Bauer Media Pty Ltd v Wilson (No 3)

[2018] VSCA 164

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2017 0109

BAUER MEDIA PTY LTD (ACN 053 273 546) and BAUER MEDIA AUSTRALIA PTY LTD (ACN 160 041 681)	Appellants
v
REBEL MELANIE ELIZABETH WILSON [No 3]		Respondent

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JUDGES:	TATE, BEACH and ASHLEY JJA
WHERE HELD:	MELBOURNE
DATES OF HEARING:	On the papers
DATE OF JUDGMENT:	27 June 2018
MEDIUM NEUTRAL CITATION:	[2018] VSCA 164

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PRACTICE AND PROCEDURE – Judgments – Interest – Repayment of part of judgment sum following successful appeal – Restitutionary interest – Costs – Costs of proceeding at first instance – Costs of appeal – Settlement offer – Whether costs of trial should be on indemnity basis – Both parties succeeding and failing on some issues – Whether costs should be apportioned – Defamation Act 2005, s 40.

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APPEARANCES:	Counsel	Solicitors
For the Appellants	Mr M F Wheelahan QC with Mr S Mukerjea	Johnson Winter & Slattery
For the Respondent	Dr M J Collins QC with Ms R L Enbom	Corrs Chambers Westgarth

TATE JA
BEACH JA
ASHLEY JA:

1. On 13 September 2017, the trial judge entered judgment for Ms Wilson against Bauer Media Pty Ltd and Bauer Media Australia Pty Ltd (collectively, ‘Bauer’) in the amount of $4,749,920.60.[1]  This amount (‘the judgment sum’) was made up of damages for non-economic loss of $650,000, damages for economic loss of $3,917,472 and damages in the nature of interest in the sum of $182,448.61.  On 3 October 2017, Bauer paid the judgment sum to the plaintiff.

   [1]Wilson v Bauer Media Pty Ltd [2017] VSC 521.

1. On 14 June 2018, this Court allowed Bauer’s appeal, set aside the judgment obtained at first instance and, in lieu thereof, ordered that there be judgment for Ms Wilson against Bauer in the sum of $600,000.[2]  In written submissions filed subsequently, the parties accepted that Ms Wilson was entitled to interest on the sum of $600,000[3] in the amount of $27,165.60.  The issues that remain to be determined are:

·Bauer’s entitlement to the repayment of that part of the judgment sum that was set aside on appeal; and

·the parties’ costs (both at first instance, and on appeal).

[2]Bauer Media Pty Ltd v Wilson [No 2] [2018] VSCA 154 (‘Appeal Reasons’).

[3]From the date the writ was filed until the date the judgment sum was paid (see ss 60 and 101 of the Supreme Court Act 1986).

Repayment

1. Bauer seeks repayment of the sum of $4,122,755, being the amount of the judgment sum ($4,749,920.60) less $627,165.60.  Ms Wilson does not dispute that that sum should be repaid.  In addition to that sum, Bauer seeks interest at the rate of 2 per cent per annum from 3 October 2017 until the date of this Court’s order for repayment.  In support of that claim, Bauer relies upon this Court’s decisions in Meerkin & Apel v Rossett Pty Ltd [No 2][4] and MLC Nominees Pty Ltd v Daffy [No 2].[5] 

   [4][1999] 2 VR 31.

   [5][2018] VSCA 10 (‘MLC’).

1. Ms Wilson submitted that no order should be made about restitutionary interest at this stage, time being needed to determine how quickly she could access the funds Bauer has paid to her.  As a secondary submission, Ms Wilson contended that, in calculating interest, a restitutionary interest rate ‘of no higher than 1.5 per cent, being the prevailing Reserve Bank of Australia cash target rate’ should be used.  She also submitted that a period for payment ‘of at least 30 days’ from the date of this Court’s orders ought be allowed ‘for otherwise penalty interest will immediately accrue’.

1. In our view, Bauer is entitled to restitutionary interest at the rate of 2 per cent per annum from 3 October 2017 until the date of this Court’s order for repayment.[6] We accept that, thereafter, the sum ordered will attract interest under s 101 of the Supreme Court Act 1986 which provides that every judgment debt carries interest at the rate fixed under s 2 of the Penalty Interest Rates Act 1983.  The penalty interest rate is currently set at 10 per cent.[7] We see no basis for deferring the making of appropriate orders for repayment together with restitutionary interest or for making some order depriving Bauer, if the judgment sum and restitutionary interest is not paid, of an entitlement to interest at the rates provided for by statute.  Bauer is entitled to restitutionary interest from 3 October 2017 to date (27 June 2018) in the sum of $60,316.45.  Thus, there will be an order requiring Ms Wilson to repay that part of the judgment sum set aside by this Court, together with interest calculated to 27 June 2018  – a total of $4,183,071.45.

   [6]See MLC [2018] VSCA 10 [8].

   [7]Victorian Government Gazette G1 (5 January 2017), 9.

Costs at first instance

1. Following the delivery of judgment at first instance, Ms Wilson applied for her costs to be paid on an indemnity basis.  Bauer did not oppose that application and the judge so ordered.[8]  Ms Wilson again seeks her costs of the proceeding at first instance on an indemnity basis.

   [8]Wilson v Bauer Media Pty Ltd (Costs) [2018] VSC 161 [1], [37].

