Anand v Armstrong (No 2) - [2020] SADC 73

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
ANAND & ANOR v ARMSTRONG & ANOR (NO 2)
[2020] SADC 73
Reasons for Decision of Her Honour Judge Schammer
16 June 2020
DEFAMATION - ACTIONS FOR DEFAMATION - COSTS
The plaintiffs pursued a claim against the defendants in defamation and for interference in contractual relations.
On 31 March 2020, I ordered judgment in favour of the first plaintiff as against the defendants in the sum of $50,000, comprising $40,000 for general damages and $10,000 for aggravated damages for defamation. The second plaintiff’s action was dismissed.
The plaintiffs failed to prove the claims made for specified economic loss as a result of either the defamation or the alleged interference in contractual relations.
The plaintiffs seek an order for pre-judgment interest at a rate of 4% per annum for the period from the date of the first publication until the date of judgment.
In addition, the plaintiffs seek an order for their costs of action on an indemnity basis either pursuant to s 38(2)(a) Defamation Act 2005 (SA), on the basis that the defendants unreasonably failed to make a settlement offer or agree to a settlement offer proposed by the plaintiffs, or in the exercise of my discretion having regard to the defendants’ conduct both before and during the proceedings.
Orders:
1. That in addition to the judgment sum, the defendants are to pay the first plaintiff the sum of $5,120 by way of pre-judgment interest.
2. Each party is to bear its own costs incurred of and incidental to FDN 13, and the costs thrown away by reason of the adjournment of the first trial.
3. Each party is to bear its own costs incurred of and incidental to FDN 19.
4. Otherwise, the defendants are to pay the first plaintiff’s costs of action on a party/party basis, to be taxed if not agreed.
5. No order as to the second plaintiff’s costs of action.
National Health Act 1953 ; Defamation Act 2005 ss 14, 35, 38; Copyright Act 1968 ; District Court Act 1991 s 42, referred to.
Calderbank v Calderbank [1975] 3 All ER 333; Cornes v The Ten Group Pty Ltd & Ors (No.2) (Cornes) [2011] SASC 141; John Fairfax & Sons Ltd v Kelly (1987) 8 NSWLR 131; Amalgamated Television Services Pty Ltd v Marsden [2002] NSWCA 419; Davis v Nationwide News Pty Ltd [2008] NSWSC 946; Macks v Viscariello (No 2) [2018] SASCFC 106; Excelsior Land Holdings Pty Ltd v Alan Sheppard Constructions Pty Ltd [2012] SASCFC 119; Parabanks Shopping Centre Pty Ltd v City of Salisbury (No 2) [2013] SASC 204; Ruddock v Vadarlis (No 2) (2001) 115 FCR 229; Lesses v Maras (No 3) [2017] SASCFC 154; Mercorella v Ellis (Unreported, Supreme Court of South Australia, Debelle J, 15 August 1994); Knight Frank Australia Pty Ltd v Paley Properties Pty Ltd (2014) 120 SASR 532, considered.

ANAND & ANOR v ARMSTRONG & ANOR (NO 2)
[2020] SADC 73
Introduction

The first plaintiff, Rajan Anand, is the sole director of the second plaintiff, IqMed Pty Ltd. The first defendant, April Armstrong, is the sole director of the second defendant, Business for Doctors Pty Ltd (BFD).
At the relevant time, both the first plaintiff and the second defendant were medical practitioners who delivered, through their respective corporate entities, educational workshops on the Medicare Benefits Schedule (MBS) to medical practitioners, in competition with each other.
Between 9 and 22 September 2017, the first defendant published three posts on a BFD Facebook page (and comments made in response thereto), two emails and one phone call (the Publications). In the Publications, the defendants stated, inter alia, that the first plaintiff had used BFD’s intellectual property in the presentation of his workshops, and that he had misrepresented himself as an expert on the MBS and the National Health Act 1953, was lacking in knowledge and insight and may have been defrauding Medicare and the Australian Taxation Office.
By Second Summons and Second Statement of Claim dated 5 July 2019, the plaintiffs claimed damages from the defendants for alleged defamation and interference in contractual relations arising from the Publications.
The defendants denied the plaintiffs’ claims and relied on the defences of justification, qualified privilege and fair comment, both at common law and pursuant to the Defamation Act 2005 (the Act).
The trial of this action proceeded over three days in September 2019. The defendants were not legally represented for most of the action, or at trial. The first defendant represented herself at trial, and, with the leave of the court, also represented the second defendant.
Shortly prior to the commencement of the trial, the first defendant informed the plaintiffs’ solicitors and the court that the defendants did not intend to call any evidence by way of defence of the claim. In the absence of such evidence being called, the defences pleaded by the defendants, were bound to fail, having regard to the substance of the Publications, which, at their core, contained an allegation that the first plaintiff had ‘knowingly passed off the work of BFD as his own’.
On 31 March 2020, I delivered judgment in this action and awarded the first plaintiff damages in the sum of $50,000 as against the defendants. I dismissed the second plaintiff’s claim. In addition, I ordered that the parties would be heard as to interest and costs.
Having regard to the impact of COVID-19 and the fact the first defendant resides interstate and is a general practitioner, on that same day, I made ancillary orders, namely:
1The plaintiffs are to file and serve any affidavits and/or written submissions on the issues of interest and costs on or before close of business Tuesday 28 April 2020.
2The defendants are to file and serve any affidavits and/or written submissions in response on or before close of business Tuesday 26 May 2020.
