Cables v Winchester (No 2)
[2019] VSC 78
•27 February 2019
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
MAJOR TORTS LIST
S CI 2017 04668
| MAREE ELLEN CABLES | Plaintiff |
| v | |
| MATTHEW WINCHESTER | Defendant |
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JUDICIAL REGISTRAR: | Judicial Registrar Clayton |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 15 August 2018 |
DATE OF JUDGMENT: | 27 February 2019 |
CASE MAY BE CITED AS: | Cables v Winchester (No 2) |
MEDIUM NEUTRAL CITATION: | [2019] VSC 78 |
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COSTS – Whether the defendant unreasonably failed to make a settlement offer - Whether the plaintiff is entitled to an indemnity costs order - Defamation Act 2005 (Vic) - Cables v Winchester [2018] VSC 392 - Hockey v Fairfax Media Publications Pty Ltd (No. 2) [2015] FCA 750 - Davis v Nationwide News Pty Ltd [2008] NSWSC 946.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J Castelan | Litton Legal |
| The Defendant in person |
JUDICIAL REGISTRAR:
Background
Ms Cables was awarded damages in the amount of $200,000 in her defamation claim against Mr Winchester.[1]
[1] Cables v Winchester [2018] VSC 392.
Mr Winchester did not file an appearance or defence and Ms Cables obtained judgment in default of appearance.
Ms Cables now makes application for an order that Mr Winchester pay her costs on an indemnity basis.
Statutory regime
Section 40 of the Defamation Act 2005 (Vic) (‘the Act’) states:
(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 sub-section (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-
(a)“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.
Application of s 40 of the Act to this proceeding
In Hockey v Fairfax Media Publications Phj Ltd (No. 2), White J said:
The effect of subs (1) is that, when determining both where the burden of costs should lie and the scale on which they be paid, the Court may have regard to the way in which the parties to the proceedings conducted their respective cases as well as to any other relevant matter. Subsection (2) specifies that the Court must make orders for indemnity costs in two circumstances, unless the interests of justice require otherwise. Subparagraph (a) relates to proceedings in which a plaintiff is successful, and subpara (b) to proceedings in which a plaintiff is unsuccessful. In each case, the Court must be satisfied that the specified conditions exist before making an order for indemnity costs.[2]
[2]Hockey v Fairfax Media Publications Pty Ltd (No. 2) [2015] FCA 750, [39] ('Hockey').
The purpose of s 40 is to ensure that a plaintiff would not be out of pocket to such an extent that the risk of bringing proceedings would be unacceptable,[3] and that parties to a proceeding take a sensible and reasonable approach to negotiations.[4]
[3]Davis v Nationwide News Pty Ltd [2008] NSWSC 946, [26] ('Davis').
[4]Hockey, above n 2, [41].
In circumstances where the court is satisfied that the unsuccessful party unreasonably failed to make or accept a settlement offer, the court must award indemnity costs unless it is in the interests of justice to require otherwise.
Did the Defendant unreasonably fail to make a settlement offer?
Mr Winchester was served with a copy of the proceedings on 20 November 2017. On 27 November 2017 he sent an email to Ms Cables’ solicitor (‘the 27 November email’) which said as follows:
Good Morning
To whom this may concern;
I am contacting you today regarding the allegations made against me by your client Maree Cables.
I attempted to make contact with you early last week but as yet have not had my phone call returned.
After close consultation with my legal advisors I wish to offer reconciliation of
a public apology via “Everything Albury Wodonga”
If you wish to discuss this further please contact me via email.
Ms Cables says that this email did not constitute a ‘settlement offer’.
On 11 December 2017, Ms Cables’ solicitor responded by letter and declined ‘your offer of an apology’. The letter set out the reasons why the offer was declined and informed Mr Winchester that if he did not file a notice of appearance and defence, judgment in default would be sought.
On 11 December 2017, Mr Winchester responded to that letter by email as follows:
Good Afternoon Rebecca
As mentioned in our previous phone conversations, I am unable to afford the cost of legal representation and am dealing with these matters myself.
I refer to point 4 of your letter, This statement is incorrect;
I provided information to the SDA directly from the correspondents (sic) of McDonalds employees.
I retained all messages and correspondents (sic) from this matter and have significant proof that what was stated on Everything Albury Wodonga was infact (sic) true and correct.
All the allegations (messages) made against Mrs Cables were forwarded SDA and McDonalds head office unedited and without delay.
To proceed with this matter would be like trying to get bloodout (sic) of a stone.
I have no money or assets against my name and have only came (sic) out pf (sic) bankruptcy in February.
