customers of Westpac. It may also have been that Westpac was prepared to go further still and to publish an acknowledgment of its responsibility for the error more widely. The fact is that none of these options were discussed because of Mr Aktas's unilateral decision not to participate in the proposed meeting. 123 It must be said however that Westpac's preparedness to formally correct, apologise and perhaps publicly acknowledge its error was some weeks after the letter from the plaintiffs' solicitor and many weeks after Mr Aktas first sought an explanation from Westpac for the dishonoured cheques and complained about the damaging consequences he was experiencing. Westpac has led no evidence to explain why Mr Aktas received no reply at all to his letter of 6 December or the delay in responding to the letter from the plaintiffs' solicitors of 16 December 1997. This is not to Westpac's credit. In fact, I am satisfied that Westpac's lack of commitment to resolving the error efficiently and emphatically in the weeks before Christmas contributed to the spread of misinformation about Mr Aktas's competence and professionalism in managing his clients' affairs in 1998. I am also satisfied that the spread of misinformation about Mr Aktas's competence and professionalism and other matters to his discredit by reason of the imputations pleaded were made worse by Westpac's tardiness in acknowledging its error and making amends. The following observations of Hilberry J in Davidson (at 324) effectively describe how a dishonour of a cheque can affect a business person: "Once there is a breath of suspicion affecting his credit, it has immediate consequences. If the bank official's visit to the payee had not convinced the payee that the dishonour was a mistake, what chance will the drawer of the cheque have of convincing others who have heard of the matter to believe that it was a mistake of the bank and that he had sufficient funds in his account. Anyone in business knows that when a cheque is dishonoured that fact is not confined to the person who immediately receives the information (normally, the payee). Substantial damage is instantly caused because nothing about a man travels so fast as that which is to his discredit." 124 The delay in offering the apology however does not diminish the fact that early in the New Year Westpac genuinely sought to both correct and apologise for the error. This was not a cynical effort on its part to avoid the consequences of litigation although, self evidently, it was justifiably concerned that this be avoided (see Uren v John Fairfax & Sons Pty Limited (1965-66) 117 CLR 118 at 141). 125 I am compelled to the conclusion that it was open to Mr Aktas by early February 1998, at the earliest, to obtain a full letter of apology from Westpac, directed to whomever he saw fit, at no cost to himself, and that his failure to pursue this course was sufficiently unreasonable as to disentitle him from claiming for loss or damage which might otherwise have been avoided. Allowing both for Westpac's delay in formally acknowledging its error and offering to remedy the wrong and the spread of the defamation in the interim, I am satisfied Mr Aktas is not entitled to damages for hurt to his feelings beyond June 1998, and not entitled to be awarded damages based on a need to vindicate his reputation, or to compensate him for harm to his reputation, extending beyond that time. 126 On the same analysis of the evidence, I am satisfied that Homewise is not entitled to any damages said to have been caused to its reputation as a trader by the defamation beyond the time when, had the relevant information and permission been forthcoming from Mr Aktas, Westpac would have communicated with Homewise's customers and/or have taken other measures to retract and correct its error. On the evidence that is also the end of June 1998. 127 By reason of Homewise's failure to mitigate, I am relieved of having to resolve much of what was in dispute between the experts, both as to the approach that should be taken to the assessment of the economic loss that Homewise is alleged to have suffered and the difference in the conclusions they reached in ultimately assessing that loss. This is so because the differences in their approach only produced a significantly different assessment of loss because of the period of 4½ years during which Homewise claims the impact of the defamation extended. For the discrete period bounded by December 1997, as the date of publication, and June 1998, as the date beyond which I am satisfied that the plaintiffs should not be permitted to recover damages, the assessment by each of the experts of the extent of the negative impact on commission on sales and rentals differ by a much reduced margin. Mr Hilton (for Homewise) assessed the loss at a compound figure of $297,693 while Mr Lom (for Westpac) assessed the loss at $130,000. Rental income commission 128 A reading of the served reports of both Mr Lom (on behalf of the defendant) and Mr Hilton (on behalf of Homewise) expose diametrically opposed differences in the methodology they each employed in determining whether there was a demonstrated loss of rental commissions and, if established, different approaches to calculating the measure of loss. Mr Hilton calculated the loss