3Thereafter the court is to advise the parties in writing of any further orders made as to interest and costs, and the reasons for such orders, with no need for the parties’ attendance.
On 28 April 2020, the plaintiffs filed an Outline of Submissions on Interest and Costs (Outline) and the Second Affidavit of Lincoln Knowles Smith affirmed on 27 April 2020 (Affidavit).
The plaintiffs seek an award of interest on the judgment sum of $50,000 at a rate of 4% from 9 September 2017 to 31 March 2020. In addition, the plaintiffs seek an order for their costs of action on an indemnity basis.
As at this date, the court is yet to receive any responding material from the defendants.
Relevant Background Matters
I do not intend to repeat the substance of my delivered judgment. However, to understand the basis for the plaintiffs’ claim for indemnity costs, it is necessary to outline how the action unfolded, and what occurred as between the parties in the period immediately after the Publications.
Pre-action
On 18 September 2017, solicitors acting on behalf of the first plaintiff, sent a Concerns Notice within the meaning of s 14(2) of the Act to the second defendant, marked for the attention of the first defendant.[1]
[1] Exhibit ‘LKS-2’ to the Affidavit.
In the Concerns Notice, the first plaintiff set forth the substance of the Publications and asserted the Publications were highly defamatory of the first plaintiff and had been made without any attempt to confirm the veracity of the allegations contained therein and with the intention of causing maximum harm to the first plaintiff, by way of reputational damage and economic loss.
The first plaintiff outlined his willingness to resolve a foreshadowed claim for defamation against the defendants on terms which included payment by the defendants of the sum of $100,000 for non-economic loss, an additional sum of $100,000 for future economic loss, the publication of a retraction and apology on the BFD Facebook page, and to Adelaide to Outback GP Training Program Limited (AOGP), and the removal of all defamatory material from the BFD Facebook page.
The defendants did not make any offer to make amends in accordance with the Act in response to the Concerns Notice. Rather, through their solicitor, the defendants sent a letter to the plaintiffs’ solicitors dated 19 September 2017, asserting that the imputations arising from the Publications were true or substantially true, repeating allegations to the effect that the first plaintiff had infringed their intellectual property and stating that he had used their material without permission.[2] In the letter, the defendants made certain demands of the first plaintiff, including that he cancel seminars containing the defendants’ material and remove any references to IqMed or AOGP in any marketing material. The letter outlined that if the demands were not met by 26 September 2017, the first defendant was ‘prepared to enforce her rights under the Copyright Act 1968’.
[2] Exhibit ‘LKS-3’ to the Affidavit.
In response, by letter dated 20 September 2017 from the plaintiffs’ solicitors to the defendants’ solicitors, the first plaintiff denied the defendants’ claims that he had used the defendants’ intellectual property, and requested the defendants provide full particulars of the intellectual property which they claimed he had improperly used.[3]
[3] Exhibit ‘LKS-4’ to the Affidavit.
By letter dated 22 September 2017 from the defendants’ solicitors to the plaintiffs’ solicitors, the defendants maintained their earlier position and reiterated that if their demands were not met, they would ‘enforce (their) rights under the Copyright Act 1968’.[4]
[4] Exhibit ‘LSK-5’ to the Affidavit.
Action
The first plaintiff commenced this action against the defendants by Summons and Statement of Claim dated 18 October 2017. The first plaintiff particularised a claim for damages in defamation, for interference with contractual relations and for misleading or deceptive conduct and/or unconscionable conduct in breach of the Australian Consumer Law (ACL).
As to the claims under the ACL (and aspects of the claim in tort for contractual interference), the first plaintiff relied on the particulars as pleaded with respect to the claim in defamation and pleaded ‘further particulars of the Defendants’ conduct will be provided following disclosure and the return of subpoenas’.
The first plaintiff sought remedies including damages in the sum of $578,500 including:
1$100,000 for non-economic loss.
2$28,500 for past economic loss.
3$450,000 for future economic loss.
In addition, the first plaintiff claimed aggravated and exemplary damages and sought ‘an account of profits for any competing seminar run by the First Defendant or an entity controlled by her’.
The defendants filed a Defence on 13 December 2017 wherein they admitted having made the Publications, relied on the defences as previously outlined and denied the plaintiff had suffered the loss and damage as alleged. The defendants did not advance any positive claim as against the first plaintiff, and have never taken the action as threatened under the Copyright Act 1968.
On 30 April 2018, the plaintiffs’ solicitors wrote to the defendants’ solicitors providing details of the first plaintiff’s claim for damages for past economic loss in a sum of $79,000 and future economic loss in a sum of $54,058.[5]
[5] Trial Book at Tab 4.
On 6 February 2019, a Master of this Court made orders including that the action be set down for trial in early May 2019 if possible and the parties were to file a notice listing the names of the witnesses they proposed to call, identifying the general nature of the evidence to be given by each witness.
The trial was set down for hearing for three days to commence on Monday 13 May 2019. Despite the contents of the letter dated 30 April 2018, the pleadings remained in the same form as initially issued.
Shortly prior to that trial date, letters of offer were exchanged by the parties.
By letter dated 26 April 2019 to the plaintiffs’ solicitors, the first defendant offered, on behalf of the defendants, to pay the first plaintiff the sum of $20,000 ‘all inclusive of legal costs, interest and disbursements’ in full and final satisfaction of the action and all claims between the parties.[6] In the letter, the first defendant outlined the defendants’ precarious financial circumstances, explained that she had been lent the sum of $20,000 by a friend to cover the costs of the trial and stated that if the offer was not accepted, that sum would instead be wholly applied to defence costs of and incidental to the trial. The offer was said to have been made in accordance with the principles in Calderbank v Calderbank [1975] 3 All ER 333.
