Pavlovic v Karzon[2023] QCA 37

SUPREME COURT OF QUEENSLAND

1. [1]
   BOND JA:  I agree with the reasons for judgment of Bradley J and with the orders proposed by his Honour.
2. [2]
   BODDICE AJA:  I agree with Bradley J.
3. [3]
   BRADLEY J:  In September 2018, the first applicant (Ms Pavlovic) sent two emails.  She did so as an agent of the second applicant (Wandulla).  By each email, Ms Pavlovic published imputations defamatory of the respondent (Mr Karzon).
4. [4]
   On 19 August 2022, the learned trial judge gave judgment, ordering Ms Pavlovic and Wandulla to pay Mr Karzon $70,000 as damages and $8,279.18 as interest on the damages. His Honour also permanently restrained each of the applicants from publishing any of the defamatory imputations or matters substantially to the same effect.  The trial judge’s reasons were published that day.^[1]

Extension of time

5. [5]
   On 17 September 2022, the time expired for filing an application for leave to appeal to this court against the judgment.  On 20 September 2022, the applicants filed a notice of appeal.  It was irregular, as the judgment was for an amount less than the Magistrates Courts’ jurisdictional limit.  On 27 September 2022, the applicants filed an application for leave to appeal and for an order extending the time to lodge an appeal.  The delay was not substantial.  It was explained by a short delay in obtaining counsel’s advice.  As the applicants’ proposed grounds of appeal raise matters of substance, it is appropriate to extend time for filing the application for leave to appeal.

The two issues

6. [6]
   There are two issues in the proposed appeal.  The first is whether the trial judge erred in finding Ms Pavlovic did not publish the emails on occasions of qualified privilege at common law.  The second is whether the trial judge erred in finding Ms Pavlovic acted with malice when she sent the emails.

Facts not in dispute

7. [7]
   Broadwater Plaza is a body corporate scheme at Hope Island.  It comprises nine shops and one petrol station.  At the relevant times, Wandulla owned the petrol station and one of the shops, and companies ultimately controlled by Mr Karzon owned two shops.
8. [8]
   At the relevant times, Ms Pavlovic was a member of the body corporate committee, as a nominee of Wandulla, and Mr Karzon was chairperson of the committee.  Bridget Blinco was employed by the manager of the body corporate.
9. [9]
   In 2015, one of the “Karzon” shops was leased, through a managing agent, to the operator of a Thai massage business.  The lease was for a term of three years.
10. [10]
    On 7 September 2018, Ms Pavlovic sent the first email to Ms Blinco, and to her father and one of her brothers who were the directors of Wandulla.  She copied the email to a solicitor for Wandulla.  The first email conveyed four imputations each defamatory of Mr Karzon.^[2]
11. [11]
    The first email was not sent to Mr Karzon.  However, within three hours, Ms Pavlovic sent an email to Mr Karzon and four other committee members (Mr Corby, Mr Wenger, Mr Law, and Ms Hachem) referring to the first email, which appeared in the chain below her email to them.
12. [12]
    On 12 September 2018, Ms Pavlovic sent the second email to Ms Hachem.  She copied it to the other committee members, including Mr Karzon.  The second email conveyed two imputations each defamatory of Mr Karzon.^[3]

Qualified privilege at common law

13. [13]
    As the trial judge identified, there was no controversy between the parties about the principles governing the common law defence of qualified privilege.
14. [14]
    The defence operates where there is a “privileged occasion”.  As Lord Atkinson summarised it in Adam v Ward, that is:

“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.”^[4]

15. [15]
    In a separate speech, Lord Dunedin explained:

“Strictly speaking, it is the occasion on which a statement is made that is privileged, and the phrase that such and such a statement is privileged would be more accurately, though perhaps, more clumsily, expressed by saying that, the statement having been made on a privileged occasion, malice cannot be implied from defamatory expressions therein, but must be proved as a real fact.”^[5]

16. [16]
    In Aktas v Westpac Banking Corporation Ltd, the majority explained:

“In Andreyevich v Kosovich, Jordan CJ pointed out that in deciding whether society recognises a duty or interest in the publisher making, and the recipient receiving, the communication in question, it is necessary to ‘show by evidence that both the givers and the receivers of the defamatory information had a special and reciprocal interest in its subject matter, of such a kind that it was desirable as a matter of public policy, in the general interests of the whole of community of New South Wales, that it should be made with impunity, notwithstanding that it was defamatory of a third party.’”^[6]

17. [17]
    As the applicants submitted to this court, “[t]he critical step in determining whether a defamatory publication is made in circumstances attracting qualified privilege at common law is therefore to identify the privileged occasion.”^[7]
18. [18]
    The applicants bore the onus of establishing that each of the two emails was sent on a privileged occasion.  Whether such an occasion is privileged is a question of law.

The applicants’ qualified privilege defence

19. [19]
    Ms Pavlovic’s emails were private communications, not publications to the public.  The first email was not a response to an enquiry, nor a rebuttal of any allegation made against Ms Pavlovic, or Wandulla.  The second email was Ms Pavlovic’s response to Mr Karzon’s denial of the defamatory statements in her first email and his demand she cease making the defamatory comments in the first email.
20. [20]
    It follows that the applicants’ qualified privilege defence fell to be considered in the context of private, unsolicited, and unprovoked communications.
21. [21]
    The applicants’ defence was based on the relationship between Ms Pavlovic as a committee member, on the one hand, and Ms Blinco as an officer of the manager and the five committee members on the other.
22. [22]
    As the trial judge noted:

“While communications between body corporate members or company directors may, depending on the circumstances, be found to be made on an occasion of qualified privilege, the question as to whether that is so will depend upon a careful analysis of the facts rather than focus on the relationship.”^[8]

23. [23]
    Part of the applicants’ task was to identify the relevant interests of the applicants and the recipients of the defamatory matter in each of two emails; i.e. the interest they contended made the occasion of each publication a privileged occasion.
24. [24]
    In their defence, the applicants alleged:

“The recipients of the emails … had an interest … in having information as to:

1. (a)
   whether any unlawful business was being operated from premises within Broadwater Plaza; and

2. (b)
   the degree of knowledge of [Mr Karzon], who was the chairperson of the Committee of the Body Corporate and the ultimate or beneficial owner of three Lots within Broadwater Plaza, of any unlawful business being operated from such premises”.

25. [25]
    The applicants did not plead any interest on the part of Ms Pavlovic that corresponded with the recipients’ interest.  It may be assumed their case was that she had the same interest as the recipients.^[9]

The qualified privilege defence at the trial

26. [26]
    At the trial, the applicants’ opening was consistent with their defence.  The court was told the occasion of qualified privilege “arose in respect of the business activities being conducted” from the premises.  In so far as the applicants identified a more specific interest of the recipients, it was that a business offering illegal services could have an adverse effect on insurance policies held by the body corporate and on the reputation of businesses conducted on premises within Broadwater Plaza.
27. [27]
    The applicants led evidence from Ms Pavlovic that, at the end of the April 2017 AGM, Ms Pavlovic’s father raised a rumour of illegal activity by the Thai massage business at premises owned by and rented from Mr Karzon.  Ms Pavlovic recalled her father said words to the effect that “there’s a lot of talk going around and it’s pretty common knowledge that the massage shop is offering more than massages”.  Ms Pavlovic said everybody laughed.  She recalled her father then said, “Sorry, but I – I had to mention it because it’s something that’s, you know, getting a little bit out of hand, the gossip.”  Ms Pavlovic said Ms Blinco then spoke, “Sorry, I know everyone’s having a bit of a laugh, but if it’s, in fact, true this could have serious implications on the plaza’s insurance, so we need to look into it.”  According to Ms Pavlovic, Ms Blinco asked Mr Karzon if she could leave it with him; and Mr Karzon replied “No problems.  I’ll have a look into it”.
28. [28]
    In her evidence in chief, Ms Pavlovic said she was prompted to look at the premises about 16 months later, in early September 2018, when she heard the massage shop was closing.  She said, when she looked “there [were] still people in the shop, but it was being moved out of.”  She said, “they’re closed now” and “the shop shut down.”  This was some days before Ms Pavlovic sent the two emails.  This part of her evidence had not been opened.
29. [29]
    In written submissions at the end of the trial, the applicants’ counsel contended the defamatory imputations were “sufficiently connected to the privileged occasion” because it was “relevant for members of the body corporate committee to know that there may be a business offering illegal … services from one of the premises.”  Counsel described the privileged occasion as “the occasion of raising a legitimate concern as to the possibility of illegal activities being carried [on] from a shop within the complex.”
30. [30]
    In his closing address, the applicants’ counsel identified the privileged occasion as a discussion by Ms Pavlovic with the committee about “the possibility and the belief that there were illegal activities being conducted at the relevant shop.”
31. [31]
    The trial judge raised with the applicants’ counsel Ms Pavlovic’s evidence that, by the time she sent the two emails, the alleged activities were no longer being conducted at the premises, that she knew the business was all over, and that she believed it had been shut down.  In response, counsel submitted:

“in the commercial setting where this was being raised, whether the business had recently closed or not may not actually make a difference.  I mean, it might make a difference whether the insurance issue had gone away but it might not make a difference as to whether there was some other source of liability or investigation or just general poor reputation for the centre, generally.  That type of thing.”

32. [32]
    The applicants’ counsel accepted the trial judge’s summation of this submission in these words: “that the desire or need to discuss the conduct of that business remains even when that business is not being conducted anymore.”
33. [33]
    The applicants did not seek to amend their defence to plead a broader or different interest on the part of the recipients or Ms Pavlovic.

The trial judge’s findings

34. [34]
    The trial judge found that, by September 2018, when Ms Pavlovic sent the two emails, the massage business was no longer operating from the premises, which were vacant.^[10] This finding is not challenged in the proposed grounds of appeal.^[11]
35. [35]
    His Honour found the defamatory content of the emails was not about any unlawful business “being operated from premises within Broadwater Plaza” or about Mr Karzon’s knowledge “of any unlawful business being operated from such premises”.  The emails were about whether unlawful activity had occurred in the past and Mr Karzon’s knowledge of any such past activity.
36. [36]
    His Honour found Ms Pavlovic “published highly defamatory statements in circumstances where there was no reciprocity of interest between her and the recipients” and “it would have been clearly unnecessary to raise the rumour again in any sense which might render the occasion one of qualified privilege.”^[12]
37. [37]
    Within these broadly expressed findings, the reasons show that the applicants failed in their qualified privilege defence because the trial judge was not satisfied the defamatory matter about rumoured past activity on the premises was sufficiently connected to the reciprocal interest of Ms Pavlovic and the recipients in activities being conducted on the premises.

The submissions on appeal

38. [38]
    In their written appeal submissions, counsel for the applicants submit:

“In this case, in respect of each of the matters complained of, the privileged occasion concerned the inaction of the body corporate committee in relation to allegations of an illegal activity being conducted at premises owned by a company associated with the chair of the body corporate.”

39. [39]
    They submit the trial judge erred because:

“the fact that, at the time the defamatory statements were made, the relevant premises had been vacated … was irrelevant: the occasion of the privilege related to past inactivity of the body corporate committee.”

