Copping Refuse Disposal Site Joint Authority v Southern Beaches Conservation Society Inc

[2016] TASSC 5

[2016] TASSC 5

COURT:  SUPREME COURT OF TASMANIA

CITATION:                 Copping Refuse Disposal Site Joint Authority

v Southern Beaches Conservation Society Inc [2016] TASSC 5

PARTIES:  COPPING REFUSE DISPOSAL SITE JOINT AUTHORITY
  v
  SOUTHERN BEACHES CONSERVATION SOCIETY INC
  MARSH, Angela

FILE NO:  730/2014
DELIVERED ON:  12 February 2016
DELIVERED AT:  Hobart
HEARING DATE:  12 November 2015
JUDGMENT OF:  Blow CJ

CATCHWORDS:

Procedure – Costs – Offers of compromise, payments into court and settlements – Informal offers and Calderbank letters – Unreasonable refusal of offer – Offer by defendants – Discontinuance by plaintiff.

Leichhardt Municipal Council v Green [2004] NSWCA 341; Evans Shire Council v Richardson (No 2) [2006] NSWCA 61, followed.
Aust Dig Procedure [1591]

REPRESENTATION:

Counsel:
             Applicants/Defendants:                   R A Browne
             Respondent/Plaintiff:  K E Read SC
Solicitors:
             Applicants/Defendants:                   FitzGerald and Browne
             Respondent/Plaintiff:  Dobson Mitchell & Allport

Judgment Number:  [2016] TASSC 5
Number of paragraphs:  29

Serial No 5/2016

File No 730/2014

COPPING REFUSE DISPOSAL SITE JOINT AUTHORITY
v SOUTHERN BEACHES CONSERVATION SOCIETY INC
and ANGELA MARSH

REASONS FOR JUDGMENT  BLOW CJ

12 February 2016

1. This is an application for an order for the payment of costs on an indemnity basis. The plaintiff has discontinued its action against the defendants. It concedes that it should have to pay their costs on a party-party basis in accordance with r 378(1)(a) of the Supreme Court Rules 2000. However the defendants are seeking an order that, in respect of the period after 15 January 2015, the plaintiff pay their costs on an indemnity basis. They contend that the plaintiff unreasonably failed to accept a Calderbank offer which expired on that date.

2. This litigation concerned a proposal for the development of a waste disposal facility at Copping, about 47Km from Hobart. The plaintiff is a "joint authority" that was established by a number of local councils pursuant to the Local Government Act 1993. By virtue of ss 34 and 35 of that Act, it is a body corporate and has the power to sue in its corporate name. The second defendant, Angela Marsh, is the president of the first defendant, Southern Beaches Conservation Society Inc. On or about 2 April 2014 that association sent a letter signed by Ms Marsh to eleven companies, in the following terms:

   "As a company that prides itself on sustainability and good governance, it is important that you have due regard to environmental impacts throughout the life of your products. This necessarily includes consideration being given to both procurement of services and to the appropriate disposal of waste.

   We understand that your company may be considering the disposal of Controlled waste/hazardous materials at the proposed Copping C-Cell facility in South East Tasmania.  We are writing to alert you to ongoing concerns regarding the viability of the Copping site for receiving and containing hazardous material and to request that you undertake due diligence to satisfy yourself that using the facility will not jeopardise your environmental record.

   It is essential that the C-cell be engineered to securely contain all leachate.  It is also critical that the surrounding landscape is able to retard the flow of leachate in the event of a breach.  For this reason, the Landfill Sustainability Guidelines 2004 directs [sic] that landfills should not be located in sandstone terrains, slipping substrates and areas of high permeability soils.

   We are concerned that the proposed C-cell at Copping does not meet the Guidelines, as follows:

   ·the C-cell facility will be located on dolerite within 100m of sandstone lithology. Where excavation is to occur, there is a risk that the C-cell will not be effectively separated from the sandstone lithology.

   ·The Pitt & Sherry risk assessment for the C-cell notes that there is a high risk from displacement of underlying strata.

   ·The C-cell facility will clearly be located in an area of high permeability substrata. The Development Proposal and Environmental Management Plan (DPEMP) recognised this would be problematic for leachate contaminants reaching the Carlton River.

   We are [sic] also hold deep concerns regarding the proximity of the proposed C-cell to wetlands and 1:100 year floodplains.

   Securing contaminated leachate relies both on engineering solutions and the capacity of the surrounding environment. We urge you to undertake rigorous investigations, ask questions of the proponents and seek expert advice regarding the geological capacity of the site in order to satisfy yourself that the facility will be managed to international best practice standards and ensure against leachate contamination of the surrounding environment."

