Defteros v Google LLC (Costs)
[2020] VSC 324
•3 June 2020
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
MAJOR TORTS LIST
S CI 2016 04954
S CI 2017 04759
| GEORGE DEFTEROS | Plaintiff |
| v | |
| GOOGLE LLC | Defendant |
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JUDGE: | Richards J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | Written submissions received 21 May 2020 and 28 May 2020 |
DATE OF JUDGMENT: | 3 June 2020 |
CASE MAY BE CITED AS: | Defteros v Google LLC (Costs) |
MEDIUM NEUTRAL CITATION: | [2020] VSC 324 |
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DEFAMATION – Costs – Two proceedings tried together – Plaintiff awarded $40,000 damages in one proceeding – Other proceeding dismissed – Apportionment of costs in light of parties’ mixed success – Chen v Chan [2009] VSCA 233 applied – Whether costs should be assessed on an indemnity basis – Defamation Act 2005 (Vic), s 40.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr DP Gilbertson QC with Mr PA Heywood-Smith QC and Mr EH Guthrie | Defteros Lawyers |
| For the Defendant | Ms GL Schoff QC with Ms L De Ferrari SC and Ms CL Alden | Johnson Winter & Slattery |
HER HONOUR:
These two proceedings involved claims made by George Defteros against Google LLC, for damages for defamation. The proceedings concerned different publications, but had a number of common issues — in particular, whether Google had published the matters complained of, and the availability of the defences of common law qualified privilege and statutory qualified privilege. Since 13 July 2018, the two proceedings have been managed together.
I heard the proceedings together over seven days in November 2019 and delivered judgment on 30 April 2020.[1] I found that Google had published the matters complained of in both proceedings.
[1]Defteros v Google LLC [2020] VSC 219 (Reasons).
In proceeding S CI 2016 04954 (2016 proceeding), I found that the ‘Underworld article’ conveyed the defamatory imputation that Mr Defteros had crossed the line from professional lawyer for, to confidant and friend of, criminal elements. The defence of statutory qualified privilege was made out in relation to a substantial proportion of the up to 150 people to whom it was published, but was not established in relation to a smaller number of those people. The other defences pleaded by Google were not made out. I awarded Mr Defteros general damages of $40,000.
In proceeding S CI 2017 04759 (2017 proceeding), I found that the fourth matter complained of — the ‘Wikipedia article’ — conveyed the defamatory imputation that Mr Defteros was a criminal associate of the Melbourne underworld group, ‘The Carlton Crew’. I did not consider that the other three matters complained of conveyed the pleaded imputations. I found that Google published the Wikipedia article between 27 September 2017 and the end of November 2017 to about 25 users of its search engine, including Mr Defteros’ personal assistant. I was satisfied that the circumstances of Google’s publication of the Wikipedia article were such that Mr Defteros was unlikely to sustain any harm, and that the defence of triviality was made out. Google’s other defences were not established in respect of its publication of the Wikipedia article.
On 6 May 2020, I made an order in the 2016 proceeding giving judgment for Mr Defteros in the sum of $40,000, and made an order that the 2017 proceeding be dismissed. I also directed the parties to file and serve submissions on costs and, in the 2016 proceeding, interest.
The parties agreed that interest should be ordered on the damages awarded in the 2016 proceeding at the rate of 3% per annum from the date of commencement of the proceeding until judgment. Mr Defteros calculated interest at that rate between 25 November 2016 and judgment to be $4,200. I will make an order in the 2016 proceeding that Google pay Mr Defteros a further $4,200 damages in the nature of interest.
On the question of costs, both parties accepted that they had mixed success in the proceedings. Beyond that, the parties took very different positions.
Mr Defteros seeks orders that:
(a) Google pay his costs of the 2016 proceeding (other than his costs of and incidental to his claim for Andrews damages) on an indemnity basis up to 13 July 2018, the date the two proceedings were ordered to be managed together;
(b) He pay Google’s costs of the 2017 proceeding (other than its costs of and incidental to defending the claim for Andrews damages) on the standard basis up to 13 July 2018; and
(c) Google pay 80% of his costs of both proceedings (other than his costs of and incidental to his claim for Andrews damages) from 14 July 2018 on an indemnity basis.
Google seeks orders that:
(a) It pay 20% of Mr Defteros’ costs of and incidental to both proceedings, including all reserved costs, on the standard basis; and
(b) Mr Defteros pay 80% of its costs of and incidental to both proceedings, including all reserved costs, on the standard basis.
Having considered the submissions made in support of those divergent positions, I have determined to make the following orders in respect of costs:
(a) Google is to pay Mr Defteros’ costs of the 2016 proceeding (other than costs of and incidental to his claim for Andrews damages) up to 15 August 2019, including any reserved costs, on the standard basis.
(b) Mr Defteros is to pay Google’s costs of the 2017 proceeding (other than costs of and incidental to defending the claim for Andrews damages) up to 15 August 2019, including any reserved costs, on the standard basis.
(c) Google is to pay one third of Mr Defteros’ costs of both proceedings (other than costs of and incidental to his claim for Andrews damages) from 16 August 2019, including any reserved costs, on the standard basis.
My reasons for that determination follow.
