Channel Seven Sydney Pty Ltd v Mahommed (No 2)

In *Channel Seven Sydney Pty Ltd v Mahommed (No 2)*, the Court of Appeal of New South Wales considered an appeal concerning the appropriate costs orders following defamation proceedings. The dispute arose from a defamation claim brought by Mr Mahommed against Channel Seven Sydney Pty Ltd.

The primary legal issues before the Court of Appeal were whether an offer made by Channel Seven constituted a "settlement offer" for the purposes of section 48A of the *Defamation Act 1974* (NSW), and how that offer, along with the ultimate outcome of the proceedings, should inform the costs orders. Specifically, the court had to determine if the offer was a genuine offer to settle, assess its reasonableness in light of the prospects of success, and consider the relevance of the ultimate judgment to the offer. The court also had to consider the application of the Uniform Civil Procedure Rules 2005, particularly regarding offers of compromise and the calculation of whether a party obtained a judgment no less favourable.

The Court of Appeal reasoned that for an offer to be a genuine settlement offer under section 48A, it must be made in good faith and be a reasonable offer in the circumstances, taking into account the prospects of success. The court noted that the ultimate success of a party is a significant factor in assessing the reasonableness of an offer. Furthermore, the court clarified that under Rule 42.16 of the Uniform Civil Procedure Rules 2005, interest accruing after an offer of compromise is made is not to be included when determining if the offeror obtained a judgment no less favourable. The court also acknowledged that in proceedings with multiple issues, costs orders should reflect the degree of success achieved by each party, and that the general rule regarding costs (Rule 42.1) is subject to the court's discretion.

The Court of Appeal ordered that Channel Seven Sydney Pty Ltd pay 90 per cent of Mr Mahommed's costs of the appeal and of and incidental to the proceedings at first instance, including the section 7A hearings, as agreed or assessed.