Burke v Shiells and Anor (Ruling No 4) (Ruling as to Costs)
[2018] VCC 1924
•27 November 2018
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMON LAW DIVISION | Revised Not Restricted Suitable for Publication |
DEFAMATION LIST
Case No. CI-16-02440
| GAVIN PATRICK BURKE | Plaintiff |
| v | |
| GRAEME FRANCIS SHIELLS | First Defendant |
| and | |
| SANDRA JOY SHIELLS | Second Defendant |
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JUDGE: | HIS HONOUR JUDGE SMITH | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 14 and 21 November 2018 | |
DATE OF RULING: | 27 November 2018 | |
CASE MAY BE CITED AS: | Burke v Shiells and Anor (Ruling No 4) (Ruling as to Costs) | |
MEDIUM NEUTRAL CITATION: | [2018] VCC 1924 | |
RULING AS TO COSTS
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Subject:DEFAMATION
Catchwords: Costs – interest on judgment sum – where plaintiff successful on some parts of his claim but not on others – whether costs should be apportioned – consideration of offers of compromise and Calderbank offers made by both plaintiff and defendant – whether costs of the plaintiff should be paid on an indemnity basis
Legislation Cited: Defamation Act 2005; County Court Civil Procedure Rules, r26.08
Cases Cited:Burke v Shiells & Anor [2018] VCC 1645; Calderbank v Calberbank [1975] 3 All ER 333; Carson v John Fairfax & Sons Ltd (1993) 178 CLR 44; Baulderstone Hornibrook Pty Ltd v Qantas Airways Ltd [2003] FCA 325; Bauer Media Pty Ltd v Wilson (No 3) [2018] VSCA 164; Hockey v Fairfax Media Publications Pty Ltd (No 2) [2015] FCA 750; Hughes v Western Australian Cricket Association Inc [1986] ATPR 40-748; Trkulja v Yahoo! Inc LLC & Anor [2012] VSC 88
Ruling:Order that the defendants pay the plaintiff’s costs.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr M Garrett | Gleeson & Co Lawyers |
| For the Defendants | Mr G Mukherji | Cosgriff Lawyers |
HIS HONOUR:
1 On 15 October 2018, I handed down judgment in favour of the plaintiff in this proceeding.[1] I awarded him damages in the sum of $75,000, which sum included $15,000 by way of aggravated damages.
[1]Burke v Shiells & Anor [2018] VCC 1645
2 I indicated that I would, in the absence of agreement between the parties, hear submissions concerning interest and costs on a date convenient to the parties.
3 Those submissions were heard by me on 14 and 21 November 2018.
4 The principal issues concerning costs and interest were:
· Whether all or part of the plaintiff’s costs should be paid by the defendants on an indemnity basis, having regard to offers of settlement made prior to and during the course of the trial?
· Whether there should be an apportionment of costs between the parties?
· From when should interest on the judgment be calculated?
Offers of settlement
5 There were a number of offers of settlement made by both parties prior to the handing down of my judgment. They were as follows:
(i) 28 November 2017 – an offer of compromise by the plaintiff, whereby he offered to accept $130,000 inclusive of costs in full and final settlement of his claim;
(ii) 22 January 2018 – the defendants’ solicitors served a Calderbank offer whereby the defendants offered to pay to the plaintiff the sum of $70,000 inclusive of costs in full and final settlement;
(iii) 2 February 2018 – an offer by the defendants to pay the plaintiff the sum of $75,000 – I was advised by counsel that this was an offer inclusive of costs;
(iv) 2 February 2018 (later, on the same date) – the defendants made an offer to pay the plaintiff the sum of $90,000 inclusive of costs;
(v) 5 February 2018 – the defendants served a Calderbank offer, offering to pay to the plaintiff the sum of $100,000 inclusive of costs;
(vi) 7 February 2018 – the plaintiff served an offer of compromise stating he would accept the sum of $120,000 inclusive of costs;
(vii) 8 February 2018 – the plaintiff made an offer to the defendants that he would accept the sum of $110,000 inclusive of costs;
(viii) 9 February 2018 – the plaintiff served a Calderbank offer on the defendants indicating that he would accept the sum of $55,000 plus costs;
(ix) 25 May 2018 – the plaintiff served an offer of compromise indicating that he would accept the sum of $55,000 plus costs on a standard basis;
(x) 24 July 2018 – the plaintiff served a Calderbank offer indicating that he would accept the sum of $25,000 plus costs of the proceeding;
(xi) 9 August 2018 – the plaintiff served a Calderbank offer indicating that he would accept the sum of $60,000 plus costs on a standard basis;
6 There was no evidence as to what costs the plaintiff had incurred (assessed on a standard or any other basis) as at the various dates upon which offers were made.
