De Poi v Advertiser-News Weekend Publishing Company Pty Ltd (No 2) - [2016] SASCFC 45

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court)
DE POI v ADVERTISER-NEWS WEEKEND PUBLISHING COMPANY PTY LTD (No 2)
[2016] SASCFC 45
Judgment of The Full Court
(The Honourable Justice Gray, The Honourable Justice Sulan and The Honourable Justice Peek)
27 April 2016
DEFAMATION - ACTIONS FOR DEFAMATION - COSTS - INDEMNITY COSTS
DEFAMATION - ACTIONS FOR DEFAMATION - COSTS - GENERAL RULE - COSTS FOLLOW THE EVENT - COSTS OF ISSUES
INTEREST - RATE OF INTEREST AND COMPOUND INTEREST - RATE IN OTHER CASES
Application for costs and interest.
The appellant, Sandra De Poi, sued the respondent, Advertiser-News Weekend Publishing Company Pty Ltd, in relation to an article published in the Sunday Mail on 28 March 2010 regarding the appellant and the 2010 State Election. At trial, a Judge of the District Court found that the article was not defamatory. The Full Court of the Supreme Court overturned this decision on appeal and awarded damages of $75,000.00.
Whether the appellant is entitled to interest at a rate of four per cent from the date of publication. Whether the appellant is entitled to her costs of the appeal. Whether the appellant is entitled to her trial costs on an indemnity basis.
1. There should be some reduction to the award of interest on account of the fact that the damages awarded by the Full Court included a component relating to continuing injury to feelings and reputation. The appellant is awarded a lump sum of interest in the amount of $15,000.00.
2. The respondent unreasonably failed to make reasonable settlement offers and unreasonably failed to accept the appellant’s filed offer. However, the respondent incurred costs in pursuing a defence that was ultimately successful in respect of one imputation. The interests of justice require an adjustment to the quantum of costs that otherwise would have been awarded pursuant to section 38(2)(a) of the Defamation Act 2005 (SA). The respondent is to pay 85 per cent of the appellant’s costs of the trial on a solicitor/client basis.
3. The respondent should pay the appellant’s costs of the appeal on a party/party basis.
Defamation Act 2005 (SA) s 14, s 28 and s 38; Supreme Court Act 1935 (SA) s 30C(3), referred to.
MBP (SA) Pty Ltd v Gogic (1991) 171 CLR 657; Chakravati v Advertiser Newspapers Ltd (1998) 72 SASR 361; John Fairfax & Sons Ltd v Kelly (1987) 8 NSWLR 131; Cornes v The Ten Group Pty Ltd & Ors (No. 2) [2011] SASC 141; Ten Group Pty Ltd v Cornes (2012) 114 SASR 46, considered.

DE POI v ADVERTISER-NEWS WEEKEND PUBLISHING COMPANY PTY LTD (No 2)
[2016] SASCFC 45
Full Court: Gray, Sulan and Peek JJ
THE COURT.

This is an application for interest and costs.
Background
The appellant, Sandra De Poi, sued the respondent, Advertiser-News Weekend Publishing Company Pty Ltd, in relation to an article published in the Sunday Mail on 28 March 2010 regarding the appellant and the 2010 State Election. The appellant claimed that the article imputed, inter alia, that:
-The appellant obtained substantial financial benefit through her close Australian Labor Party connections and thereby demonstrated that she lacks integrity; and
-There are reasonable grounds to suspect the appellant of having breached the Code of Conduct of the Australian Institute of Company Directors by having placed herself at the centre of dishonest electoral practices.
The trial Judge dismissed the appellant’s claim, finding that the first imputation was not conveyed and that the respondent had justified the second imputation. Her Honour ordered that the appellant pay the respondent’s costs on an indemnity basis.
At the commencement of proceedings in the District Court, the appellant pleaded six defamatory imputations. Two of those were struck out at the interlocutory stage. At trial, the Judge found that the remaining four imputations either did not arise on an ordinary reading of the article or were answered by the defence of justification. On appeal, the appellant sought to challenge only the Judge’s findings in respect of two of the four imputations, being the two set out above.