3. On 15 August 2014 the plaintiff responded by bringing an action against the defendants seeking a permanent injunction and/or damages. The plaintiff contended that the recipients of the eleven letters were all either its customers or potential customers, and that the contents of the letter amounted to a series of false representations. It sought a permanent injunction restraining the defendants from repeating any of those so-called representations.  It did so on the basis that such an injunction would restrain the defendants from committing the tort of injurious falsehood. 

4. The offer now relied on by the defendants was made in a letter dated 18 December 2014 from their solicitors to the plaintiff's solicitors. The letter was headed "Without Prejudice Save as to Costs".  In substance, the defendants offered that, if the plaintiff would consent to judgment being entered for each of them for the dismissal of the action, then they would settle for two thirds of their taxed costs instead of all their costs.  The offer was expressed to be open for 28 days from the date of the letter.  It was foreshadowed that the defendants might tender a copy of the letter in relation to any application for costs, including indemnity costs, if the offer was not accepted.  The offer was obviously intended to be a Calderbank offer: Calderbank v Calderbank [1976] Fam 93.

5. The offer was not accepted during the period when it remained open. It has not been suggested that 28 days was an unreasonably short period for it to have remained open.

6. The defendants contend that the offer was a reasonable one; that the plaintiff's case was so weak that it was unreasonable for it not to accept the offer; and that, in all the circumstances, the making of an order for indemnity costs is justified in respect of the period after the expiry of the offer.  The plaintiff disputes all of those contentions.

Calderbank offers and discontinuance

1. Calderbank v Calderbank (above) stands for the proposition that, in civil litigation, when one party makes an offer of settlement on a "without prejudice except as to costs" basis, that offer is unreasonably refused or not accepted, the parties proceed to trial, and the offeree obtains a worse result than what was offered, then ordinarily the offeror should be awarded costs as from the date of the offer.

2. In Gunns Limited v Marr (No 4) [2007] VSC 91, Bongiorno J applied that principle in a case involving capitulation by a plaintiff without proceeding to trial. The 18th defendant in that case had made a Calderbank offer to the effect that he would bear his own costs if the plaintiffs withdrew the proceeding and released him from all relevant claims. That offer was not accepted. Further costs were incurred.  The plaintiffs subsequently discontinued against that defendant, and accepted that they would have to pay his costs.  As a result, the plaintiffs were in a worse position than that which would have resulted from the acceptance of the Calderbank offer. At [50], his Honour concluded that "in accordance with the principles in Calderbank v Calderbank the plaintiffs should be ordered to pay the 18th defendant's costs on an indemnity basis from the date of that offer". In my view there is no reason why the principles in Calderbank v Calderbank should not be applied, if appropriate, in a case that ends with discontinuance instead of a trial and a judgment on the merits. 

The offer

1. The plaintiff contends that the offer of 18 December 2014 was in substance not an offer at all, but really a demand for capitulation.  A so-called offer by a plaintiff that amounts to a demand for the full amount claimed, or practically all of the amount claimed, will not be regarded as having any consequences in relation to costs: Tickell v Trifleska Pty Ltd (1991) 25 NSWLR 353 at 355; Hobartville Stud v Union Insurance Co (1991) 25 NSWLR 358 at 368; Leichhardt Municipal Council v Green [2004] NSWCA 341 per Santow JA, with whom Bryson and Stein JJA agreed, at [23]-[24]. However the plaintiff's primary claim in this action was for an injunction, not damages. Its statement of claim alleged only a likelihood of future damage, not the suffering of past damage. Unless the defendants were willing to consent to a less drastic injunction than that sought by the plaintiff, it seems the only thing they could do by way of offering to compromise was to offer to forego some or all of their costs. If they had offered to forego a minimal or negligible proportion of their costs, it would be appropriate to follow the Tickell and Hobartville Stud cases.  However they offered to forego one third of their party-party costs.  That was not a generous offer of compromise, but in my view it was a sufficient offer of compromise for it not to be ignored in relation to an application for indemnity costs.