[6] Exhibit ‘LKS-6’ to the Affidavit.
By letter dated 29 April 2019 from the plaintiffs’ solicitors to the first defendant, the first plaintiff rejected the defendants’ settlement offer and made a counter-offer. The terms of that counter-offer included a public apology and retraction on the BFD Facebook page and to AOGP, a requirement that the defendants cease and desist from making any defamatory comments with respect to the first plaintiff, payment of the sum of $120,000 by way of compensation to the first plaintiff and payment of the first plaintiff’s legal fees to that date, on a party/party basis. [7] The offer was said to remain open until 5 pm on Friday 3 May 2019.
[7] Exhibit ‘LKS-7’ to the Affidavit.
Further, the letter stated:
My client is of the view that the offer set out above is reasonable in the circumstances and reserves his right to refer to this letter on the question of costs. We refer you to section 38(2)(a) of the Defamation Act 2005 (SA) and note that if a defendant unreasonably fails to agree to a settlement proposal by the plaintiff, then the defendant must pay the plaintiff’s costs on an indemnity basis. We respectfully suggest that the refusal to accept the above offer will be deemed to have been done so “unreasonably”.
By letter dated 26 April 2019, emailed to the plaintiffs’ solicitors on 30 April 2019, the first defendant rejected the first plaintiff’s counter-offer and reiterated the terms of the defendants’ earlier offer.[8] In that letter, she outlined that the funds she had borrowed would be used to pay for defence costs of and incidental to the trial (the preparation for which included booking flights and accommodation for witnesses) and the defendants had no other available funds for payment with respect to the claim. Further, she stated:
I am sure you can appreciate that for me to prove I have not defamed your client that I will have to provide evidence that my claims of
1.   Medicare fraud
2.   Tax evasion
3.   IP theft
are true – this will leave him open to investigation and audit by these authorities, potentially costing him significant sums of money and the possibility of restricted provider number access resulting in loss of future income and impacting on his business.
It is not my intention to ruin your client’s business or reputation in court – however I see that presenting the facts to the court that this may be the outcome…I believe the stress of this trial on a person already suffering with mental health illness, could potentially cause more grief…
[8]    Exhibit ‘LKS-8’ to the Affidavit.
By email dated 1 May 2019, the plaintiffs’ solicitor again rejected the defendants’ offer on behalf of the first plaintiff and requested the provision of the defendants’ proposed list of witnesses, outlining the general nature of their evidence, by close of business that day.[9]
[9] Exhibit ‘LKS-9’ to the Affidavit.
The defendants responded to that request on 6 May 2019, but did not file a notice pursuant to 6R 159. The list of witnesses proposed to be called by the defendants included three people from Primary Health, being the entity with whom the first plaintiff was working as a general practitioner at the relevant time.
Initial Trial Date
On Friday 10 May 2019, the defendants filed an interlocutory application seeking an order that the trial be adjourned (FDN 13). The application was supported by an affidavit sworn by the first defendant on that day, wherein the first defendant deposed to the first plaintiff having made disclosure of 31 additional documents on Wednesday 8 May 2019.
The first defendant deposed that that there were individuals referred to in the documents who could potentially be called as witnesses at the trial. She deposed that because of the lateness of the disclosure, she was unable to obtain independent legal advice in respect of the documents including advice as to whether such witnesses should be called by the defendants, and if so, to have time to make such arrangements.
The application was heard immediately prior to the commencement of the trial. It was opposed by the first plaintiff.
The additional disclosure made by the first plaintiff included documents relating to a dispute between the first plaintiff and Primary Health after the Publications, which, it was submitted, were disclosed in response to the defendants’ intimation to call witnesses from Primary Health, but were not otherwise considered by the first plaintiff to be relevant to the action. The documents also included an independent investigation report marked as confidential, prepared by WA Country Health, with respect to the first defendant (the confidential report). The first defendant foreshadowed an application to object to the admissibility of that report.
After hearing submissions on the application, I adjourned the trial. In doing so, I had regard not only to the practical difficulties arising from the first plaintiff’s late disclosure, particularly relating to the confidential report, but that, on my analysis of the pleadings and the first plaintiff’s list of documents, I was concerned that from a procedural perspective, the action was not ready to be listed for trial.
The contract which formed the basis for the claim for damages for contractual interference was not a contract to which the first plaintiff was a party, rather the relevant party was IqMed Pty Ltd. In addition, the first plaintiff had not disclosed any taxation returns or financial statements to support the claim for economic loss (which remained pleaded in the sum of $478,000 despite the contents of the letter dated 30 April 2018). The pleadings continued to include paragraphs to the effect that further particulars of the pleaded causes of action would be provided in due course.
I reserved the question of costs thrown away by reason of the adjournment.
By letter dated 14 May 2019, the first defendant restated the terms of the defendants’ earlier offer, outlining that the offer was open for acceptance until close of business 24 May 2019.[10] In that letter, she stated:
As previously mentioned, I am genuinely concerned about how your client will handle the stress of the trial and the toll that will no doubt have on his ailing mental health…
[10] Exhibit ‘LKS-10’ to the Affidavit.