The Court’s Findings on the Appeal
This Court found that both imputations had been conveyed and that the article was defamatory. At trial, the defendant had pleaded qualified privilege in respect of both imputations. This Court rejected the defence of qualified privilege at common law on the basis that the publication was made to a large audience, being the general public, and it could not be said that all members of the public had an interest in the published imputations. This Court further rejected the defence of extended qualified privilege and the statutory defence pursuant to section 28 of the Defamation Act 2005 (SA). The respondent failed to act reasonably as it did not take proper steps to verify the imputations and it did not make a reasonable attempt to obtain a response from the appellant as to the imputations.
This Court also dismissed the respondent’s defence of justification. At trial, the Judge had found the defence of justification made out in respect of an imputation to which it had not been pleaded. The appellant was prejudiced by this error of the trial Judge as there had been nothing tendered in evidence to establish the truth of the imputation. This Court awarded general damages in the amount of $75,000.00 and indicated that it would hear the parties as to costs and interest.
The Application for Interest
The appellant seeks interest from the date of publication of the article. The appellant referred to MBP (SA) Pty Ltd v Gogic,[1] where the High Court held that an interest rate of four per cent was appropriate for pre-trial non-economic loss. This was the rate applied by this Court in Chakravati v Advertiser Newspapers Ltd.[2]
[1] MBP (SA) Pty Ltd v Gogic (1991) 171 CLR 657.
[2] Chakravati v Advertiser Newspapers Ltd (1998) 72 SASR 361.
The respondent noted that interest is often reduced in defamation cases to reflect that the award of damages includes an amount referable to continuing injury. It was submitted that interest at a rate of two per cent would be appropriate. The respondent referred to John Fairfax & Sons Ltd v Kelly, where McHugh JA said:[3]
In a practical as well as a theoretical sense, the plaintiff in a defamation action is entitled on publication to damages. In particular, he is entitled to damages to vindicate him. A plaintiff in such an action sustains loss for each day that the defendant fails to pay the appropriate damages to him. However, it does not follow that the plaintiff is entitled to interest on the whole award. In many cases the award will reflect an amount for continuing injury to feelings and reputation to the date of verdict. Hence the amount awarded may, and usually will, be higher than the amount which would have been awarded as at the date of publication or even as at the date of the writ. Paradoxically, the amount awarded as vindication per se will inevitably reduce as the damages increase for continuing injury. This is because the award of damages for actual injury will also partly serve the purpose of vindicating the plaintiff's reputation. However, there is no strict correlation between the damages for vindication and the damages for injury to feelings and reputation. If damages were awarded at the date of the writ in a particular case, the proper damages might be $3x. By the time of trial the actual injury might be equivalent to $2x. Yet a proper award for all elements might be only $4x. In some cases damages for vindication will constitute the greater part of the verdict; in other cases those damages per se will play a lesser role. However, to the extent that the damages reflect a component for actual injury to the date of trial, the plaintiff's loss is spread over a period. Any award of interest must reflect that fact.
The correct approach in theory would seem to be that, since the plaintiff was entitled to damages immediately upon publication, the proper inquiry is first to determine to what extent the award was increased by reason of continuing injury. In strict theory the interest, in respect of this additional sum, would need to take account of the fact that the injury was spread over a period after publication. That is, leaving aside any question of future loss, the matter should be approached on the basis that the plaintiff is prima facie entitled to interest on the whole amount of the award from the date of publication. However, that amount has to be reduced for any sum additional to “vindication damages” awarded in consequence of injury suffered between publication and verdict. This approach gives rise to obvious difficulties of assessment. But if, as I think is the case, the plaintiff is entitled to at least part of his damages from the date of publication, the choice is between awarding no interest at all or attempting to calculate interest on a basis which, although not mathematically perfect, achieves a measure of justice. Since it is unfair to plaintiffs to deprive them of interest for the period in which they have been deprived of their money, interest ought to be awarded to the extent that it is fair and proper.
[3] John Fairfax & Sons Ltd v Kelly (1987) 8 NSWLR 131, 143.
In Cornes v The Ten Group Pty Ltd & Ors (No. 2),[4] Peek J made a reduction to the interest rate to be applied after noting that the plaintiff in that case had delayed the commencement of trial and that the hurt and personal distress suffered by the plaintiff continued over a period of three years.
[4] Cornes v The Ten Group Pty Ltd & Ors (No. 2) [2011] SASC 141.