7 It can be seen that the amount of damages I awarded to the plaintiff was a more favourable result for the plaintiff than any of the offers of compromise or other forms of offer made by the plaintiff to the defendants, and more favourable to the plaintiff than any of the offers made by the defendants prior to my judgment being handed down.
8 In those circumstances, the plaintiff seeks an order for costs pursuant to s40 of the Defamation Act 2005, and, in the alternative, pursuant to Rule 26.08 of the County Court Civil Procedure Rules.
9 Section 40(2) of the Defamation Act provides that 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; ... .”
[my emphasis]
10 Offers of compromise under Order 26 of the Civil Procedure Rules may be made on a “plus costs” basis or on the basis of being “inclusive of costs”.
11 At times, in order to determine whether a plaintiff has obtained a judgment more favourable than an offer of compromise made on an “all in” basis, may require expert evidence by an independent costs consultant.
12 Here, I am satisfied that the judgment recovered by the plaintiff is more favourable to him than the offer of compromise served by him on 25 May 2018 in which he offered to accept the sum of $55,000 plus costs on a standard basis.
13 I am also satisfied that the judgment recovered by the plaintiff is more favourable to him than each of the Calderbank offers made by the plaintiff on 9 February 2018 ($55,000 plus costs), 24 July 2018 ($25,000 plus costs) and 9 August 2018 ($60,000 plus costs).
14 There were a number of other offers made by the plaintiff on an all-in basis; however, it is not possible for me to calculate what the plaintiff’s costs (when assessed on a standard basis) were at the time that those offers were made. There was no evidence as to what those costs might have been as at the dates upon which they were made.
15 In any event, I am satisfied that the offers of compromise to which I have referred were made in compliance with Rule 26.02, and that, prima facie, the plaintiff is entitled to his costs on an indemnity basis pursuant to Rule 26.08(2)(b) from 11.00am on the second business day after the offer was served. The rule provides for such, “unless the Court otherwise orders”.
16 The plaintiff relied upon his offer of compromise of 25 May 2018. He did not rely on earlier offers of settlement made by him, for reasons concerning which I do not need to speculate. I am satisfied that the offer of compromise, in the sum of $55,000 plus costs on a standard basis, satisfies both the provisions of s40 of the Defamation Act and Order 26 of the Civil Rules of the Court. That is, that the plaintiff should recover his costs of the proceeding on an indemnity basis:
· “Unless the court otherwise orders” – (Rule 26.08); or
· Where the Court is satisfied that the defendant unreasonably failed to make a settlement offer or agree to a settlement offer proposed by the plaintiff.
17 The defendants have submitted that indemnity costs should not be awarded because:
· The Court should order otherwise – (Rule 26.08);
· The defendants had not unreasonably failed to make a settlement offer to the plaintiff; and
· They had not unreasonably failed to agree to a settlement offer proposed by the plaintiff.
18 The defendants submit that the offers made by them on 22 January ($70,000 inclusive of costs) and 5 February 2018 ($100,000 inclusive of costs) were both reasonable offers, made before the trial commenced and with adequate time for acceptance.
19 There was no evidence before me as to what the plaintiff’s costs (calculated on the standard basis) were on 22 January or 5 February 2018; however, I am satisfied that the plaintiff has obtained a more favourable result than the amount that either of those offers represented.
20 The defendants conceded that both of those offers were in fact less favourable for the plaintiff than the judgment eventually obtained by him.