Calderbank offers by defendants

1. Rule 280 of the Supreme Court Rules allows plaintiffs and defendants to lodge and serve formal offers of compromise that have costs consequences if not accepted.  Those consequences are spelled out in r 289(1).  If an offer by a plaintiff is not accepted, and the judgment in the action is no less favourable to the plaintiff than the terms of the offer, then the plaintiff is entitled to an order for costs against the defendant on a solicitor-client basis unless the court or a judge otherwise orders.  But the position is different in relation to offers by defendants. If a defendant makes a formal offer of compromise which is not accepted, and the judgment is no more favourable to the plaintiff than the terms of the offer, then, unless the court or a judge otherwise orders, the defendant becomes entitled to an order for costs against the plaintiff in respect of the period after the service of the offer, but only on a party-party basis: r 289(2).  In this case, the defendants chose to make their offer in the form of a Calderbank letter rather than by way of an offer of compromise pursuant to r 280.  The plaintiff contends that they should not be in any stronger position to claim indemnity costs as a result of choosing one form of offer rather than the other.

2. In Leichhardt Municipal Council v Green (above), Santow JA, with whom Bryson and Stein JJA agreed, had regard to applicable rules of court whereby an unaccepted offer of compromise by a plaintiff could lead to the plaintiff recovering costs on an indemnity basis, whereas an unaccepted offer of compromise by a defendant could lead only to the defendant recovering costs on a party-party basis, subject to the court's general discretion as to costs.  At [45]-[47] his Honour said:

   "45   Costs on an indemnity basis are awarded following unaccepted plaintiff offers, as a necessary incentive to defendants to settle. The defendant will be liable for costs on a party and party basis anyway, if it loses. By contrast, depriving a successful plaintiff of costs, and awarding them in favour of a defendant should ordinarily be sufficient sanction against a plaintiff's failing to give adequate consideration to a defendant's offer. The fact that the defendant may ultimately have a verdict in its favour does not alter the incentive scheme. A successful defendant will generally receive party and party costs when it wins. No additional sanction is ordinarily necessary to make a plaintiff consider the defendant's settlement offer over and above that. A plaintiff will ordinarily have regard to any defendant's offer without need for additional incentives, because a plaintiff as initiator of the action, primarily bears the risk of the claim. If the plaintiff's claim fails, the plaintiff's own investment (in costs) will be lost and the plaintiff will carry the burden of the investment it has forced the defendant to make in costs also. Defendant offers are thus treated differently in the Rules than plaintiff offers for good reason. [Original emphasis.]

   46    It is respectfully submitted that there is no principle of law or persuasive policy reason why a defendant's unaccepted offer of compromise made by Calderbank letter should give rise to costs sanctions on any basis different to that provided by the Rules. Under the rules, such costs would only be awarded in exceptional circumstances if the Court 'otherwise orders'. For the Court to depart from the general rule there must be particular grounds on which the Court can exercise its discretion: Hillier v Sheather (1995) 36 NSWLR 414. A defendant must resort to showing that the plaintiff's rejection of the offer was 'unreasonable' under the general law: Multicon Engineering Pty Limited v Federal Airports Corp (1996) 138 ALR 425. That discretion is to be exercised in all the circumstances of the case: SMEC Testing ServicesPty Limited [SMEC Testing Services Pty Limited v Campbelltown City Council [2000] NSWCA 323] at [37] per Giles JA affirmed in Jones v Bradley [(No 2) [2003] NSWCA 258] at [9]. Indemnity costs do not flow as a matter of course from unaccepted defendant offers.

   47    The conclusion that indemnity costs should not be viewed as a necessary or automatic consequence of not accepting a defendants [sic] offer does not in any way deny the general discretionary power of the Court regarding costs in such circumstances. It merely recognizes that, influenced but not bound by the rules, a Court will be reticent to award such indemnity costs following defendant offers of settlement … It is preferable to consider applications for indemnity costs following unaccepted offers of compromise by defendants as being applications for a favourable exercise of the Court's general discretion to award indemnity costs. As far as Calderbank offers go there is very little difference, the costs consequences of these lying entirely within the Court's general inherent discretion on costs."

3. That exposition of the relevant principles was referred to with approval by the New South Wales Court of Appeal (Giles, Ipp and Tobias JJA) in Evans Shire Council v Richardson (No 2) [2006] NSWCA 61 at [20]. At [21] their Honours suggested that the sort of conduct on the part of a plaintiff that could result in an order for costs on an indemnity basis included "the peremptory dismissal of an offer of compromise such that an inference could be drawn that no bona fide consideration had been given by the plaintiff to early settlement of the claim".

4. Those authorities do not appear to have been cited to Bongiorno J in Gunns Limited v Marr (No 4) (above).

5. In the light of those authorities, I can see no reason to take an approach that differs from that of Santow JA in Leichhardt Municipal Council v Green.  I accept the plaintiff's submission that the defendants should not be advantaged as a result of having chosen to proceed by way of Calderbank letter rather than by lodging and serving an offer of compromise.  It follows that I need to consider, according to ordinary principles, whether the plaintiff's conduct in not accepting the defendants' offer of settlement and later discontinuing was so unreasonable as to warrant an order for the payment of indemnity costs. The defendants' contentions as to unreasonableness were based substantially on arguments that the plaintiff's claim had little or no merit.