The respondent submitted that the appellant only notified the respondent of her concerns with the article six months after publication and only filed proceedings 11 days prior to the 12 month limitation period. It was further noted that the appellant pleaded unsustainable imputations which were struck out after a contested interlocutory application and an appeal in respect of that application.
Pursuant to section 30C(3) of the Supreme Court Act 1935 (SA), we would award a lump sum of interest in the amount of $15,000.00. This amount takes into account a reduction referable to the fact that the damages awarded by this Court included a component relating to continuing injury to feelings and reputation.
The Application for Costs
The appellant seeks an order for her costs of the appeal on a party/party basis and her costs of the trial on an indemnity basis. The respondent seeks an order that the appellant pay the respondent’s costs of the appeal up to the date she filed her second notice of appeal. The respondent conceded that the appellant was entitled to her costs of the appeal on a party/party basis from the date of the second notice.
The respondent further submitted that the appellant should only be entitled to the trial costs of the issues on which she was successful. Accordingly, the appellant should pay the respondent’s costs of any interlocutory applications on which she was unsuccessful, insofar as those costs were reserved, and the respondent’s costs of those issues at trial on which she was unsuccessful. The respondent contended that the costs of the trial should be awarded on a party/party basis.
The Costs of the Appeal
The respondent contended that the appellant should pay the costs of the appeal up to the date that she filed her second notice of appeal on the basis that many of the grounds of appeal raised in the first notice were abandoned. The appellant had first sought to appeal from the whole of the judgment of the trial Judge as well as the interlocutory judgment which struck out two of the six imputations pleaded in the appellant’s first statement of claim.
The first notice of appeal was filed on 18 March 2015 and the second notice was filed on 8 May 2015, prior to the setting down of the appeal. In our view, the respondent was not materially prejudiced by the first notice. We cannot see how the respondent could have incurred any meaningful costs in the short seven week period between the two notices that would not have been incurred in any event. The respondent should pay the appellant’s costs of the appeal on a party/party basis.
The Costs of the Trial
Section 38 of the Defamation Act provides:
(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; 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—
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.
Both the appellant and the respondent made settlement offers during the course of the proceedings. The trial Judge awarded indemnity costs to the respondent on the basis that the respondent had made reasonable offers that the appellant unreasonably failed to accept.
The appellant submitted at trial and on appeal that the offers were unreasonable as they were insufficient and did not include an offer to make an apology. Further, any offers which included as a component damages to be paid by the respondent to the appellant were subject to the requirement of confidentiality. The appellant relied on Ten Group Pty Ltd v Cornes, where Gray J, Kourakis CJ and Blue J concurring, explained:[5]
I am unable to discern any error in the judge’s approach. Having regard to the nature of the defamation, I consider the offer to be wholly inadequate and unreasonable. I consider the term as to confidentiality to be a clear indication of unreasonableness. The publication of the fact that the appellants were paying damages and costs, and of the amounts being paid would, in the mind of the public, provide confirmation that the plaintiff had been defamed and would provide a degree of vindication of her reputation.
A finding made by a court that a person has been defamed provides a vindication of reputation. The publication of such a finding in a judgment is a publication to the public at large. That vindication may well be enhanced by an award of damages and the public awareness of that award.
A settlement of a defamation claim when the terms of the settlement may be published, including the disclosure of the payment of a monetary sum, offers a significant vindication of reputation. If there cannot be a full disclosure then the level of vindication will be reduced. The appellants’ offer in the present case allowed the plaintiff only to refer to the fact of settlement being reached. Such a limited disclosure would offer little or no vindication of reputation. Such a disclosure would be open to the interpretation that the claim had been withdrawn without the payment of any monies. It is to be accepted that the offer referred to an earlier on-air correction and apology. However, this apology was made some eight months earlier. No reference was made in the apology to damages or costs.
[5] Ten Group Pty Ltd v Cornes (2012) 114 SASR 46, 79.
In the present proceedings, the trial Judge held:[6]
In the present case the plaintiff has been unsuccessful and accordingly the judgment does not provide a vindication of reputation. In those circumstances a settlement term requiring confidentiality is not, in my view, a clear indication of unreasonableness as it was in the matter of Cornes. A similar point can be made in relation to the failure to offer an apology or correction. I note in passing that the defendant’s letter of 9 October 2010 states that the defendant was unaware of any factual matters that were misstated or inaccurate but nevertheless invites the plaintiff to let the defendant know if she was of the view that any of the factual matters were inaccurate.