on the basis that the average rental commissions earned by Homewise over the three financial years preceding June 1997 would be sustained over successive financial years. He then compared that figure with the rental commissions actually received over those successive financial years and calculated the shortfall. However, as Mr Lom pointed out, the figure used for comparative purposes is itself an average calculated over the preceding three years and, on closer analysis, the actual commission earned for the year ended June 1997 was $11,688 less than the preceding year and also less than the commission earned for the year preceding that. From that perspective it is self evident that Homewise had lost some rental commission income before the defamation and that Mr Hilton's approach effectively incorporated these lost commissions (otherwise unrelated to the defendant's conduct) in the calculation of the loss. 129 After an experts' conference was convened at my direction, Mr Hilton agreed that the figure for comparative purposes should be the actual commissions earned in the year June 1997 and not the average calculated over the preceding three years. On that basis the shortfall by reference to Mr Hilton's calculation was $10,693. I am not however prepared to accept this as an accurate measure of the loss when, as Mr Lom pointed out, Mr Hilton did not identify with clarity and precision what source materials were used by him to calculate the loss of rental commissions and did not clearly discriminate between that income and other income earned from Homewise's rental business. Mr Lom was provided with what he described as 11 folders of documents and despite the fact that this information was itself an incomplete record of the rental business for the relevant period, I am satisfied that by reference to these records and his reconstruction and analysis of the income Homewise received that a more reliable basis for the calculation of the actual rental commission earned for the year ended June 1998 is revealed. This is so notwithstanding the fact that the information for that year does not include the calendar months of May or June and that the income is accordingly annualised for the ten-month period ended 30 April 1998. When the income from rental commission for the financial years ended June 1997 and June 1998 were compared by Mr Lom there was in fact no loss but a slight gain. This is consistent with the fact that Homewise's trust ledger printouts, which contain information as to the number of owners it serviced at the relevant time, reveals that while Homewise lost 14 owners between 15 December 1997 and 29 May 1998 it replaced these with 18 new owners apparently prepared and willing to place their properties with Homewise. I also note that between 31 October 1997 and 15 December 1997, eight owners withdrew their properties from management whilst other owners placed their properties with Homewise for the same purpose. 130 Accordingly, I am not persuaded that Homewise sustained any loss of rental commission income that can properly be attributed to the defendant either on the basis of the defamation or, as will later become obvious, for the breach of contract. Sales commission 131 The experts agreed that the methodology to be used to calculate the loss of sales commission suffered by Homewise should be by undertaking a comparison of Homewise market share prior to 1 December 1997 with market share after that date so as to appoint a value of lost contracts for sale against which the net loss of sales commission could be calculated. However, they approached the determination of market share in totally different ways. They also differed as to the appointment of the rate of commission. Mr Hilton (for Homewise) utilised 2.9 per cent as a fixed rate of commission going forward while Mr Lom used the actual commission rate that was charged by Homewise over successive years. In addition, Mr Hilton made no deduction for the staff costs in the earning of the sales commission until sales exceeded 100 homes/units per annum. By contrast, Mr Lom reduced the total shortfall in commissions earned by 35 per cent to account for the cost to Homewise of employing its sales staff and the commission they would be paid as a component of their wage. This point of difference between the experts, to my mind, exemplifies the contrast in the approach each of them has taken to an appreciation of the formal requirements and underlying rationale of the Expert's Code. I say that having regard both to their served reports and the way in which each of them gave their evidence. Mr Hilton offered no explanation either in his report or satisfactorily in his evidence for the arbitrary notion that the first hundred sales would incur no commission or salary costs. The only rationale he advanced, as I understand it, was that the hypothetical 'lost' sales would have been settled by Mr Aktas who would not demand a commission or require any additional sales from Homewise. There was no evidence called by Homewise to persuade me that this would be the case. Indeed, having regard to the apparent senior sales role performed by Mr Kong and less so of Mr Shi and others in the Homewise business, it was not open to me on the evidence to reach that conclusion. There was no evidence before me that Mr Aktas had been at any time willing to work on a salaried basis and, even if that were the case, that would need to be offset against any loans, dividends or other benefits he might have received in lieu of commissions. Moreover, the extent to which he would have been willing to work on a salaried basis after the defamation in circumstances that would have occasioned an additional workload was not the subject of evidence in any event. 