Following a huge award in a petty defamation case, the Court of Appeal has drawn an important line in the sand. Will we see the same outcome elsewhere?

In May, I reported on the outsized consequences of a petty law suit: the case of Raynor v Murray, in which the chairman of the strata committee of a unit block in Sydney sued a fellow resident for defamation and won damages of $120,000.

The short version is that Murray was a persistent non-locker of her mailbox, and Raynor was persistent in his insistence that she fall into line. The dispute ended in a frustrated email from Murray -- to Raynor and copied to 16 other residents -- in which she accused him of cowardly, offensive, harassing and menacing behaviour towards her.

Raynor said he'd been defamed, labelled a malicious and small-minded busybody. The District Court judge agreed that his perfectly understandable diligence in performing his official duties had been indefensibly maligned, and gave him the big win.

Murray, a few hundred thousand dollars out of pocket, rolled the dice with an appeal. To my smug delight, the NSW Court of Appeal has overturned the original decision.

Unanimously, it found that Murray had a good defence and gave an order for costs. For Raynor, ouch.

There was no real doubt that Murray's email was defamatory. It was angry, deeply sarcastic and very pointed, leaving no reader in doubt that she considered Raynor to be a petty tyrant of the type that anyone who's ever lived the strata life will readily recognise.

The issue on appeal was Murray's defence of qualified privilege, which the trial judge had rejected. The defence is "qualified" because it has limited application. It arises only on a "privileged occasion", which requires that the person sending the communication had a duty or interest in publishing it and that the audience had a reciprocal interest in receiving it. A classic example is a communication among managers at a workplace in relation to one of its employees.

The defence only succeeds in that limited frame (it's why the media almost always loses when it tries a qualified privilege defence -- the audience is too large and disparate). It also requires that the actual defamatory statement was relevant to the reciprocal duty/interest, and that there was no malicious intent. Malice defeats the defence altogether.

While the trial judge had found an occasion of privilege in this case, she concluded that Murray could not access the privilege because her email had not been sent for the purpose of sharing a legitimate concern with her fellow residents. Rather, the trial judge ruled her purpose had been that of "humiliating, belittling and insulting [Raynor] in the most hurtful way possible". (Side note: if the judge really believes that that's as hurtful as it gets, she should spend a couple of minutes on Twitter.)

The appeal court departed entirely from the trial judge here, finding that she had made two critical errors. First, she had allowed an unfair cross-examination of Murray and drawn unwarranted judgments regarding Murray's credibility as a result (interestingly, Murray's lawyers had pleaded an appeal point of apprehended bias on the trial judge's part, but withdrew it).

Secondly, the trial judge had conflated matters relevant only to the question of malice with that of whether Murray's statements related sufficiently to the privilege between her and the other residents. Most importantly, even if Murray's purpose had been to humiliate or belittle Raynor, that didn't necessarily take what she said out of bounds. The appeal court found that her accusations against Raynor, such as that he was a busybody, were part and parcel of the matters of concern among residents of the unit block, sufficiently so to attract the qualified privilege and give Murray a complete defence.

As to malice, while the trial judge may have been very sure that Murray hated Raynor's guts, the appeal court disagreed. While sarcasm and disrespect were certainly dripping from Murray's email, it was specifically responsive to what she saw as Raynor's unmerited attacks on and threats to her.

Icing on the cake: for good measure, the Court of Appeal had a crack at the judge's damages verdict as well. In short shrift, it found that her award of $90,000 for damage to Raynor's reputation and hurt feelings was excessive; $25,000 should have been top dollar. And there was no justification for the extra $30,000 she gave as aggravated damages.

I first highlighted this case as an egregious example of the explosion of petty defamation disputes clogging the courts and resulting in disproportionate payouts.

The Court of Appeal has now used it to draw an important line in the sand. Hopefully the message will be received below. Certainly Raynor will have heard it loud and clear.