Case Law, Australia: Tsamis v State of Victoria, Inflation night-club owner wins $90,000 for police slur – Justin Castelan

21 02 2020

Martha Tsamis has worked in the nightclub industry for around 30 years and is the manager of the Inflation night-club in Melbourne. In October 2013, the police brought an application to restrict Inflation’s trading hours (LCRA proceeding). The evidence was that the police brought this in an attempt to reduce the incidence of drug overdoses, improve community safety and give people confidence that ‘licensed premises’ were not ‘drug dens’. The statement in the police application referred to 59 incidents that occurred at the venue.

Ms Tsamis was due to file a response in those proceedings and around that time, on 30 January 2014, Brett Guerin, who was a Superintendent of Victoria Police and at the time the State’s ‘top licensing cop’, spoke with a journalist at the Herald-sun in relation to the case.  The Herald-Sun published articles quoting from Mr Guerin on its front page and online. Mr Guerin also appeared on a top-rating breakfast radio show on 3AW.

Ms Tsamis sued the State of Victoria in defamation over Guerin’s statements. She alleged that the statements defamed her personally and in the way that she managed Inflation.

In August 2019, a jury of six sat and heard 18 days of evidence. This included evidence about much of the 59 incidents. On 30 August 2019, the jury returned a verdict that the publications conveyed 4 imputations where there was no defence (false imputations). They were that Ms Tsamis:

  1. had approached and cross-examined witnesses in the LCRA proceeding in a manner that was improper, inappropriate and unlawful (which the State argued was only published to the journalist and not republished);
  2. had allowed minors to enter the venue in breach of the provisions of the Liquor Control Reform Act 1998;
  3. had operated Inflation in a way that jeopardised her patrons’ health and resulted in many hospital admissions; and
  4. managed the venue in a manner that was conducive to drug trafficking, drunkenness and violence.

However, the case was complicated because the jury also found that the State proved the truth of four other imputations claimed by Ms Tsamis (true imputations). These were that she:

  • was operating Inflation in a manner that resulted in drug dealing in and around the venue;
  • was operating Inflation as a ‘honey pot’ (meaning a source of attraction) for drug dealers;
  • operated the venue in a manner that resulted in drug overdoses in and around the venue; and
  • operated the venue in a manner that allowed drugs to be sold and consumed in and around the venue.

On 16 September 2019, Justice Dixon heard argument about the assessment of the damages.

The State argued that it justified the most serious imputations pleaded by Tsamis, being the drug activity imputations and effectively overwhelmed her otherwise good reputation, meaning that the damages should only be minimal, if anything.

In a judgment handed down on 18 December 2019 (Tsamis v Victoria (No 7) [2019] VSC 826) His Honour found that even though Tsamis’ reputation was to some extent lowered by the true identification of drug activities at her venue, it was ameliorated by the finding that she was uncaring for the welfare of patrons. His Honour was not persuaded that the publication of the true imputations substantially mitigated or swamped Ms Tsamis’ reputation as the State contended and concluded that no substantial or negative adjustment of Ms Tsamis’ reputation was required.

In analysing the jury’s verdict, His Honour concluded that:

  • the evidence demonstrated that the police failed to control drug activity in and around the nightclub, but the State did not seek to show how Ms Tsamis might have achieved what the police, with substantial statutory power, could not.
  • The evidence did not establish in what particular respect the management of the venue contributed to drug overdoses or that drug use was facilitated by the manner in which the club was managed. The evidence was that neither Ms Tsamis’ systems nor the police presence could effectively deter either drug use or drug trafficking in the nightclub.
  • Although there was an apparent contradiction in the jury’s verdict, it was consistent with the nightclub having the reputation as a place where drugs were used, sold and where drug overdoses occurred, as distinct from any specific feature of its management by Ms Tsamis;
  • The extensive exploration of the drug activities at trial was a sideshow that overshadowed any analysis of Ms Tsamis’ methodology in operating Inflation. The State did not adduce any evidence of a credible solution as to how a nightclub proprietor might prevent unlawful drug activity, when the police could not control it themselves.

There was significant character evidence adduced on Ms Tsamis’ behalf at trial and His Honour was not persuaded that there was any specific conduct on her part that revealed that her reputation was lower than that as described by her witnesses.

His Honour concluded that Ms Tsamis had a high reputation in the nightclub industry for her integrity and that reputation was damaged by the false imputations published.

As for the first imputation, during his exchange with the journalist, Superintendent Guerin spoke of the police statement in the LCRA proceeding and had said:

… she’s asking these people – well, you know, she’s started to cross-examine them about the statement. Now, I can’t say that she’s threatened them or put the frighteners on ‘em and non-one has told me that, but the fact that she’s actually reached out and, you know, got them to contact her and started talking to them is a bit – a bit of an issue of concern for us.

The Herald-Sun published: “Supt Gerin said he was concerned the club had contacted some of the witnesses after receiving the police submission”, but did not explicitly state that this was improper, inappropriate or unlawful.

His Honour nevertheless concluded that Guerin’s statement carried a greater sting than the remaining imputations. It was the most serious because it involved an allegation that Ms Tsamis may have interfered with witnesses to the prejudice of the LCRA proceeding. There was also a basis on which to take account of the grapevine effect as the journalist did not give evidence.

His Honour concluded that:

  • Ms Tsamis’ hurt feelings were not limited to the true drug activity imputations (although the hurt was at least partly attributable to this), but nevertheless the injury to her feelings was significant.
  • Guerin’s conduct was intended to maximise the exposure of the police argument to be put in the LCRA proceeding and this aggravated the damages. However in all of the circumstances, aggravation was not significant;
  • The most damaging aspect of the publications was that they presented a false picture of Ms Tsamis’ activities in relation to the regulatory management of her venue.

In all, His Honour awarded Ms Tsamis $90,000 damages, including aggravated damages. A victory for Ms Tsamis, but after many interlocutory fights and a hard-fought trial to get to this point, the verdict is likely to be overwhelmed by the legal costs….

This post originally appeared on the Defamation Watch blog and is reproduced with permission and thanks


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