132 In so far as the issue of the rate of commission is concerned, Mr Hilton's reasoning, to my thinking, was again flawed. Not only was the uncontested evidence that the commission rate charged by Homewise was a matter of variation and negotiation in successive years before the defamation, but Mr Hilton was also unable to satisfactorily explain why he relied upon the two years prior to the defamation (namely June 1996 and June 1997) upon which to project the commission rate going forward. By contrast, Mr Lom was able to objectively demonstrate that Homewise's commission rate for the two years after the defamation (only the first of which I am concerned with) was above the industry average. Mr Hilton was unable to make clear to me why this was irrelevant or why I should not prefer Mr Lom's use of the actual commission rate charged by Homewise given that the rate of commission is notoriously a matter for the individual trader reflecting generally the operation of market forces at an industry level at any given time. Mr Hilton proceeded on the assumption that Mr Aktas was engaged in discounting Homewise's commission rate in an attempt to recover market share after the effects of the defamation. I am not persuaded that this assumption is well founded. 133 I should also record the fact that not only were there marked differences in the attention to detail and the care with which source materials were reviewed and analysed by the two experts, leaving me with a real sense of unease as to the accuracy or reliability of Mr Hilton's calculations, but I also had supervening doubts as to Mr Hilton's objectivity and independence. It was quite clear from the evidence revealed in cross-examination that he had a private relationship with Mr Aktas with whom he met regularly. While this does not necessarily render him unsuitable as a witness to give expert evidence, notwithstanding the fact that Mr Aktas has a direct and pecuniary interest in the outcome of the proceedings, Mr Hilton was unable to distinguish between information he had obtained under instruction and that which he had obtained less formally and was unable, after lengthy cross-examination, to identify to my satisfaction what role the mix of information played in the assumptions he made and the opinions he formed and maintained. I do not doubt that Mr Hilton genuinely believed in the rectitude of the position of Homewise and Mr Aktas as plaintiffs. However, it would appear that the opinions he expressed were predicated on a misunderstanding of the plaintiffs' case. He was instructed that: "… All staff resigned, following accusations by clients of dishonesty within the business and rumours spread in the Auburn business community that the first plaintiff (Mr Aktas) was going bankrupt, had stole from his trust account and was generally an untrustworthy person." 134 Mr Hilton said in cross-examination that he regarded this as "the crux of the whole claim". For the reasons articulated in this judgment he was quite clearly mistaken. 135 In all the circumstances, and in particular having regard to the misgivings that I have expressed as to the appropriateness of Mr Hilton's approach to the assessment of the loss of sales commissions and the reliability of the conclusion he reached, I propose to proceed to an assessment of the economic loss Homewise suffered on the basis of Mr Lom's analysis. He appointed the total shortfall in sales commission income for the year ended June 1998 at $130,000. I propose to discount Mr Lom's figure by 10 per cent to account for what I consider are differential causes for the downturn in Homewise's business in the relevant period, namely staff movements (in particular the defection of Messrs Kong and Branley and their assumption of a Century 21 franchise in competition with Homewise's business) and Mr Aktas's deteriorating health which I am satisfied adversely impacted on Homewise's business for reasons unrelated to any conduct of the defendant. Damages 136 In assessing Mr Aktas's damages in defamation for the period 2 December 1997 to 30 June 1998, I am obliged by s 46A of the Defamation Act to have regard to the general range of damages for non-economic loss in personal injury awards in New South Wales, including under any statute. Pursuant to s 16 of the Civil Liability Act 2002 "a most extreme case" deriving from a personal injury claim results in an award for non-economic loss of $427,000 or $366,000 pursuant to the Motor Accidents Compensation Act 1999. I note the observations of Sperling J in Vacik Distributors Pty Limited & Anor v Australian Broadcasting Corporation & Anor No. 8 [2000] NSWSC 732 that since the purpose of an award of damages is also to vindicate the reputation of the person defamed, strict relativity with personal injury cases may not be practicable. 