21 Further, I am satisfied that, in all of the circumstances, the defendants’ refusal to accept the plaintiff’s offer of compromise made on 25 May 2018 was unreasonable.
22 The sum of $55,000 was considerably less than the sum that I have assessed as being a fair and reasonable award of general damages in favour of the plaintiff. I consider that the plaintiff’s offer was one that the defendants ought to have accepted.
23 It follows, pursuant to s40 of the Defamation Act, the Court must order costs of and incidental to the proceedings on an indemnity basis. Those words refer to the plaintiff’s costs – not merely to his costs incurred after the date of the offer.
24 The defendants submit that, notwithstanding a finding that the defendants unreasonably failed to agree to a settlement offer proposed by the plaintiff, the Court maintained a wide discretion with regard to what costs should be awarded and on what basis or scale. They submitted that there were a number of bases upon which the award for costs should be less that that sought by the plaintiff. They submit that the words in Rule 26.08 – “unless the court otherwise orders” – have significance and are not overridden by the words of s40 of the Defamation Act.
25 The defendants submit that there are a number of matters pertaining to the plaintiff’s claim and the manner in which it was presented to the Court which should persuade the Court not to award indemnity costs at all. The defendants submit the plaintiff should only be awarded one third of his costs, assessed on the standard basis.
26 Firstly, the defendants submit that the plaintiff made some six amendments to his Statement of Claim, the last of which was made after the commencement of the trial. In some circumstances I consider that amendments may be crucial to a determination as to whether a party’s rejection of an opponent’s offer of settlement was reasonable; however, here, the amendments all had the effect of narrowing or reducing the plaintiff’s claim – not enlarging it.
27 For instance:
· The plaintiff abandoned the cause of action of malicious injury, leaving only the claim for defamation.
· Various imputations were withdrawn by the plaintiff. Other imputations were struck out by me on the basis that they were not capable of arising out of the published material.
28 There was no evidence before me as to whether the defendants incurred additional legal costs by reason of the pleading of the additional cause of action of injurious falsehood.
29 The plaintiff’s amendments were not brought about by the discovery of new evidence or by the conduct of the defendants. Rather, they appear to have been brought about by the plaintiff’s further consideration and evaluation of the evidence available to him.
30 Whilst I consider that the plaintiff’s final pleading could and probably should have been his first pleading, I do not consider that the various amendments made should somehow mean that the interests of justice require an order for costs on anything other than an indemnity basis.
31 The various amendments confining the plaintiff’s case gave rise to the likelihood that lesser damages would be awarded. The fact is that the defendants made no offer of settlement after 5 February 2018.
32 The defendants further submit that the plaintiff, having initially commenced his proceeding in the Magistrates’ Court, “improperly” transferred the proceeding into the County Court. I note that neither party had sought a trial by jury which would have necessitated an uplift. The defendants submit that the claim was never likely to attract an award above $100,000 (the limit of Magistrates’ damages awards) and that the matter should have not have been uplifted.
33 Taking all of the circumstances into account, I am satisfied that this was a proceeding which it was reasonable to bring before the County Court. Whilst, as it has turned out, the plaintiff could have obtained an award of damages of $75,000 plus costs in the Magistrates’ Court, I do not consider that the plaintiff was unreasonable in seeking to have the matter transferred to this Court. The vast majority of defamation actions in this State are commenced and heard in either the County Court or the Supreme Court. They are often, by their nature, complex trials, and this was no exception. The trial was hard fought. Preliminary issues as to what imputations were capable of arising from the published material, and what imputations were defamatory or capable of being found by the Court to be defamatory, were the subject of lengthy submissions by both parties. A perusal of the written closing submissions following the evidence confirms that there were complex issues of law and fact relating to most of the matters raised by the pleadings as amended.
34 Accordingly, I do not consider that I should take into account the uplift from the Magistrates’ Court when exercising my discretion as to the costs to be awarded in favour of the plaintiff.
Apportionment of costs
35 The defendants further submit that a significant part of the trial was devoted to parts of the plaintiff’s claim in respect of which he was unsuccessful.