The merits of the plaintiff's claim

1. At the hearing of this application, counsel for the defendants made a submission to the effect that this Court does not have the power to grant an injunction to restrain the commission of the tort of injurious falsehood unless it is established that the plaintiff has already suffered damage as a result of the commission of the tort, and that there is likely to be a repetition resulting in further damage.  Counsel for the plaintiff relied on a series of New South Wales cases in which injunctions were granted to restrain the publication of injurious falsehoods: Beechwood Homes (NSW) Pty Ltd v Camenzuli [2010] NSWSC 521; Mahon v Mach 1 Financial Services Pty Ltd [2012] NSWSC 651; AMI Australia Holdings Pty Ltd v Fairfax Media Publications Pty Ltd [2010] NSWSC 1395. However counsel for the defendants argued that those cases should be distinguished because the legislation as to injunctions in New South Wales expressly applies "in a case where an injury is not actionable unless it causes damage" whereas there is no such provision in the relevant Tasmanian legislation: Supreme Court Act 1970 (NSW), s 66(2), cf Supreme Court Civil Procedure Act 1932, s 11(12).

2. In Swimsure (Laboratories) Pty Ltd v McDonald [1979] 2 NSWLR 796 at 802, Hunt J took the view that, without that legislative provision, the absence of evidence of actual loss would have precluded the grant of an injunction to restrain a slander of goods. His Honour based that view on two English cases, White v Mellin [1895] AC 154 and British Railway Traffic and Electric Co Ltd v CRC Co Ltd [1922] 2 KB 260. McCallum J took a similar view in Mahon v Mach 1 Financial Services Pty Ltd (above) at [16]-[18]. However, with respect, I do not think that the dicta as to the relevant point in those cases were entirely correct.

3. White v Mellin was a case in the House of Lords.  Different views were expressed as to whether proof of actual damage was necessary before an injunction would be granted to restrain a slander of goods. At 163-164, Lord Herschell LC took the view that an injunction could not be granted without proof of special damage having been suffered. At 167, Lord Watson took the opposite view, but suggested that a plaintiff who sought an injunction before suffering any special damage would bear a heavier onus. At 171, Lord Shand took the view that an averment of special damage ought not to be necessary.  On my reading of the speeches of Lords Macnaghten and Morris, I do not think it can be said that they indicated a clear preference for either view.  In British Railway Traffic and Electric Co Ltd v CRC Co Ltd (above), McCardie J referred at 273 to the conflicting opinions in White v Mellin, and proceeded to refuse an injunction on an unrelated ground.

4. Before White v Mellin went to the House of Lords, there was a reported case in which Chitty J granted an injunction to restrain the publication of injurious falsehoods without any evidence of prior damage: Collard v Marshall [1892] 1 Ch 571. That case was referred to with approval by Gummow and Hayne JJ in Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57 at [56]. It was not referred to in White v Mellin. 

5. That being the state of the authorities, I very much doubt that any judge of this Court would have followed the dicta of Lord Herschell in White v Mellin and held that proof of prior damage was a prerequisite to the granting of an injunction in this sort of case.  As McCardie J said in British Railway Traffic and Electric Co Ltd v CRC Co Ltd (above) at 273:

   "… it may be strange to hold that no injunction can be granted where the plaintiff proves only that damage will necessarily or probably arise, and yet to grant an injunction in a case where the plaintiff proves a small item of special damage and further claims an injunction to restrain future publications.  Surely in such an action the only reason for the grant of the injunction can be that damage will necessarily or probably arise from the further publications threatened by the defendant."

1. In Palmer Bruyn & Parker Pty Ltd v Parsons (2001) 208 CLR 388 at [114], Kirby J listed the elements of the tort of injurious falsehood. The first element in his Honour's list was "That the defendant published matter that was false". The fourth was "That the publication was actuated by malice". The sixth was that the results of the publication "included actual damage to the plaintiff". The defendants contend that the plaintiff's case was extremely weak in respect of these three elements of the tort.