The offer was rejected by the first plaintiff by letter dated 16 May 2019.[11] In a further letter to the first defendant of the same date, the plaintiffs’ solicitors outlined the basis of the claim in defamation and the strength of that case, and made a further offer to resolve the claim on terms which included payment of the sum of $140,000 inclusive of interest and costs, a public apology and retraction on the BFD Facebook page and to AOGP and a requirement that the defendants cease and desist from making any defamatory comments with respect to the first plaintiff.[12] The first plaintiff stated that he was happy for the sum of $140,000 to be made by periodic payments, subject to the provision of security. The offer was expressed as open for acceptance until 5 pm the next day, 17 May 2019.
[11] Exhibit ‘LKS-11’ to the Affidavit.
[12] Exhibit ‘LKS-12’ to the Affidavit.

The first defendant responded to that letter on 7 June 2019.[13] In that letter, she noted that the first plaintiff’s claim, although originally pleaded in the sum of $578,000, had subsequently been reduced by (about) half and had been further reduced. She wrote:
There has been no explanation provided to me for the reduction in what can only be described as a grossly inflated claim. Further, there has been no documentation to justify either the original amount claimed, the Revised Claim or the offer outlined in your abovementioned letter. Even if your clients successfully establish liability at trial (which is denied), they will not on the documentation presently available establish that any loss has been suffered which sounds in an award of damages.
[13] Exhibit ‘LKS-13’ to the Affidavit.
In the letter, the defendants made a further offer to resolve the claim in the sum of $50,000 (all inclusive), to be paid by periodic payments, pursuant to a deed of release. The offer was stipulated to be open for a period of 14 days from the date of the letter.
By letter from his solicitors dated 28 June 2019, the first plaintiff rejected the defendants’ settlement offer.[14] The letter outlined that the first plaintiff would only accept a settlement offer which included an apology, or at the very least, an acknowledgement by the first defendant, as to the hurt and embarrassment her words and actions had inflicted on him and his family. The letter expressed a continued willingness to reach a commercial outcome of the matter.
[14] Exhibit ‘LKS-14’ to the Affidavit.
I am uncertain what, if any, further settlement negotiations occurred thereafter.
Pursuant to leave granted by me, the second plaintiff was added as a party to the action and the plaintiffs filed a Second Statement of Claim (Second SOC) on 5 July 2019. The Second SOC included, for the first time, allegations pertaining to the Comments, further particulars as to the plaintiffs’ claim for economic loss and abandoned the claims based on the Australian Consumer Law and the claim for exemplary damages.[15]
[15] A claim for which in defamation is prohibited pursuant to s 35 of the Act.
The defendants did not file a Defence to the Second SOC.
The defendants issued an application (FDN 19) seeking an order that the court wholly disallow the use of the confidential report at trial. The application was opposed. After hearing argument, by Reasons for Decision dated 5 August 2019, I ordered that the plaintiffs were prohibited from using the confidential report until further order, and reserved the question of costs of and incidental to that application.
The trial ultimately commenced on Monday 23 September 2019 and proceeded over three sitting days. On Thursday 19 September 2019, the first defendant sent an email to the plaintiffs’ solicitors and the court, advising that she would not be calling any of the witnesses to give evidence as previously advised. She subsequently clarified that she was also not intending to give evidence. The defendants called no evidence in defence of the plaintiffs’ claim at trial.
Judgment
In my judgment, I made the following findings on the issues in dispute:
1Each of the Publications was defamatory to the first plaintiff.
2The defendants had failed to establish any of the defences as pleaded.
3When the first defendant sent the First and Second Emails she was motivated by malice, and with the intention of preventing the first plaintiff from competing against BFD as a provider of MBS education to medical practitioners.
4The defendants’ interference in the contractual relationship between the second plaintiff and AOGP, did not cause any breach of contract, nor was it productive of any loss to either plaintiff.
5At the time of the Publications, the first plaintiff:
a.was not an expert in the MBS and/or the National Health Act 1953;
b.did not have an established reputation in Australia as a provider of education to general practitioners on the MBS; and
c.had only a limited reputation and standing within the Australian medical community.
6General Damages were assessed and awarded in the sum of $40,000.
7Aggravated Damages were assessed and awarded in the sum of $10,000.
8The plaintiffs had not established any claim for damages for economic loss as specified.
Interest
The plaintiffs seek an award of pre-judgment interest on the judgment sum of $50,000 at a rate of 4% per annum for the period from the date of the first publication, namely 9 September 2017, until the date of judgment, 31 March 2020.
In doing so, the plaintiffs’ solicitors relied on r 261 of the District Court Civil Rules 2006 and r 217 of the District Court Civil Supplementary Rules 2014 (now repealed), but in force as at the date submissions were made.
The relevant rule is now r 182.3 of the Uniform Civil Rules 2020 (UCR), which states:
182.3—Pre-judgment interest
(1)The appropriate rate and period for the calculation of interest on pre-judgment monetary amounts is a matter for determination by the Court in each case.
(2)As a guide only, and subject to any contrary statute, the Court may calculate such interest—
(a) at the rate of 5 per cent per annum in respect of a period from the commencement date onwards or if the Court thinks fit any earlier period; or
(b) at another rate prescribed by the Chief Judicial Officer from time to time in respect of a period from not earlier than the first anniversary of the commencement date onwards.
(3)The Registrar must publish any prescription by the Chief Judicial Officer made under subrule (2)(b) on the CAA website.