40. [40]
    It may be accepted that the first email is about the allegation that Ms Blinco, Mr Karzon and the other committee members had failed to act while an illegal business had been operating from one of the shops in the body corporate scheme.  In the first email, Ms Pavlovic called on Ms Blinco and Mr Karzon to “consider resigning” from their respective positions with the body corporate for this reason.  In the second email, Ms Pavlovic posed questions to Mr Karzon about any action he had taken about the rumours raised at the 2017 AGM and his knowledge of and his legal relationship with the operators of the allegedly illegal business.
41. [41]
    On a generous view of the applicants’ defence, the interest in “the degree of knowledge” of Mr Karzon “of any unlawful business being operated” from the shop, might encompass some of the interest on which the applicants would now rely.
42. [42]
    The applicants also submit that the judge should have examined the evidence to identify a possible interest and privileged occasion, other than that pleaded in the defence.  I would not embrace that submission.  The material facts on which a defendant relies to advance a defence of common law qualified privilege must be pleaded.^[13]
43. [43]
    The applicants might have benefitted from the advice of McHugh J, in Bashford v Information Australia (Newsletters) Pty Ltd, that:

“the practical working of the doctrine of qualified privilege requires that the occasion be defined concretely and precisely.  That ordinarily requires the interest of the recipient to be defined first, and to be defined concretely and precisely …  Unless the interest is so defined, the issues of duty, occasion, relevance and malice cannot be determined – at all events correctly.”^[14]

44. [44]
    Within the range of reciprocal interests of the committee members and the manager, there may be one or more interests that would give rise to a privileged occasion for such communications.^[15]
45. [45]
    None of these considerations would assist the applicants in the proposed appeal, owing to the conclusion I have reached on malice.  The defence of qualified privilege at common law is defeated by proof of actual malice.

Malice

46. [46]
    His Honour did not accept Ms Pavlovic’s statement that she had good intentions when sending the emails.  His Honour found her evidence, in this respect, to be “completely at odds” with some of the surrounding objective circumstances in which the emails were sent and to be inconsistent with the language chosen in the emails and with Ms Pavlovic’s reference to Mr Karzon as “petty and interfering.”
47. [47]
    The trial judge relied on the following circumstances, which his Honour found surrounded the sending of the emails:^[16]

    1. (a)
       Ms Pavlovic made no attempt to satisfy herself of the truth of any of the rumours upon which she chose to base her factual assertions;
    2. (b)
       Ms Pavlovic, used language “dripping with sarcasm”, spiteful, and by which she “sought to ridicule and embarrass rather than to inform”;
    3. (c)
       The emails were “voluntary and spontaneous”, written about rumours that had been raised sixteen months earlier at the April 2017 AGM;
    4. (d)
       The emails were sent when Ms Pavlovic’s family business and the body corporate (led by Mr Karzon) were in a dispute, the subject of adjudication, about matters raised by Mr Karzon that Ms Pavlovic regarded as petty;
    5. (e)
       Ms Pavlovic sent the emails when she was “hot headed”, “driven by emotion”, angry and affected by other things happening in her life;
    6. (f)
       The defamatory imputations in the second email were published despite the response of Ms Hachem to Ms Pavlovic and the other recipients, in which Ms Hachem wrote she had made enquiries about Ms Pavlovic’s allegations, discovered they were untrue, and apologised to Mr Karzon;
    7. (g)
       Ms Pavlovic failed to retract the defamatory imputations or apologise for them for nearly four years, and notwithstanding Ms Hachem’s apology;^[17] and
    8. (h)
       The applicants pleaded an unjustifiable truth defence, which was only abandoned on the first day of the trial.
48. [48]
    The trial judge found that Ms Pavlovic sought to use the two emails for the dominant and improper purpose of defaming Mr Karzon.

The applicants’ written outline in this court

49. [49]
    In the written appeal outline, the applicants submitted that the circumstances found by the trial judge (and on which his Honour based the conclusion that Ms Pavolic was motivated by malice towards Mr Karzon) did not correspond with the grounds pleaded by Mr Karzon in the reply.  I reject that submission.
50. [50]
    In his reply, Mr Karzon pleaded that “the predominant and improper motive” for the publication of the two emails was to harm Mr Karzon by reason of four matters:

    1. (a)
       The applicants were motivated by a desire to injure Mr Karzon’s reputation;
    2. (b)
       They have refused to retract the imputations, or any of them, or to apologise to Mr Karzon;
    3. (c)
       They published the two emails with knowledge that they were false, or alternatively with reckless indifference as to whether they were true or false; and
    4. (d)
       They published the emails without making any or any proper inquiry as to the truth of the emails or as to the truth of the imputations.
51. [51]
    The first of the matters pleaded by Mr Karzon is precisely the finding the trial judge made, noted at [46] above.  It also corresponds to the circumstance found by his Honour summarised at [47](b) and relates to the finding at [47](d) above.  The second pleaded matter is the same as the trial judge’s findings summarised at [47](f) above.  The reckless element of the third pleaded matter corresponds to the trial judge’s findings summarised at [47](a), (c), (e) and (f) above.  The fourth pleaded matter corresponds to the finding summarised at [47](a) above.
52. [52]
    The trial judge’s findings on malice were more detailed than the matters briefly stated in the reply.  They are in substance the same, covering the same terrain.  The applicants’ persistence with an unjustifiable truth defence also supports the malice finding.
53. [53]
    The applicants’ other written submissions on malice should also be rejected.
54. [54]
    As noted above, his Honour found Ms Pavlovic published the two emails for the dominant and improper purpose of defaming Mr Karzon.  The applicants’ contrary submission is wrong.  Ms Pavlovic’s evidence about her motivation was expressly rejected.
55. [55]
    His Honour’s findings – that Ms Pavlovic sent the two emails when “hot headed”, “driven by emotions”, “angry” and affected by other things happening in her life – were relevant to the findings that she acted for the purpose of defaming Mr Karzon, intending to harm his reputation, recklessly, and without any or any proper inquiry as to the truth of the emails or as to the truth of the imputations.
56. [56]
    The fact that the applicants ran a truth defence until the first day of trial was relevant to the trial judge’s finding.  Some context is given to this by earlier findings.  His Honour accepted the submission for Mr Karzon that there was no real prospect the applicants could have proved the truth of the imputations.  His Honour found that “there was no evidential basis exposed in the summaries of evidence” provided by the applicants that could have supported a finding that Mr Karzon held any relevant knowledge as Ms Pavlovic imputed in the two emails.
57. [57]
    The trial judge made these findings having observed Ms Pavlovic give evidence, having considered the terms of the two emails, and having identified the relevant undisputed facts.  I am not satisfied that the findings of the trial judge were erroneous.  To the extent that the findings drew on inferences from the content of the emails, the evidence of Ms Pavlovic, or the undisputed facts, the trial judge chose inferences that were open on the evidence.
58. [58]
    Ms Pavlovic repeated the defamatory imputations in her oral evidence at the trial, insisting they were true.  She did so the day after she and Wandulla had abandoned their truth defence.  This would be an additional circumstance tending to establish malice on her part, were the other findings not sufficient.

Arguments advanced orally at the appeal hearing

59. [59]
    In addressing this court for the applicants, Mr Gilbertson KC submitted there were two further matters that demonstrated his Honour’s findings on malice were erroneous.  The first was the limited circulation of the two emails, being sent only to the manager, the five committee members, the two directors of Wandulla, and its solicitor.  The second was that Ms Pavlovic honestly believed Mr Karzon had been conducting an illegal brothel.
60. [60]
    Ms Pavlovic’s limited publication of the emails does not indicate malice.  Had she posted them on social media, malice might be inferred on that basis.  However, the limited publication is not a basis for setting aside the trial judge’s factual finding that Ms Pavlovic acted with the improper purpose of harming Mr Karzon’s reputation.
61. [61]
    Mr Gilbertson’s submission on the second matter should also be rejected.  A person who believes a rumour to be true, and publishes it to damage the reputation of another, does so maliciously.  His Honour found that Ms Pavlovic did not act with good intentions and published the defamatory imputations for the dominant and improper purpose of defaming Mr Karzon.  His Honour’s factual findings, summarised at [47] above, were sufficient to establish malice.

Final disposition

62. [62]
    For the above reasons, I would extend the time for filing the application for leave to appeal, and dismiss the application with costs.