36 It is correct that the plaintiff did not succeed in all aspects of his case. I was not satisfied that the defendants were responsible for the republication of the Susan Williams and Samuel West letters in 2015.
37 Notwithstanding, it is important to note that my finding to that effect does not lead to a conclusion that the evidence concerning those first two letters was irrelevant to the plaintiff’s claim in respect of the Shaun Williams letter. I found, on the basis of all the evidence put before me, that Mr Shiells played a role in the publication of the earlier two letters and also in relation to the third letter. My finding that he was involved in the first two letters was plainly relevant to my conclusion that he was involved in the third. Therefore, it could not be said that all of the evidence concerning the first two letters was irrelevant to the publication of the third letter, which I found to be have been published by the defendants and defamatory of the plaintiff.
38 I accept that there was evidence relating to the 2015 republication concerning agency and ratification issues which took some time and on which the plaintiff did not succeed. However, I do not consider that the amount of time spent on those matters was substantial or of no relevance to those issues upon which the plaintiff did succeed. Mrs McFarlane was called to give evidence, but her evidence related to a number of matters that were relevant to the plaintiff’s successful claims in addition to her evidence concerning the republication issues.
39 It was further submitted that the trial was significantly protracted by:
· The length of submissions made by the plaintiff’s counsel – I do not accept that the length of submissions of either party were significantly different.
· The calling of medical evidence regarding depression and anxiety alleged to have been suffered by the plaintiff, where such damage was not relevant to his claim for damages, and where, in any case, the medical evidence could not have been relevant to facts in issue. I do not accept that such evidence, if accepted by me, was not relevant. It would, in my opinion, have been relevant to issues of injury to feelings, which may include anxiety, a sense of outrage, and upset.[2] It is correct that I was not satisfied that the plaintiff had proven that his depression and anxiety was caused by the publication of the Shaun Williams letter as opposed to the March 2012 letters and various other problems in his life.
[2]Carson v John Fairfax & Sons Ltd (1993) 178 CLR 44 at 71 per Brennan J
40 It is often not an easy task to calculate how much of a trial was occupied by issues upon which a plaintiff was successful or unsuccessful. Counsel for the plaintiff provided me with what he described as an ‘aide-mémoire’ of the pages of the transcript relating to various issues of the trial, and concluded that less than a third of the trial time was occupied by unsuccessful issues. It is difficult to confirm, and the defendants’ submission was that a substantial part of the trial had been taken up by issues upon which the plaintiff was unsuccessful. Taking a broad-brush approach, I accept the plaintiff’s submission that successful issues probably did occupy somewhere in the vicinity of two-thirds of the trial time.
41 I should also comment that although I rejected the plaintiff’s contention that the defendants were liable for the 2015 republication of the Susan Williams and Samuel West letters, I did not consider such claim was without any merit or in any way absurd. On all the evidence, the plaintiff was probably entitled to think there was a reasonable prospect of him establishing that the defendants had been aware of the republication and had done nothing about it for some years. In the end, I was simply not satisfied, on the balance of probabilities, that the plaintiff had established that this was so.
42 The defendants did not provide any evidence that they had incurred additional legal expenses in defending the plaintiff’s alternative cause of action in malicious injury.
43 I take note of and accept the views expressed by Finkelstein J in the Federal Court decision of Baulderstone Hornibrook Pty Ltd v Qantas Airways Ltd:[3]
“The days when a plaintiff could, with impunity, mount an attack on several fronts, some with little prospect of victory, in the hope of a direct hit and the recovery of all costs must be put behind us. Litigation is too expensive for courts to sanction this approach. Indeed it should be discouraged.”
[3][2003] FCA 325 at paragraph [4]
44 Nevertheless, in Bauer Media Pty Ltd & Anor v Wilson (No 3),[4] the Court of Appeal dealt with a matter where, at first instance, the trial was a claim for general damages and a large claim for economic loss. The trial judge awarded general damages in the sum of $650,000 and special damages in the sum of just under $4 million. On appeal, the Court of Appeal ruled that no amount should have been awarded for special damages, and reduced general damages to $600,000.