In Cornes v The Ten Group Pty Ltd & Ors (No.2) (Cornes),[16] Justice Peek considered the principles applicable to an award of interest in defamation proceedings. He referred to the principle that interest can be reduced in defamation cases to reflect the fact that any injury or damage to a plaintiff’s reputation arising from the defamation was from a continuing injury, as explained in John Fairfax & Sons Ltd v Kelly[17] where McHugh JA said:[18]
The correct approach in theory would seem to be that, since the plaintiff was entitled to damages immediately upon publication, the proper inquiry is first to determine to what extent the award was increased by reason of continuing injury. In strict theory the interest, in respect of this additional sum, would need to take account of the fact that the injury was spread over a period after publication…
[16] [2011] SASC 141.
[17] (1987) 8 NSWLR 131.
[18] Ibid 143.
Peek J noted that in Amalgamated Television Services Pty Ltd v Marsden[19] and in Davis v Nationwide News Pty Ltd,[20] it was emphasised that rather than applying a purely arithmetical approach to the calculation of interest, it was necessary always to consider what was fair and proper in the circumstances of the particular case.
[19] [2002] NSWCA 419.
[20] [2008] NSWSC 946.
The plaintiffs submitted that interest should be awarded from the time of the first publication to the date of judgment, with no reduction, as the damage to the first plaintiff’s reputation occurred primarily at the time of each publication and shortly thereafter and that it was not possible to dissect the award (presumably, by reference to any particular publication, rather than to the Publications as a whole).
At trial, the first plaintiff gave evidence that he was still distressed and upset by the impact of the Publications on his reputation and I accepted that evidence. Further, there was some delay in the matter proceeding to trial by virtue of the adjournment of the first trial, which, as previously outlined below, albeit precipitated by an application made by the defendants, was granted in circumstances arising from late disclosure by the first plaintiff and because, from a procedural perspective, the action was not ready to proceed to trial.
Bearing in mind the contents of UCR 182.43, which prescribe a rate of pre-judgment interest of 5% per annum, I consider it fair and proper in the circumstances of this case to proceed in the manner as sought by the plaintiffs and to award pre-judgment interest on the sum of $50,000 calculated from the date of defamation to the date of judgment, but only at the rate of 4% per annum.
I fix a sum of $5,120 for pre-judgment interest.
Costs
The Act and Rules
Pursuant to s 42 of the District Court Act 1991, costs are in the discretion of the court and may be awarded against any person. The discretion is unfettered but must be exercised judicially.[21]
[21] Macks v Viscariello (No 2) [2018] SASCFC 106 at [5].
Pursuant to UCR 193.1, costs are to be determined on the ‘standard costs basis’ and in accordance with the ‘Higher Courts costs scale’, subject to the cost rules in Chapter 11 Part 2 Division 4. I have considered those relevant rules.
Pursuant to UCR 194.5(2), as a general rule, costs follow the event. Further, pursuant to UCR 194.5(4), generally, the costs of an adjournment arising from a party’s default are to be paid by the party in default.
UCR 194.6 deals expressly with ‘Discretionary Factors’. It states:
194.6—Discretionary factors
(1)In exercising its discretion as to costs, the Court may have regard to any factors it considers relevant.
(2)For example, the Court may have regard to the following factors—
(a)     any misconduct or unreasonable conduct of a party in connection with a proceeding;
(b)     any breach by a party of overriding obligations, these Rules or an order of the Court;
(c)     any breach by a party of the pre-action obligations imposed by Chapter 7 Part 1;
(d)     the making or not making of an offer by a party to resolve the proceeding;
(e)     the non-acceptance by a party of an offer made by another party to resolve the proceeding;
(f)     the value and importance of the relief sought or any relief obtained;
(g)     any public interest in the subject matter of the proceeding or public benefit from the prosecution or defence of the proceeding; or
(h)     whether costs awarded are to be met by a person or out of a fund.
Further, in the exercise of the court’s discretion as to costs, it has been recognised that although a party may be successful in achieving a judgment in its favour, it may, nevertheless, have been unsuccessful with respect to various issues (or ‘events’) as advanced within its claim and that in such circumstances, it is appropriate for the court to treat those distinct issues as distinct events when exercising its discretion as to costs.[22]
[22] Excelsior Land Holdings Pty Ltd v Alan Sheppard Constructions Pty Ltd [2012] SASCFC 119 at [10], Parabanks Shopping Centre Pty Ltd v City of Salisbury (No 2) [2013] SASC 204.
In Ruddock v Vadarlis (No 2),[23] Black CJ and French J held that:
…a successful party who has failed on certain issues may not only be deprived of those costs but may be ordered as well to pay the other parties’ costs of them. In this sense “issue” does not mean a precise issue in the technical pleading sense but any disputed question of fact or law.
[23] (2001) 115 FCR 229 at 234 [11].
In Lesses v Maras (No 3),[24] a defamation case, the Full Court observed that in dealing with cases where a party had ‘mixed success’:
…a court may in appropriate circumstances reduce the costs ordered in favour of the overall successful party, and further may order that party to pay the opponent’s costs, in respect of such issues. When the court considers that the discretion should be so exercised, it will usually make an order for payment of a proportion of one party’s costs by the other party reflecting a broad axe assessment, even when it considers that the successful party should pay the opponent’s costs in respect of such issues. (citations omitted)
[24] [2017] SASCFC 154 at [82].
In Macks v Viscariello (No 2),[25] the Full Court adopted what was said in Lesses v Maras (No 3),[26] and stated:
Factors to be considered when assessing costs on separate issues include determining whether the issues were separate and distinct, the importance of the issues (including whether they had merit), and the time taken at trial in litigating those issues.
[25] [2018] SASCFC 106 at [32]-[33].
[26] [2017] SASCFC 154 at [82].