2. Counsel for the plaintiff submitted that it would be inappropriate for me to undertake any assessment of the strength of the plaintiff's case because it did not proceed to trial.  I disagree.  In my view the applicable principles are as stated by McHugh J in Re Minister for Immigration and Ethic Affairs; ex parte Lai Qin (1997) 186 CLR 622 at 624-625, where his Honour said:

   "In most jurisdictions today, the power to order costs is a discretionary power. Ordinarily, the power is exercised after a hearing on the merits and as a general rule the successful party is entitled to his or her costs Latoudis v Casey (1990) 170 CLR 534. Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order Latoudis (1990) 170 CLR 534, 566-568. When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order.

   In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties Australian Securities Commission v Aust-Home Investments Ltd (1933) 44 FCR 194 at 201. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action Australian Securities Commission v Aust-Home Investments Ltd (1933) 44 FCR 194 at 201. In administrative law matters, for example, it may appear that the defendant has acted unreasonably in exercising or refusing to exercise a power and that the plaintiff had no reasonable alternative but to commence a litigation."

3. The plaintiffs pleaded that the fourth and fifth paragraphs of the defendants' letter, which I have set above at [2], contained a series of false statements.  The defendants contend that those paragraphs referred only to possibilities about which they were concerned, and did not contain any false statements at all.  If this case had gone to trial, I think this issue could have gone either way.

4. I am not in a position to say anything about malice.  The contents of the letter provide no basis for an inference of malice, but I do not know what evidence, if any, the plaintiff had in relation to malice.  And I know too little about the case to evaluate the merits of an assertion that further publications by the defendants might have resulted in the plaintiff suffering financial loss.

5. The plaintiff's customers and potential customers appear to have included a number of large corporations.  It may be that they were very capable of determining what was true and what was false in relation to the possible environmental impact of the proposed waste disposal facility. If so, the plaintiff's action might well have failed on the basis that there was not sufficient likelihood of it suffering damage to warrant the granting of an injunction.  The action might also have failed on the basis that damages were considered to be an adequate remedy.

6. I have no evidence as to why the plaintiff discontinued the action. It did not tell the defendants why it discontinued. Discontinuing without explanation tends to suggest that it was thought that the action was likely to fail.

7. Taking all of these matters into account, I am satisfied that the plaintiff's case was problematic, to the extent that it could have failed in a number of ways if taken to trial.  However I am not able to say that it was hopeless, or even that it was almost hopeless. 

Conclusion

1. In the light of that assessment, I need to decide whether there is sufficient reason to make an order for the payment of indemnity costs, on the basis of the established principles relating to the making of such orders.  The relevant principles were usefully summarised by Sheppard J in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 25 at 233-234. His Honour said this:

   "4   In consequence of the settled practice which exists, the Court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the Court in departing from the usual course. That has been the view of all judges dealing with applications for payment of costs on the indemnity or some other basis whether here or in England. The tests have been variously put. The Court of Appeal in Andrews v Barnes [(1887) 39 Ch D 133] at 141 said the Court had a general and discretionary power to award costs as between solicitor and client 'as and when the justice of the case might so require'. Woodward J in Fountain Selected Meats [Fountain Selected Meats(Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397] appears to have adopted what was said by Brandon LJ (as he was) in Preston v Preston [[1981] 3 WLR 619] at 637; namely, there should be some special or unusual feature in the case to justify the Court in departing from the ordinary practice. Most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of factors which would be capable, if they existed, of warranting a departure from the usual rule. But as French J said … in Tetijo [Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd, unreported, Federal Court, 3 May 1991, at 8], 'The categories in which the discretion may be exercised are not closed'. Davies J expressed … similar views in Ragata [Ragata Developments Pty Ltd v Westpac Banking Corporation, unreported, Federal Court, 5 March 1993, at 6].

   5    Notwithstanding the fact that that is so, it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v Weekes (1989) 92 ALR 131 at 152; evidence of particular misconduct that causes loss of time to the Court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp [J-Corp Pty Ltd v Australian Builders Labourers Federation Union of Workers (WA Branch) (No 2) (1993) 46 IR 301]); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise (eg Messiter v Hutchinson (1987) 10 NSWLR 525; Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 at 724 (Court of Appeal); Crisp v Keng (unreported, Court of Appeal, NSW, Kirby P, Priestley JA, Cripps JA, No 40744/1992, 27 September 1993) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records [EMI Records Ltd v Ian Cameron Wallace Ltd [1983] Ch 59]). Other categories of cases are to be found in the reports. Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis."

2. The plaintiff may well have had a very weak case, but I am not satisfied that it so weak that its conduct in not accepting the less than generous offer of 18 December 2014 was so unreasonable or imprudent as to warrant an order for the payment of any costs on an indemnity basis, or any basis other than a party-party basis.

3. For these reasons, the application is refused.