[4][2018] VSCA 164 at paragraph [12]
45 As a consequence, Ms Wilson was left with a judgment only in respect of general damages. The Court of Appeal nevertheless awarded her costs of the trial on an indemnity basis as the trial judge had done. This was in spite of the submission by Bauer that a major component of the trial was the claim for economic loss. That submission does not appear to have been challenged by Ms Wilson.
46 The Court of Appeal stated:
“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.”[5]
[my emphasis]
[5](ibid) at paragraph [12]
47 Here, I do not consider that plaintiff’s unsuccessful issues occupied the “bulk of the trial”.
48 The defendants relied upon various statements of White J in Hockey v Fairfax Media Publications Pty Ltd (No 2)[6] which relied in part upon the judgment of Toohey J in Hughes v Western Australian Cricket Association Inc.[7]These were decisions that preceded Bauer by some years.Where inconsistent, I prefer to follow the judgments of the Court of Appeal in Bauer and that of the trial Judge at first instance.
[6][2015] FCA 750
[7][1986] ATPR 40-748
49 All in all, when the offers of settlement are considered as a whole, it is difficult to avoid the conclusion that the proceeding is one that should have settled on 25 May 2018, if not before.
50 In all the circumstances, I consider that the plaintiff should receive his costs of and incidental to the proceeding on an indemnity basis, to be determined in default of agreement between the parties by the Costs Court. I do not consider that the interests of justice require otherwise.
51 Insofar as it might be submitted that there is some tension between the provisions of s40 of the Act and Rule 26.08 of the Rules of the Court, I consider that the Rules are general in nature whilst s40 applies specifically and solely to defamation proceedings. In those circumstances, I consider that the provisions of s40 should apply.
Interest
52 The parties are in agreement that interest should be awarded at the rate of 3 per cent per annum, consistent with the rate agreed to and applied in Trkulja v Yahoo! Inc LLC & Anor.[8]
[8][2012] VSC 88
53 However, the defendants dispute that they should be ordered to pay interest from the date of the publication of the defamatory material. They refer to:
· The unnecessary uplifting of the proceeding from the Magistrates’ Court; I have already dealt with this submission.
· The amendments to the plaintiff’s claim shortly prior to scheduled trial dates in March 2017, July 2017 and February 2018, resulting in vacation of those trial dates and the later relisting of the matter in July 2018, when it was finally heard. It is correct that trial dates were vacated as a consequence of those amendments by the plaintiff. But the plaintiff, on each of those occasions, was ordered to pay the defendants’ costs thrown away by reason of such vacations on an indemnity basis. Those orders will still stand.
54 Whilst I accept that there have been delays that lie at the feet of the plaintiff, the defendants will have had the use of their money over the period of delay. There was no evidence as to the manner in which the defendants invested their funds over the relevant period. There was no evidence to indicate that the defendants were to any extent out of pocket by reason of those delays. I consider that to merely classify the plaintiff’s claim for full interest as a provision of monetary reward to the plaintiff for the delays that he caused is not justified.
55 I accept the defendants’ submission that the imputations arising from the publication were not finalised until after the commencement of the trial, but note that in many, if not most, trials the imputations are not finalised or known until a jury verdict. I do not consider the submission has merit.
56 Further, I accept the submission made on behalf of the plaintiff that this proceeding was made considerably more difficult for him by reason of the denial (at least for a time) by the second defendant that she had anything to do with the letters in question, and the continued denial by the first defendant that he was ever involved in the publication of any of those letters. I accept the submission made by the plaintiff that had Mr Shiells disclosed his discussions with Mrs Shiells in April 2012 in his Answers to Interrogatories, it may have prompted settlement discussions at a much earlier stage in the proceeding.
57 All parties agreed that rate of interest to be used in calculating interest is 3 per cent per annum on the judgment sum.
58 In all of the circumstances, I consider that the plaintiff is entitled to interest on the judgment sum calculated from the date of the issue of the proceeding, 31 July 2015, until this day.
59 I shall hear the parties as to the form of final orders consistent with this Ruling.
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