Importantly, section 38 of the Act states:
38—Costs in defamation proceedings
(1)In awarding costs in defamation proceedings, the court may have regard to—
(a)     the way in which the parties to the proceedings conducted their cases (including any misuse of a party’s superior financial position to hinder the early resolution of the proceedings); and
(b)     any other matters that the court considers relevant.
(2)Without limiting subsection (1), a court must (unless the interests of justice require otherwise)—
(a)     if defamation proceedings are successfully brought by a plaintiff and costs in the proceedings are to be awarded to the plaintiff—order costs of and incidental to the proceedings to be assessed on an indemnity basis if the court is satisfied that the defendant unreasonably failed to make a settlement offer or agree to a settlement offer proposed by the plaintiff; or
(b)     if defamation proceedings are unsuccessfully brought by a plaintiff and costs in the proceedings are to be awarded to the defendant—order costs of and incidental to the proceedings to be assessed on an indemnity basis if the court is satisfied that the plaintiff unreasonably failed to accept a settlement offer made by the defendant.
(3)In this section—
settlement offer means any offer to settle the proceedings made before the proceedings are determined, and includes an offer to make amends (whether made before or after the proceedings are commenced), that was a reasonable offer at the time it was made.
Plaintiffs’ Submissions
The plaintiffs seek an order for their costs of action on an indemnity basis.
It was submitted that such an order was appropriate having regard to the defendants’ conduct since the Publications and specifically:
1The fact the defendants maintained a denial that they had defamed the plaintiff, in circumstances where, in accordance with my findings, the defamatory imputations arising from the Publications were serious and had the ability to cause significant damage to the first plaintiff’s reputation, and, where the defendants had no reasonable basis for making the allegations.[27]
2The defendants were aware of the negative impact of the Publications on the first plaintiff’s health.[28]
3The Posts remained on the BFD Facebook page until at least 30 November 2018, being over 14 months after their publication.[29]
4At no time has the first defendant apologised for her defamatory comments or retracted them.
5In her closing submissions at trial, the first defendant continued to attack the first plaintiff’s character, despite not calling evidence to substantiate her many allegations.
6The primary purpose for the Publications was to advance the first defendant’s personal interests and to seek to extinguish the plaintiffs as competitors in the area of MBS education.[30]
7The defendants maintained the first plaintiff had infringed their intellectual property, despite never providing evidence of the same,[31] and had threatened legal proceedings under the Copyright Act 1968.
8The defendants did not respond to the Concerns Notice by offering to make amends, rather they had threatened proceedings against the first plaintiff.
9The defendants had not filed a Second Defence.
10The defendants made a late decision not to call any evidence at trial.
[27] Judgment at [659] and [490].
[28] Noting the contents of her letters dated 26 April 2019 and 14 May 2019 (Exhibits ‘LKS-8’ and ‘LKS-10’ to the Affidavit). There was no medical evidence led at trial addressing any alleged impact on the first plaintiff’s health arising from the Publications.
[29] Judgment at [643].
[30] Judgment at [667].
[31] Judgment at [313]-[314].
Further, it was submitted that the court should proceed pursuant to s 38(2) of the Act and award indemnity costs to the plaintiffs as:
1none of the defendants’ various offers of settlement constituted a ‘settlement offer’ as defined by s 38, because no such offer was ‘a reasonable offer’ at the time it was made, having regard to the strength of the plaintiffs’ case; and/or
2the defendants had unreasonably failed to accept any of the settlement offers as proposed by the plaintiffs, but in particular, had not accepted the offer conveyed by letter dated 16 May 2019.[32]
[32] Exhibit ‘LKS -12’ to the Affidavit.
The plaintiffs relied on what was said by Peek J in Cornes,[33] namely that an offer made by the defendant in that case of $35,000 (all inclusive) was not a ‘reasonable offer’, having regard to the award of damages ultimately made ($85,000) and noting that at the time that offer was made, it must have been obvious to the defendants that the plaintiff had been defamed and would recover damages of other than a modest sum.
[33] [2011] SASC 141.
It was submitted that, similarly, it must have been obvious to the defendants that the first plaintiff had been defamed, and that none of the defendants’ offers appropriately reflected the strength of the first plaintiff’s (or plaintiffs’) case, at the time the offer was made.
Discussion/Findings
General
The claim for damages for defamation was pleaded only on behalf of the first plaintiff, and damages were awarded to the first plaintiff for such claim in the sum of $50,000.
The second plaintiff’s claim for damages for contractual interference was wholly unsuccessful.
As previously stated, in the ordinary course, costs follow the event. As such, in ordinary circumstances, the defendants are entitled to a costs order in their favour as against the second plaintiff, for costs they incurred in defending the second plaintiff’s claim.
However, the defendants were not legally represented at any time after the pleadings were amended to add the second plaintiff. The defendants did not file a defence to the Second SOC. Further, the issues in dispute on the second plaintiff’s claim, while not identical, involved the canvassing of evidence which was otherwise required to be adduced and considered with respect to the first plaintiff’s claim in defamation. In my view, it is almost impossible to identify costs which would have been incurred by the second plaintiff with respect to that claim, save and except for the costs of adding it as a party to the action. The costs order I made on FDN 16, being the plaintiffs’ application to amend and to add the second plaintiff, was that costs be in the cause. It follows that the first plaintiff is entitled to its costs of that application, but the second plaintiff is not.
Otherwise, I consider the costs incurred by the second plaintiff with respect to the action, are costs that were incurred by the first plaintiff in any event in the prosecution of his action in defamation.
