Bill Karageozis as trustee for the bankrupt estate of Siobhan Lamb v Sherman [No 2]

Bill Karageozis, as trustee for the bankrupt estate of Siobhan Lamb, initiated proceedings against Sherman, alleging defamation. The dispute ultimately reached the Court of Appeal, which had to address several critical issues surrounding the costs of the litigation. The primary issue was whether the respondent should be required to pay the appellant’s costs of the District Court proceeding on an indemnity basis. This arose from the appellant's Calderbank offer, which the respondent failed to accept. Another issue was whether the costs thrown away due to the appellant withdrawing a justification defence two business days before the trial should be assessed on an indemnity basis.

The Court of Appeal considered the legal framework governing indemnity costs in defamation cases, particularly under s 40(2)(b) of the Defamation Act 2005 (Qld). It examined the circumstances under which a Calderbank offer could compel indemnity costs. The court also assessed whether the respondent’s failure to accept the Calderbank offer was unreasonable. Additionally, it looked into whether the costs associated with the interlocutory hearings in the Court of Appeal should be borne by the appellant or the respondent. The court had to balance fairness in the context of interlocutory applications that arose from the respondent executing orders ultimately set aside by the Court of Appeal.

The Court of Appeal concluded that the respondent should pay the appellant’s costs of the District Court proceeding on an indemnity basis, as it was unreasonable for the respondent to fail to accept the Calderbank offer. It also determined that the costs thrown away due to the appellant withdrawing the justification defence should be assessed on an indemnity basis. Regarding the interlocutory hearings, the court found that fairness dictated there should be no order as to costs in respect of the applications, and thus vacated the previous orders for costs. The court set aside the costs order and substituted it with an order that the respondent pay the appellant’s costs of the District Court proceeding and the costs of the appeal, excluding those associated with specific interlocutory applications.