Having considered the various offers made by the defendant I do not consider any of them to have been unreasonable either as to their conditions, timing or quantum given the circumstances obtaining at the time they were made. Further having regard to the final outcome of the plaintiff’s claim it is clear that the offers were, objectively assessed, reasonable.
[6] De Poi v Advertiser-News Weekend Publishing Company Pty Ltd (No 2) [2015] SADC 25, [12]-[13].
In light of this Court’s finding that the article was defamatory, the Judge’s findings as to the offers cannot stand. The Judge’s decision was reliant on the fact that the appellant’s claim was dismissed at trial.
The appellant submits that she is entitled to indemnity costs as the respondent unreasonably failed to accept settlement offers and unreasonably failed to make settlement offers. In our view, the respondent unreasonably failed to make reasonable settlement offers. As made clear in Ten Group Pty Ltd v Cornes, the insistence of a term as to confidentiality will usually be considered unreasonable in proceedings involving defamation. Further, the offers, none of which gave the plaintiff more than $20,000.00 in respect of damages, were wholly insufficient when offered in the absence of any published apology or correction.
The appellant claims to have made two settlement offers which were unreasonably rejected by the respondent. The first was a concerns notice sent pursuant to section 14 of the Defamation Act prior to proceedings being issued. That notice stated that the appellant would accept damages in the amount of $60,000.00, an apology and payment of legal costs.
The second offer was filed in the District Court on 22 March 2012. That offer proposed damages of $40,000.00 and payment of legal costs to be taxed or agreed. There was no longer a requirement for an apology.
The appellant submits that both of these offers were significantly more favourable to the respondent than the judgment of the Full Court on appeal. Consequently, it is submitted that the respondent’s failure to accept these offers was patently unreasonable.
The respondent submitted that it was not unreasonable for it to reject the appellant’s offers as if it accepted those offers it would be accepting liability for imputations that were later found to be unsustainable in the sense that they were struck out or defeated by the respondent’s defence of justification. The respondent relies on subsequent offers made by the applicant to support its contention that the appellant will seek an extraordinary sum in respect of her costs.
In our view, it is of little consequence that the filed offer was made at a time when the respondent was defending six pleaded imputations. That the respondent was successful in defending some of the pleaded imputations is a factor that must be considered, but it plays a limited role when considering whether the respondent acted unreasonably in rejecting a settlement offer. The most important factor is that the offer was significantly more favourable than the judgment of the Full Court. It is not the case that a condition of the filed offer was that the respondent had to apologise or retract one of the imputations which was ultimately struck out or successfully defended in the District Court. Further, the filed offer was entirely reasonable as to the costs component. In our view, it was unreasonable for the respondent to fail to accept the appellant’s filed offer.

As mentioned above, it remains relevant that four of the imputations originally pleaded by the appellant failed in the District Court. In our view, the article had two main categories of imputation. The first was that the appellant had placed herself at the centre of dishonest electoral practices. The appellant succeeded in respect of one pleaded imputation in this category. The second, and the one on which the appellant was entirely successful, was the appellant had taken advantage of her Australian Labor Party connections to obtain a financial benefit. This bordered on a claim of corruption and was found to give rise to an imputation that the appellant lacked integrity. It is to be noted that it is the gravity of this second category imputation that resulted in the award of damages of $75,000.00.
However, it is relevant that the respondent incurred costs in pursuit of its defence of justification in relation to the first category of imputation. That defence, which had only been pleaded in respect of one imputation, was successful in respect of that imputation at trial and this finding was not pursued on appeal. Accordingly, the interests of justice require an adjustment to the quantum of costs that otherwise would have been awarded pursuant to section 38(2)(a) of the Defamation Act. We would order that the respondent pay 85 per cent of the appellant’s costs of the trial on a solicitor/client basis.
Conclusion
The appellant is entitled to interest in the sum of $15,000.00. The respondent is to pay 85 per cent of the appellant’s costs of the trial on a solicitor/client basis. The respondent is to pay the appellant’s costs of the whole of the appeal on a party/party basis.