1. In resisting an order for indemnity costs, Bauer submitted that a major component of Ms Wilson’s claim at trial was the claim for economic loss.  This claim has now been lost.  It was submitted that the trial would have been ‘shorter and less costly for the parties’ had the economic loss claim not been pursued.  Moreover, the claim was pursued in the face of a Calderbank offer made by Bauer on 18 April 2017 inviting Ms Wilson to discontinue her claim for economic loss with no order as to costs in relation to that aspect of her claim.  In reliance upon these matters, Bauer submitted that the appropriate order for costs of the proceeding at first instance was either an order that Ms Wilson receive 70 per cent of her costs on an indemnity basis or all of her costs on a standard basis.

1. On 4 May 2017, still some three weeks before trial, Ms Wilson made a settlement offer to Bauer saying that she would accept $200,000 plus costs ‘to date assessed on a standard basis’. In her settlement offer, Ms Wilson referred to s 40(2)(a) of the Defamation Act 2005 (‘the Act’), saying that if Bauer did not accept the settlement offer and she was successful at trial, then she would rely upon the offer ‘in seeking an order under s 40(2)(a) … that her costs of and incidental to the proceeding be assessed on an indemnity basis’ (emphasis in offer). 

1. Section 40(2)(a) of the Act provides that if defamation proceedings are successfully brought by a plaintiff and costs in the proceeding are to be awarded to the plaintiff then the Court must (unless the interests of justice require otherwise) ‘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’. Section 40(2)(b) of the Act is a mirror of s 40(2)(a), providing for indemnity costs to be ordered in favour of a successful defendant where the plaintiff has unreasonably failed to accept a defendant’s settlement offer.

1. Ms Wilson contends that Bauer unreasonably failed to agree to her settlement offer of $200,000 plus costs on a standard basis.  We agree.  As we said in our original judgment,[9] Bauer seriously defamed Ms Wilson.  Its defamation had a devastating personal effect on her.  Moreover, Bauer published what it knew to be false for the purpose of maximising its own commercial opportunities.  In the circumstances, Bauer’s rejection of Ms Wilson’s settlement offer was unreasonable.

   [9]Appeal Reasons [257]–[258].

1. The issue which arises is whether Bauer has established that it is in the interests of justice not to order Bauer to pay Ms Wilson’s costs of and incidental to the proceeding on an indemnity basis.

1. Defamation proceedings are inherently complex. This proceeding was no exception. There were many and difficult issues that fell to be considered. The mere failure, on one or some issues in the case, by a successful party to defamation proceedings should not (without more) deprive them of an order for costs of and incidental to the proceeding on an indemnity basis, where the other party has unreasonably failed to accept a settlement offer. The purpose of s 40(2) of the Act is to promote settlement by giving a prima facie entitlement to indemnity costs of and incidental to the proceeding where the losing party unreasonably fails to accept a settlement offer. That purpose would be undermined if a successful party’s failure on some issue or issues (especially an issue that did not occupy the bulk of the trial) was held to require a departure from the prima facie position under the statute.

1. In the present case, we have held that Ms Wilson failed to establish an entitlement to economic loss.  It is true that Bauer made a Calderbank offer inviting Ms Wilson to discontinue her economic loss claim. Those circumstances do not, however, in our view lead to a conclusion that the interests of justice require a departure from the position mandated by s 40(2)(a) of the Act. This was hard-fought litigation, involving the publication of knowingly false defamatory material by a media organisation for its own commercial purposes. That is a relevant matter and forms part of the context in which the costs at first instance fall to be considered.[10]  In our view, Ms Wilson should have her costs of the proceeding at first instance on an indemnity basis.

   [10]See s 40(1) of the Act.

1. For these reasons, we will not disturb the order for indemnity costs made by the trial judge in favour of Ms Wilson.

Costs of the appeal

1. Ms Wilson submits that she should have her costs of the appeal on an indemnity basis.  Bauer, on the other hand, submits that it should have its costs of the appeal on a standard basis. 

1. There were three significant areas of argument on appeal: circumstances entitling Ms Wilson to an award of aggravated damages, the construction of s 35 of the Act and Ms Wilson’s claim for damages for economic loss. Bauer enjoyed some (but not complete) success on its grounds of appeal relating to aggravated damages, and complete success on its grounds relating to economic loss. On the other hand, Ms Wilson was successful on the significant statutory construction question.

1. In our view, there is no warrant for giving Ms Wilson her costs of the appeal (on either a standard or indemnity basis). Bauer enjoyed substantial success on the appeal. It should not be ordered to pay costs despite its success. It is entitled to costs, at least, on the issues upon which it succeeded. In our view, Bauer should have its costs of the appeal in relation to all of the issues argued, other than those involving the statutory construction question. The issue of the construction of s 35 of the Act was a discrete one. In the circumstances, we think it appropriate that the order for costs we will make in relation to the appeal should reflect the fact that Ms Wilson was put to the expense of incurring costs on a significant issue on which she succeeded.

1. In our view, the appropriate order for costs in relation to the appeal (including the application for leave to appeal) is that Ms Wilson pay 80 per cent of Bauer’s costs on the standard basis. 

Orders

1. Having already made orders allowing Bauer’s appeal, setting aside the judgment obtained at first instance and ordering in lieu that there be judgment for Ms Wilson against Bauer in the sum of $600,000, we will make the following orders:

(1)       Ms Wilson pay Bauer $4,183,071.45, being $4,122,755 together with interest calculated up to and including this day (27 June 2018) of $60,316.45.

(2)       Ms Wilson pay 80 per cent of Bauer’s costs of the appeal (including the application for leave to appeal) on the standard basis.

1. For the reasons given above, we will not disturb the trial judge’s order that Ms Wilson have her costs of the proceeding at first instance on an indemnity basis. We will grant Ms Wilson, as a respondent to a successful appeal, an indemnity certificate under s 4 of the Appeal Costs Act 1998.

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