I am unable to afford legal costs nor am I eligible for legal aid.
Kind Regards
There was no further relevant discussion between the parties and no further offers were made by either side.
Ms Cables submits that the ‘offer’ contained in the 27 November email did not comprise a ‘settlement offer’. She says that that offer was understood to be a suggestion that Mr Winchester publish an apology, but it was not clear that it was an ‘offer to settle the entire proceedings and the terms of the apology are not described.’
I do not accept that the offer of an apology was not a settlement offer. I think that Ms Cables’ solicitors, on receiving the 27 November email, rightly considered it to be an offer of settlement of the entire claim. In their letter of 11 December 2017 rejecting the offer, they specifically set out that Ms Cables ‘has suffered immensely both physically and emotionally as a result of the defamatory conduct and as such, deserves to be compensated’ which indicates to me that they understood that the offer of apology was intended as an offer to settle the entire proceeding. They rejected the offer on the basis that it was too little too late, and also, implicitly, because there was no offer of compensation to which they considered their client entitled.
I consider that a reasonable person, receiving that offer, would understand it as an attempt at resolution by the defendant, in response to being served with proceedings. I can find no coherent explanation as to why, upon being served with proceedings, Mr Winchester would otherwise have offered to apologise if it was not his clear intention that that apology resolve the proceedings. I do not accept the notion that, because Mr Winchester did not say words to the effect of ‘in full and final settlement of your claim I offer an apology’, Ms Cables or her lawyers did not understand that the offer of an apology was an offer of settlement.
Ms Cables rejected that offer of settlement, as she was entitled to do, and made no counter offer. She was not required to make any counter offer and her failure to make any counter offer does not preclude her from seeking indemnity costs.
However, the legislation defines a ‘settlement offer’ as an offer that was ‘a reasonable offer at the time it was made’.
Ms Cables submits that, after the 27 November email, Mr Winchester should have made sensible attempts to settle the proceeding. Given that Ms Cables rejected an apology and took no steps to explore what any apology might look like, one can presume that Ms Cables considered that a ‘sensible attempt’ to settle the proceeding would have to involve an offer of monetary compensation.
The court must consider whether Mr Winchester’s offer to make a public apology was ‘a reasonable offer at the time it was made’ or whether, as is submitted by Ms Cables, his failure to make any monetary offer of compensation was unreasonable. However, in circumstances where Mr Winchester has disclosed to Ms Cables that he is a recently discharged bankrupt with no ‘money or assets’, it is appropriate for the court to consider his financial position in assessing whether a failure to make an offer of monetary compensation is reasonable or unreasonable.
At the request of the court, Mr Winchester filed an affidavit dated 3 January 2019 setting out his financial position. He left school in 2008 at the age of 18 and went into voluntary bankruptcy in February 2011 due to a failed business. He was discharged from bankruptcy in February 2017. He commenced a traineeship with Fastway Couriers in March 2017 and in October 2017 bought a franchise of Fastway Couriers with his partner, Sarah. He is paying off a loan for the purchase of the franchise and the purchase of a van. After deductions he takes home about $950 per week. Sarah went into bankruptcy with debts of $45,000 in December 2018 and was removed as a director of the franchise shortly before this. They have two young children. He receives a Family Tax Benefit of $1000 per fortnight. He has various expenses including rent, utilities, food, school fees, and car costs. He says that most weeks, after paying all necessary bills and expenses, he has about $75 in his account.
I am satisfied from Mr Winchester’s affidavit that he does not have, and would not have had in 2017 or 2018, the financial means to make a settlement offer that included payment of compensation.
Conclusion
In the circumstances of this case I am satisfied that Mr Winchester did make a settlement offer within the terms of the legislation; that is, that the settlement offer was a reasonable offer at the time it was made.
Accordingly s 40(2)(a) is not invoked and the Court is not required to assess costs on an indemnity basis.
The Court may, nonetheless, consider the way in which the parties have conducted their cases, and any other relevant matters, in awarding costs. Mr Winchester took no part in the proceeding other than appearing at the assessment of damages. He made no submissions at that hearing and agreed with the assessment of damages proposed by Ms Cables. Other than the two emails referred to above, it does not appear that the parties have engaged in any communication or discussion. He made a settlement offer, it was rejected, no counter offer was put to him and judgment was entered against him. Ms Cables says that by failing to file a notice of appearance Mr Winchester has put her to the cost of entering judgment and having damages assessed. As she was successful in her case she is entitled to an order for costs in her favour. Nothing in the manner in which Mr Winchester conducted his case would cause me to consider that those costs should be awarded on an indemnity basis and I therefore order costs be paid on a standard basis.
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