137 The mandatory terms of s 46A are consistent with the majority judgment in Carson v John Fairfax & Sons Limited (1992-93) 178 CLR 44 at 58-59 where their Honours noted that "cases of serious physical injuries …in their severity and disabling consequences, transcend injury to reputation". The effect of s 46A in the present case is salutary in that a comparison between the suffering and loss of a plaintiff who has the misfortune to qualify as "a most extreme case", with the evidence of such of the suffering and loss of Mr Aktas (such as I am satisfied was caused by the defamation) inexorably leads to a downward influence on any award in his favour. That said I am not unmindful of the fact that Mr Aktas did suffer from the defamation and that it endured over a period of time when, it would seem, he may have been less able to withstand its deleterious effects and on that basis he is entitled to be compensated. 138 In all the circumstances and in the event that my findings as to the defence of qualified privilege are set aside, I would have awarded Mr Aktas the sum of $50,000 in damages as a public vindication for the injury to his reputation and as a consolation to him for the wrong done and for his hurt to feelings. I would not have awarded aggravated damages. Not only am I satisfied that the award of $50,000 would adequately compensate Mr Aktas but, in any event, while Westpac's conduct in dishonouring the cheques was in error and entirely unjustified, I am not satisfied that the error was reckless in the sense that the imposition of the "post credits only" on the Rent Trust Account was done without regard for the consequences to the account holder knowing that harm might be sustained if the restriction on drawings was in error. 139 In regard to the claim by Homewise I would have awarded the sum of $117,000. The claim in contract 140 The claim brought for breach of contract is on the basis of the contractual relationship of banker to customer with Homewise, trading as a real estate agency as the customer, and the defendant its bank. In its ultimate submission Westpac does not dispute the existence of the contract or that an implied term was breached when it refused to pay on the cheques drawn on Homewise's Rent Trust Account. The plaintiff also submitted that there was breach of a further implied term obliging Westpac to exercise all due and reasonable skill, care and diligence in respect of the trust account and, in particular, in relation to the payment of cheques drawn on that account. I am satisfied that Westpac was in breach of each of the implied terms. The multiplicity of breach however has no material bearing on the assessment of damages. 141 The plaintiffs' claim for damages is to compensate it for economic loss calculated by reference to the downturn in Homewise's business from the time of breach in December 1997 for a period up to and including June 2003. The duty to mitigate is properly invoked in the action on contract, however, I consider it as having a somewhat different application in the context of the defamation action to that of contract. When considering the question of mitigation in the defamation action I was satisfied that despite the fact that Mr Aktas had effectively refused to take up Westpac's offer of a published acknowledgement of its error by the end of March 1998, I would appoint June 1998 as the date beyond which recovery of damages should not extend so as to account for the likely deleterious impact on Homewise's business by reason of Westpac's delay in making the offer and the consequent spread of the defamation over the 45 days up to that time. There is no basis for my extending the time to June 1998 in the case of the contractual breach which is confined to the damage fairly and reasonably arising naturally in the usual course of things from the breach of contract which must exclude the effects of the defamation simpliciter for reasons which I expand upon later in this judgment. 142 I approach the assessment of damages in this case mindful of the general principle governing the measure of damages for breach of contract authoritatively stated in Robinson v Harman (1848) 1 Exch 850 at 855 per Parke J: "The rule of the common law is, that where a party sustains a loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed." 143 This principle has been accepted and applied in Australia (see for example, The Commonwealth v Amann Aviation Pty Limited (1991) 174 CLR 64, per Mason CJ and Dawson J at 80, per Brennan J at 98, per Toohey J at 134 and per McHugh J at 161). In this case Homewise is entitled to be awarded damages in an amount that will adequately compensate it for the losses it has incurred by reason of Westpac's breach and in such a way as to enable it to be restored to a position in which it would have been had the cheques never been dishonoured. 144 The plaintiffs submitted that the measure of damages in the action on contract is the same as the special damages claim advanced on Homewise's behalf in the defamation action, namely the loss of income that would otherwise be earned from commissions on sales and rentals. Although there is authority for the proposition that, subject to remoteness, general damages for loss of business reputation are recoverable for breach of contract (see Kpohraror v Woolwich Building Society [1996] 4 All ER 119), proof of pecuniary loss is essential in other than what are described as the "direct breach " cases. In Baltic Shipping Co v Dillon (1993) 111 ALR 289 at 308, Brennan J observed that: "…damages have been awarded without proof of pecuniary loss for damage caused in direct breach of a contractual promise where the damage consists in a general loss of reputation." 