Defendants’ Conduct
The Publications were quite clearly defamatory of the first plaintiff and the first defendant must have known that.
The defendants’ decision not to call evidence meant that the defences pleaded had very little (if any) likelihood of success. The first defendant attempted to establish the first plaintiff was lacking in knowledge as to the MBS via cross-examination, with a focus on attacking the accuracy of the various case scenarios used in the first ProMBS workshop. However, in the absence of the defendants calling evidence to establish the content of any BFD workshops or Facebook material (beyond that already in evidence), the scope and content of her personal discussions with the first plaintiff and/or any infringement of the defendants’ intellectual property, the defences pleaded had no reasonable prospect of success.
As such, the defendants must have known that the first plaintiff’s claim in defamation was likely to succeed as to liability.

I made findings in my judgment as to the first defendant’s conduct, which ultimately formed the basis for the award of aggravated damages, such that the defendants have been called to account for such conduct.[34] In considering conduct in the context of the issue of costs, the relevant conduct must be connected with, or leading up to, the litigation.[35] Further it must be more than the fact that the relevant evidence of a party was rejected and the conduct must have caused or contributed to the existence, continuation or the extent of the litigation.[36]
[34] Judgment at [666]-[673].
[35] Mercorella v Ellis, per Debelle J, No S4752, 15 August 1994, unreported.
[36] Knight Frank Australia Pty Ltd v Paley Properties Pty Ltd at [53]-[58].
The defendants’ failure to file a Second Defence did not impact on the course of the proceedings or the trial. The defendants’ decision not to call evidence in fact shortened the length of trial. While aspects of the defendants’ cross-examination of the first plaintiff served little purpose, and some of the content of the defendants’ closing submissions had no evidentiary basis, the practical consequences of the same were such that only several extra hours of trial time were, effectively, wasted.
Throughout the action, the first plaintiff continued to maintain that he had suffered considerable specified economic loss, over and above losses arising from any damage to his reputation arising from the defamation. As such, it was inevitable that the action would proceed to trial, irrespective of the defendants’ conduct highlighted by the plaintiffs (save for that which formed the basis for the cause of action in defamation).
The first plaintiff gave evidence to support the claim for damages for economic loss and much of the evidence of Dr Kelly and Ms Cheah was devoted to that issue. The evidence simply did not support such a claim and the plaintiffs failed to prove any such loss.
Before the action was commenced, the first plaintiff’s demands for compensation in the Concerns Notice were pitched unreasonably high (namely $100,000 for non-economic loss and $100,000 for economic loss). When the action was issued, the claim for economic loss was pleaded in the sum of $478,000. It should have been apparent to the first plaintiff that there was no reasonable basis whatsoever for a claim of such magnitude.
Although the letter dated 30 April 2018 provided details of a reduced claim for economic loss incurred to August 2019 in the sum of $133,048, it was not until after the first trial was adjourned, that there was any amendment made to the Statement of Claim to reduce the claim for damages as pleaded. Until the pleadings were amended on 5 July 2019, the defendants were entitled to assume that they faced a claim at trial in accordance with that as pleaded. Further, it was not until the pleadings were amended, that the second plaintiff was properly named as a party to the action (noting the claim advanced for damages for contractual interference). At the same time, the alternate claims for breach of the ACL were abandoned, as was the pleaded claim for exemplary damages.[37]
[37] A claim for which in defamation is prohibited pursuant to s 35 of the Act.
As to the defamation claim, the first plaintiff was awarded general damages in the sum of $40,000 and aggravated damages in the sum of $10,000. Although I determined the first plaintiff was defamed in the Publications, I also made findings as to his expertise and reputation, namely that at the time of the Publications, he had only a limited standing and reputation within the Australian medical community and was not an expert in either the MBS or the National Health Act 1953. These two matters formed a substantial component of the defendants’ cross-examination of the plaintiff.
Further, in my judgment, I expressed significant concerns as to the reliability and credibility of the first plaintiff. One aspect of the first plaintiff’s evidence which caused me considerable concern, was the initial evidence given as to why he ceased his involvement in presenting the ProMBS workshops in February 2018. The first plaintiff gave evidence that this was because of the effect of his poor mood and the ‘bad mouthing’ which occurred after the Publications. However, it became apparent that in fact Primary Heath required the first plaintiff to cease such involvement, until the terms of its contract with the first plaintiff had expired. Thereafter the first plaintiff returned, albeit briefly, to such presentations. It was appropriate for the defendants to test at trial, the plaintiffs’ claims of having incurred significant economic loss.
While the defendants’ conduct in fact precipitated the action, the award for damages was made to compensate the first plaintiff for such conduct. When all relevant matters are carefully considered, I do not consider that the other aspects of the defendants’ conduct outlined by the plaintiffs justify an award of indemnity costs in favour of the plaintiffs (or the first plaintiff). Except insofar as the conduct included that relied on to found a cause of action in defamation, I am not satisfied that such conduct, caused or contributed to the existence, continuation or the extent of the litigation, having regard to the case as pleaded and maintained by the plaintiffs.
Settlement Offers – s 38 of the Act
The offers made by the defendants fell short of the award of damages ultimately awarded. That being said, from a purely monetary perspective, the offer made by the defendants on 7 June 2019 ($50,000, inclusive of costs and interest) was more than just a ‘nominal offer’ and, in my view, represented a genuine attempt by the defendants to resolve the dispute. In my view, this offer was a ‘settlement offer’ within the meaning of s 38 of the Act, in contrast to the offer made by the defendants in Cornes.
