Coles Supermarkets has been ordered to pay $52,900 in damages to a customer wrongly accused of stealing raw prawns from its Lane Cove store.

Philip Clarke, 49, an artist, sued Coles for defamation, assault, intimidation, harassment and wrongful imprisonment after he was aggressively confronted by the store manager in front of dozens of other customers.

District Court Judge Leonard Levy found Mr Clarke had been defamed because some of the shoppers may have recognised him from the neighbourhood and the accusation that he had been caught stealing may have been spread along the "grapevine".

In September 2009, Mr Clarke ordered about 500 grams of raw prawns from the delicatessen counter. After filling his trolley with more items, he returned to the counter, put the prawns on the top of it and asked for the package to be topped up to 1 kilogram.

Soon after, the store manager, Shant Tatosian, along with some other staff members, confronted Mr Clarke and accused him of eating some of the prawns so he did not have to pay for them.

A heated exchange followed in which Mr Tatosian claimed Mr Clarke had eaten some prawns, dropping the shells on the floor and secreting the wrapper in the freezer section.

About 30 shoppers witnessed the confrontation, which Mr Clarke said left him feeling hurt, upset, humiliated and shocked.

But during the trial, Mr Tatosian admitted he didn't actually see Mr Clarke eat or hide the prawns in his jacket, rather he assumed he had, and publicly made the allegations without giving Mr Clarke a chance to explain.

Judge Levy awarded Mr Clarke $40,000 in compensatory damages and $10,000 aggravated compensatory damages because of the prolonged and repeated nature of the embarrassing and humiliating accusations he was subjected to for at least 10 minutes. Mr Clarke was also awarded interest and costs. Judge Levy dismissed the other causes of action.

Judge Levy said Coles' defence of qualified privilege failed because the other customers had no interest in hearing of the accusations, which could have been made discreetly