Cripps v Vakras [No 2]
[2014] VSC 352
•28 July 2014
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
MAJOR TORTS LIST
S CI 2011 1484
| ROBERT RAYMOND CRIPPS & ANOR | Plaintiffs |
| v | |
| DEMETRIOS VAKRAS & ANOR | Defendants |
S CI 2012 4407
| DEMETRIOS VAKRAS & ANOR | Plaintiffs |
| v | |
| ROBERT RAYMOND CRIPPS & ANOR | Defendants |
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JUDGE: | KYROU J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | Decision on interest and costs made ‘on the papers’. Written submissions received on 3 and 4 July 2014. |
DATE OF JUDGMENT: | 28 July 2014 |
CASE MAY BE CITED AS: | Cripps v Vakras [No 2] |
MEDIUM NEUTRAL CITATION: | [2014] VSC 352 |
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COSTS — Defamation and contract proceedings heard together — Plaintiffs in defamation proceeding successful in that proceeding but unsuccessful in contract proceeding — Whether costs order in favour of those plaintiffs should be on standard or indemnity basis — Quantum of allowance for those plaintiffs’ lack of success in contract proceeding — Three preconditions for award of indemnity costs under Defamation Act 2005 s 40(2)(a) — Costs awarded on indemnity basis with allowance of 20 per cent.
INTEREST — Interest of three per cent payable on damages awards.
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| APPEARANCES: | Counsel | Solicitors |
| For Mr Cripps and Redleg Museum Services Pty Ltd | Mr C J Dibb | Efron & Associates |
| For Mr Vakras and Ms Raymond | Mr D Gilbertson SC with Ms S Porter | Media Arts Lawyers |
HIS HONOUR:
These reasons should be read in conjunction with my principal judgment.[1] Abbreviations and definitions in the principal judgment are also used in these reasons.
[1]Cripps v Vakras [2014] VSC 279 (20 June 2014).
With the consent of the parties, I have decided the issues relating to interest and costs ‘on the papers’ based on the parties’ written submissions. The Defamation Defendants’ submissions are dated 3 July 2014 and those of the Defamation Plaintiffs are dated 4 July 2014.
The following matters are common ground between the parties. First, that a single order for costs should be made in the two proceedings. Secondly, the form of the order should be that the Defamation Defendants pay the Defamation Plaintiffs’ costs of both proceedings, with a percentage allowance for the Defamation Defendants’ success in the Contract Proceeding.
I agree that a single order for costs is appropriate because of the substantial overlap in the evidence that was adduced in the two proceedings. As most of the evidence and legal argument related to the Defamation Proceeding, the costs order should reflect the outcome of that proceeding rather than that of the Contract Proceeding. Further, Mr Cripps was successful in the Contract Proceeding and much of the evidence that related exclusively to that proceeding had no connection with the narrow ground upon which the Defamation Defendants were successful against Redleg in that proceeding. It follows that the order for costs will be in favour of the Defamation Plaintiffs.
The key issues in dispute between the parties are whether the costs order should be on the standard basis or on the indemnity basis, and the quantum of the allowance. The Defamation Plaintiffs have submitted that costs should be on the indemnity basis with an allowance of five per cent. The Defamation Defendants have submitted that costs should be on the standard basis with an allowance of 20 per cent.
Section 40 of the Defamation Act 2005 (‘Act’) relevantly provides:
40 Costs in defamation proceedings
(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 subsection (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; …
(3) In this section—
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.
The case law suggests that there are three preconditions for an award of indemnity costs under s 40(2)(a) of the Act and that the burden of proof in respect of them is on the successful plaintiff. Those preconditions, as they apply to the Defamation Proceeding, are as follows:
(a) The proceeding must have been successfully brought by the Defamation Plaintiffs.
(b) The Court must have determined that costs in the proceeding are to be awarded to the Defamation Plaintiffs.
(c) The Court must be satisfied that the Defamation Defendants unreasonably failed to make an offer or agree to an offer to settle the proceeding made before the proceeding was determined.
The Defamation Defendants have correctly conceded that the first two preconditions are satisfied.
In relation to the third precondition, as the Defamation Plaintiffs did not make any offer of settlement, the question is whether the Defamation Defendants unreasonably failed to make a settlement offer.
The Defamation Defendants have submitted that the third precondition is not satisfied, principally because, in their view, it could not be said that all of their defences were hopeless and that they were bound to fail. The Defamation Plaintiffs, on the other hand, have submitted that it must have been obvious to the Defamation Defendants that the evidentiary foundation for the key defences upon which they relied — particularly in relation to the most serious imputation, the Hitler Imputation — was absent and that they would fail. The Defamation Plaintiffs contended that in these circumstances, it was unreasonable for the Defamation Defendants not to make an offer of settlement and therefore the third precondition is satisfied.
In my opinion, the key evidentiary issues upon which the Defamation Proceeding principally depended were:
(a) whether Mr Cripps stated to the Defamation Defendants that Mr Vakras and his artwork were racist;
(b) whether Mr Cripps made comments that could reasonably be construed as being racist and similar to the views of Adolf Hitler; and
(c) whether Mr Cripps made any statements which effectively excluded the Defamation Defendants from the Gallery after 18 June 2009.
In my principal judgment, I found that Mr Cripps did not make any such statements or comments and that the Defamation Defendants well knew this. On this basis, the Defamation Defendants, acting reasonably, would have known that their defences in the Defamation Proceeding were substantially doomed to fail.
Accordingly, I am satisfied that the Defamation Defendants should have made a settlement offer prior to the determination of the Defamation Proceeding and that their failure to do so was unreasonable. It follows that the third precondition is met and that I am required to award costs to the Defamation Plaintiffs on the indemnity basis unless the interests of justice require otherwise.
For the following reasons, I am of the opinion that the interests of justice require that the Defamation Plaintiffs should not be awarded costs on the indemnity basis in respect of all of their costs. First, as a single order for costs will be made, it would be inappropriate for the Defamation Defendants to be required to pay on the indemnity basis the Defamation Plaintiffs’ costs that related exclusively to the Contract Proceeding, as s 40(2)(a) of the Act does not apply to the Contract Proceeding. Moreover, the Defamation Defendants have been successful in being awarded damages in the Contract Proceeding, albeit on a much narrower basis than that upon which they had pleaded and only against Redleg. Secondly, the Defamation Plaintiffs were successful in respect of some of the imputations whose evidentiary basis was unconnected to the issues set out at [11] above.
I am satisfied that the interests of justice can be accommodated in a manner that is fair and appropriate for all the parties by making a more generous allowance than otherwise would be the case in relation to the costs of the two proceedings which are not to be paid by the Defamation Defendants. That allowance will be 20 per cent.
In addition to s 40(2)(a) of the Act, the Defamation Plaintiffs relied on s 40(1)(a). However, that provision cannot affect my conclusion because I have already taken into account under s 40(2)(a) the conduct of the Defamation Defendants that the Defamation Plaintiffs allege was relevant under s 40(1)(a). That conduct was the Defamation Defendants’ reliance on defences which were said to be ‘close to hopeless’.
Accordingly, I will order that the Defamation Defendants pay 80 per cent of the Defamation Plaintiffs’ costs of each of the proceedings on the indemnity basis.
The parties have made submissions about interest which are substantially the same. Consistently with those submissions, I will order that the Defamation Defendants pay interest at the rate of three per cent since 1 April 2010 on the damages awards set out in my principal judgment.
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