Lawyers acting for lord mayor Nuatali Nelmes and City of Newcastle chief executive officer Jeremy Bath have threatened defamation action against three people linked to the city's two marginalised business groups.
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Matthews Folbigg Lawyers wrote to inner-city business owner Catherine Henry in August asserting she had defamed Cr Nelmes and Mr Bath by sharing an inflammatory post by east end resident Maria Charlton.
The same legal firm wrote to Newcastle Now chairman Edward Duc and Hamilton Chamber of Commerce president Nathan Errington in July alleging they had defamed Cr Nelmes in a media release.
The legal letters are the latest development in a long dispute over Newcastle Now and the Hamilton chamber, which have been banned from the city's "business improvement association" scheme due to alleged breaches of their funding agreements with the council.
I feel strongly about these issues.
- Catherine Henry
The legal letter to Ms Henry asked her to remove Ms Charlton's post from her Facebook feed and issue a public apology and retraction by August 5. The letter also reserved Cr Nelmes' and Mr Bath's right to monetary compensation for "reputational damage and hurt".
Ms Charlton, who lives on the Supercars track and is a harsh critic of the council and the lord mayor for agreeing to bring the race to Newcastle, posted comments critical of Mr Bath and Cr Nelmes on her "Ban the Supercars in Newcastle East" Facebook page on July 17.
The post was in response to a Newcastle Herald report about the Reserve wine bar in Hunter Street closing.
Ms Henry, a former Newcastle Now board member, shared the post that afternoon and the following day.
The Newcastle Labor party branch member, former council candidate and daughter of prominent activist Margaret Henry told the Newcastle Herald on Wednesday that she had shared the post out of frustration with the way the city's transformation had been handled and how the council had treated Newcastle Now.
"I feel strongly about these issues," Ms Henry said.
"I thought the Newcastle Now stuff was so unfair, just ghastly.
"The mall is embarrassing. It's just so sad."
Ms Henry was elected to the Newcastle Now board in November but stood down weeks later when she started to help the organisation form a legal response to a council termination letter.
The legal letter to Ms Henry last month said the Facebook post implied misconduct, incompetence, self-interest and corruption and she had defamed Cr Nelmes and Mr Bath by republishing it.
Ms Henry, a lawyer who runs a practice in King Street, said she had no intention of apologising and would "happily defend" a defamation action.
A council spokesperson said on Wednesday that City of Newcastle would not pursue the matter "given that the social post in question has been removed from Ms Henry's account".
Ms Charlton said she had not received a legal letter in relation to the July 17 post, which is still on her anti-Supercars Facebook page.
Mr Errington and Mr Duc, who have waged a campaign against the council's efforts to remove Newcastle Now and the Hamilton chamber from the BIA scheme, received legal letters on July 30.
Matthews Folbigg wrote that a media release issued by Mr Errington and Mr Duc on July 18 had claimed incorrectly that Cr Nelmes was attending a conference in New York at ratepayers' expense.
They said all costs associated with Cr Nelmes' attendance had come from a scholarship fund set up by former New York mayor Michael Bloomberg.
They asked Mr Duc and Mr Errington to apologise and retract the claims by August 5. The letter reserved the right of Cr Nelmes and Mr Bath to pursue "substantial monetary compensation".
The council spokesperson said on Wednesday that the council was "investigating the appropriate next steps" given Mr Errington and Mr Duc had not retracted their statement.
The council has overhauled its funding model for the BIA scheme after three reviews and the sacking of two liaison staff.
Newcastle Now and the Hamilton chamber have been excluded from applying for funds.