Mr Hockey's case was a microcosm of the main underlying problem, she said. The Treasurer was awarded $200,000 in damages for a poster by the Sydney Morning Herald and two tweets by The Age relating to the "Treasurer for sale" story about a Liberal Party fundraising group. He failed in the core of his claim relating to the underlying articles. Fairfax will pay just 15 per cent of Mr Hockey's recoverable costs following a Federal Court decision on Wednesday, leaving the Treasurer with a possible shortfall of around $300,000.

Justice Gibson said that the Defamation Act was rife with drafting problems and needed a complete overhaul that included redefining what a publication was, taking into account electronic media and whether damages should be the same for all publications.

Responsible reporting

Among concerns was the continued rejection by Australian courts of the statutory qualified privilege defence, which was initially anticipated as a bulwark protection for serious and investigative journalism. Journalists must show they acted responsibly according to a checklist, including taking steps to verify the facts and seeking comment from the claimant.

"How do you give someone sufficient notice or include their reply if you are sending a tweet?" queried Justice Gibson.

"Should you offer them 70 of the 140 characters? Defamation legislation, especially defences, are poorly designed to cope with electronic publication."

There was also no "science" in the award of damages, Justice Gibson added.

Last year a student was ordered to pay a NSW school teacher $105,000 for defaming her on Twitter and Facebook. The large award has been partly blamed for a spike in claims, particularly by unrepresented litigants, which many hope could be dampened by Fairfax's success against Mr Hockey in the battle over legal costs.


Judge Gibson said a "serious harm" threshold should be introduced to prevent trivial claims.

"If we don't have a serious harm test, at least we could have some sort of common law developed concept of proportionality that would enable courts to say you can't spend a million against an old lady over a cake recipe."

Former Fairfax in-house counsel, barrister Mark Polden, said the low marginal cost of production in cyberspace meant low-grade defamatory comment was on the rise – and there were risks to mainstream media if they elected to carry it.

Defamation remained extraordinarily plaintiff-friendly, he said.

"It presumes that what has been published is completely false, and once publication has been proven it also presumes damage to reputation."

Tweets and other forms of social media were similar in some ways to a newspaper poster, which the law treated as a stand-alone publication, he said, but there were important differences.

"Some, perhaps most, readers will have viewed the individual tweet or Facebook post in context with other comments in the feed.

"That means that an individual tweet or post which cannot reasonably be understood as defaming the plaintiff on its own may still attract a defamation action based on other material accompanying the feed."


Law on the back foot

Minter Ellison partner Peter Bartlett said that advances in technology had been so rapid the law could not keep up.

The $366,000 cap on damages had not reduced the number of claims and claims involving social media had increased. Plaintiffs were claiming multiple caps by lodging multiple claims over the same story run in a publisher's various papers and online publications, he said.

"Many of these actions create real problems for the judiciary as the issues raised are complex but one or other of the parties is unrepresented by lawyers," Mr Bartlett said.

Mr Bartlett said the defence of qualified privilege, upon which Fairfax failed in the Hockey case, had been so narrowly interpreted by the courts that it was "basically useless".

"Judges have interpreted the defamation laws in such a way that few can fully understand them. Even judges cannot always agree on what the law is," Mr Bartlett said.

Most defamation lawyers said overall there had been an increase in the number of complaints and the figures did not account for the vast majority of disputes which were resolved short of legal action.

The number of NSW District Court actions doubled from 31 in 2013 to 61 in 2014, while in the NSW Supreme Court filings reduced from 67 in 2013 to 58 in 2014.


Melbourne Law School professor Andrew Kenyon said legal costs remains a major problem in defamation law.

"It is such a high-risk legal action for each side that I think many potential plaintiffs are dissuaded from bringing actions, while many defendants feel pressured to settle quickly to avoid higher legal costs," Mr Kenyon said.

Laws in the UK and Canada provide greater protection to media organisations while provisions in the United States make it much harder for politicians to bring claims.

Justice Gibson said that the problem with law reform in Australia is that it would require the agreement of the states and there were no votes in fixing defamation law.