The defendants never made an offer which included an apology or detraction, and maintained a denial of liability. It is clear from the correspondence that these were fundamental and non-negotiable components of any settlement offer that would be acceptable to the first plaintiff and that the defendants must have known that.
However, there was no evidence before me that the plaintiffs were ever prepared to entertain a settlement which did not also include a substantial monetary sum by way of compensation. As such, even if an offer had been made by the defendants which included an apology and public retraction, I am not satisfied it would have been accepted, and the trial avoided.
The offers of settlement conveyed by the first plaintiff dated 18 September 2017[38] and 29 April 2019[39] were for sums considerably in excess of those ultimately awarded by way of damages to the first plaintiff. The defendants’ failure to accept such offers is therefore readily explicable and not unreasonable for the purposes of s 38 of the Act.
[38] By which the first plaintiff sought settlement on terms including payment of damages of $200,000 plus legal costs estimated in the sum of $3,000.
[39] By which the first plaintiff sought settlement on terms including payment of damages of $120,000 plus legal costs.
The final settlement offer conveyed by the plaintiffs on 16 May 2019 proposed settlement on terms which included payment of the sum of $140,000 inclusive of interest and costs, a public apology and retraction on the BFD Facebook page and to AOGP and a requirement that the defendants cease and desist from making any defamatory comments with respect to the first plaintiff.[40] The first plaintiff was prepared to accept periodic payments, subject to the provision of security.
[40] Exhibit ‘LKS-12’ to the Affidavit.
Having regard to the time this offer was made, being after the adjournment of the first trial, but prior to the amendment of the Statement of Claim, the damages component of this offer was in excess of that ultimately awarded by the court. Again, the defendants’ failure to accept such offer was explicable and cannot be considered ‘unreasonable’ for the purposes of s 38 of the Act.
Further, the offer was expressed to be open for acceptance only until 5 pm the next day, 17 May 2019. The defendants had very little time to properly consider and respond to that offer, given it was expressed as open for such a limited duration.
I decline to make an award of indemnity costs in favour of the first plaintiff (or the plaintiffs) pursuant to s 38 of the Act.
If I am wrong in this respect, in my view, the interests of justice are such that it is not appropriate for an award of indemnity costs to be made as against the defendants in favour of the plaintiffs, as sought.
Only the first plaintiff, and not the second plaintiff, pursued the claim in defamation. The first plaintiff was wholly unsuccessful at trial on the pleaded claim for damages for economic loss. The very fact of that claim, and the size of the claim as first pleaded, and maintained, made settlement of the claim, prior to trial, extraordinarily difficult. Indeed, it is open for there to be an order made, in the exercise of my discretion, to the effect that the first plaintiff not be entitled to its costs relevant to the claim for damages for economic loss.
However, rather than doing so, I have considered this as a factor in both the exercise of my discretion and in my application of s 38 of the Act.
As such, except as further ordered (hereunder), the defendants are to pay the first plaintiff’s costs of action on a party/party basis.
Reserved Costs
On 13 May 2019, the first trial was adjourned and orders were made to facilitate a possible amendment to the pleadings by the first plaintiff (if so advised) and for further disclosure. The costs of the defendants’ application and those thrown away by reason of the adjournment were reserved.
As previously outlined, the adjournment was requested by the defendants, due to the late provision of documents by the first plaintiff. Although the first plaintiff only disclosed those documents in response to receiving the defendants’ list of proposed witnesses (none of whom were ultimately called), as I understand it, those documents related to the first plaintiff’s dealings with Primary Health. The first plaintiff’s dealings with Primary Health were relevant to the claim and to the assessment of damages for economic loss. Indeed, given the manner in which the first plaintiff’s evidence unfolded, they were critical in terms of understanding why the first plaintiff in fact distanced himself from the ProMBS workshops in February 2018.
As previously outlined, in my view the action was simply not ready, from a procedural perspective, to proceed to trial on 13 May 2019. The pleadings were incomplete and did not properly put the defendants on notice of the case they were required to meet at trial.
I reserved the question of costs on FDN 19 (the defendants’ application not to allow the plaintiffs to use the confidential report at trial). The confidential report was not admissible in the absence of its author being called to give evidence. The orders made by me on FDN 19 contemplated the court revisiting the question of the report’s admissibility in the event that an affidavit was received from the author confirming she was willing and available to give evidence as to the authenticity of the report and its contents at trial and confirmation from the plaintiffs that they had advised the WA Country Health Service of their intention to use the report in this action, together with any response received by WA Country Health Service in this respect.
The court never received any further information in this respect. Of course, the plaintiffs’ intended use of the confidential report was to discredit the first defendant. As she did not give evidence, the occasion for its intended use did not arise. However, whether the existence of that report in anyway influenced the first defendant’s decision not to call evidence, is uncertain.
Having carefully considered all of the circumstances relating to the adjournment of the first trial and the argument pertaining to the use of the confidential report, I consider the appropriate order as to costs with respect to both FDN 13 and FDN 19 and the wasted costs of the first trial, is that each party bears its own costs.
Orders
1That in addition to the judgment sum, the defendants are to pay the first plaintiff the sum of $5,120 by way of pre-judgment interest.
2Each party is to bear its own costs incurred of and incidental to FDN 13, and the costs thrown away by reason of the adjournment of the first trial.
3Each party is to bear its own costs incurred of and incidental to FDN 19.
4Otherwise, the defendants are to pay the first plaintiff’s costs of action on a party/party basis, to be taxed if not agreed.
5No order as to the second plaintiff’s costs of action.