145 His Honour characterised these cases as "direct breach" cases citing as examples Wilson v United Counties Bank Ltd [1920] AC 102 and Herbert Clayton and Jack Waller Ltd v Oliver [1930] AC 209. The former case involved a breach of contract that expressly required Westpac to take all reasonable steps to maintain the customer's credit and reputation and the latter case involved breach of a contract designed to promote an actor's publicity. In each case damages were awarded for failure to perform a specific contractual undertaking to protect or enhance the plaintiff's reputation or, in other cases, to provide some other intangible benefit such as an amenity or source of enjoyment. Brennan J went on to say in Baltic, and in reliance on Foaminol Laboratories Ltd v British Artid Plastics Ltd [1941] 2 All ER 393, that "except in the "direct breach" cases, damages are not awarded for general loss of reputation without proof of pecuniary loss". In a different but related context, Brereton J observed in Rose v Boxing New South Wales Inc and Anor [2007] NSWSC 20 that in the context of an assessment of damages in a wrongful dismissal case: "Loss of reputation simpliciter is protected by the tort of defamation, the requirements of which cannot be sidestepped by a claim for breach of contract that would not succeed in defamation [ Lonrho plc v Fayed (No 5) [1993] 1 WLR 1489, 1496 (Dillon LJ); Malik , 40B (Lord Birkenhead)]. However, financial losses occasioned by a breach of contract do not cease to be recoverable because they might also be recoverable in an action for defamation [ Foaminol Laboratories Ltd v British Artid Plastics Ltd [1941] 2 All ER 393, 399-400 (Hallet J)], nor because no claim for defamation would lie [ Malik , 40D-H (Lord Birkenhead), 51-52 (Lord Steyn)]." 146 Homewise also correctly advanced the submission that the principle in Jamoo has no application in the contract case and that since the evidence establishes that were it not for the wrongful dishonour of the 30 trust account cheques Homewise's business would not have suffered the dramatic downturn (or at least its profitability would have been maintained) the defendant is liable for that loss. Westpac, on the other hand, submitted that since the general rule is that damages are assessed at the time of breach then an assessment of the likely consequences of the breach or, to put it in terms of the first limb in Hadley v Baxendale (1854) 9 Exch 341, the damage fairly and reasonably arising naturally in the usual course of things from the breach, should also be made at that same time. I propose to approach the assessment of damages for breach in accordance with Westpac's submission. 147 That said, contrary to Westpac's further submission that the error in marking the cheques "Refer to Drawer" was not causative in the legal sense of any great harm to Homewise, I am satisfied that the breach did cause injury to Homewise's business reputation and that, in accordance with the principle in Kpohraror v Woolwich Building Society, that injury has translated into a measurable pecuniary loss. The measure of the loss in the defamation action brought by Homewise is not distinguishable from the case it brings in contract (save for the fact that the failure to mitigate limits recovery only up to the end of March 1998) and accordingly Mr Lom's assessment of loss at $130,000 has to be reduced by 25 per cent to take account of that point of difference. Westpac again points to differential causes for the downturn in Homewise's business, principally the dispute with Century 21 and the attrition of sales staff, and invites me to factor down the plaintiffs' claim for economic loss for these reasons. On the same basis as my approach in the defamation action this is productive of a further reduction by 10 per cent in the award of damages. In the result I assess damages for breach of contract at $84,500, being 35 per cent of Mr Lom's assessment of $130,000 loss of profit for the year ended June 1998. 148 The claim in negligence for economic loss is pleaded in the alternative to the claim in contract. For that reason I do not need to resolve the dispute between the parties as to whether the claim in negligence is properly brought in these proceedings (see Sattin v Nationwide News Pty Limited (1996) 39 NSWLR 32 and Sullivan v Moody and Others (2001) 207 CLR 562). Orders 149 The orders I make are as follows: 1. In the defamation action brought by the first plaintiff verdict for the defendant. 2. In the defamation action brought by the second plaintiff verdict for the defendant. 3. In the action for breach of contract brought by the second plaintiff verdict for the second plaintiff. 4. Damages for breach of contract are awarded in the amount of $84,500 plus interest. I reserve the calculation of interest and the question of costs for further submissions. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.