General principles
The principles to be applied in determining who should pay the costs of proceedings in which the parties’ enjoyed mixed success were summarised by the Court of Appeal in Chen v Chan:[2]
(1)The general rule is that costs should follow the event. Absent disqualifying conduct, the successful party should recover its costs even where it has not succeeded on all heads of claim.
(2)The Rules of Court permit significant flexibility in determining questions of costs. In particular, the Court is entitled to examine the realities of the case and will attempt to do ‘substantial justice’ as between the parties on matters of costs.
(3)Where there is a multiplicity of issues and mixed success has been enjoyed by the parties, a Court may take a pragmatic approach in framing the order for costs, taking into consideration the success (or lack of success) of the parties on an issues basis. Generally, if such an order is made, it is reflected in the successful party being awarded a proportion of its costs but not the full amount.
(4)A Court may, when fixing costs in a claim where there has been mixed success, take into account complications which it considers will arise in the taxation of costs, as part of its consideration of the overall interests of justice.
(5) Where a Court determines to make an order apportioning costs, then it does so primarily as ‘a matter of impression and evaluation,’ rather than with arithmetical precision, having considered the importance of the matters upon which the parties have been successful or unsuccessful, the time occupied and the ambit of the submissions made, as well as any other relevant matter.
[2][2009] VSCA 233, [10] (citations omitted).
In defamation proceedings, s 40 of the Defamation Act 2005 (Vic) displaces the usual rule that costs are to be awarded on a standard basis unless there are special or unusual circumstances that justify awarding costs on an indemnity basis. Section 40 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.
Google also pointed out that r 63.24(2) of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) applies where a plaintiff in a proceeding for libel or slander recovers not more than $50,000. In that event, unless the Court otherwise orders, the plaintiff is entitled to costs on the County Court scale, less the additional costs incurred by the defendant due to the proceeding being brought in the Supreme Court rather than the County Court. Although this rule applies in the 2016 proceeding, Google did not rely on it because its application would make the costs orders and any taxation of costs unduly complex.
Apportionment of costs to achieve substantial justice
Mr Defteros submitted that there was no reason why the general rule that costs follow the event should not be applied in relation to the 2016 proceeding, in which he was awarded damages. He also acknowledged that a costs order should be made against him in the 2017 proceeding. He further submitted that the costs orders made in each proceeding should reflect that the proceedings were managed together from 13 July 2018, were heard together, and that he had succeeded on the substantive issues of publication and qualified privilege in both proceedings. He argued that much of the evidence at the trial had to be given for the 2016 proceeding, irrespective of the 2017 proceeding, including the evidence of Google’s witnesses Dr Raghava Kondepudy, Ms Catherine Edwards, and Ms Rachel Ahn. On that basis, he submitted that Google should have its costs of the 2017 proceeding only up to 13 July 2018, and that he should have 80% of his costs of the 2016 proceeding after that date.
Google urged me to take an issues-based approach to determining success in the proceedings. It argued that Mr Defteros had sued on five matters — one in the 2016 proceeding, and four in the 2017 proceeding — but had succeeded on only one matter.[3] On that basis, it submitted that costs should be allowed to Mr Defteros on the single cause of action in which he succeeded, and to Google on the four causes of action that it successfully defended.
[3]Relying on s 8 of the Defamation Act 2005 (Vic), which provides that ‘a person has a single cause of action for defamation in relation to the publication of a defamatory matter about a person, even if more than one defamatory imputation about the person is carried by the matter’.
In response to Mr Defteros’ submission that the two proceedings were essentially combined after 13 July 2018, Google submitted that most, if not all, of the procedural steps incurred from that time onwards were incurred in the 2017 proceeding. The 2016 proceeding was ready for trial by mid-2018, and the trial date of 13 August 2018 was vacated on the application of Mr Defteros.
It also pointed out that the evidence of Dr Kondepudy was, for the most part, only necessary because of Mr Defteros’ response to its notice to admit dated 19 June 2018. Dr Kondepudy’s evidence about the operation of the Google search engine was ultimately not contentious and was accepted by the Court. Some costs in relation to his evidence could have been avoided if Mr Defteros had provided a more timely response to Google’s notice to admit.
I consider it appropriate to order Google to pay Mr Defteros’ costs of the 2016 proceeding, and to order Mr Defteros to pay Google’s costs of the 2017 proceeding, up to the point where the two proceedings effectively combined. Having reviewed the interlocutory history of both proceedings, it is apparent that they did not merge when it was ordered on 13 July 2018 that they be managed together. After that date, there were a number of steps taken in the 2017 proceeding referable only to that proceeding. These included discovery, interrogatories, answers to interrogatories, and outlines of evidence.
It was not until a directions hearing on 16 August 2019 that the two proceedings effectively combined. At that hearing, John Dixon J ordered that liability evidence, expert evidence, and evidence on quantum in each proceeding would be evidence in the other. A number of other pre-trial directions were also made in common to both proceedings.
As to the apportionment of costs from 16 August 2019, I do not accept Google’s submission that I should do that on a ‘cause of action’ basis. The net effect of the orders sought by Google would be that Mr Defteros would pay more than half of Google’s costs of the trial and preparation for the trial. That would not reflect the success that Mr Defteros achieved in the 2016 proceeding, or his success on the substantial issues of publication and qualified privilege in the 2017 proceeding. That costs outcome might have been appropriate if Google had made some settlement offer in respect of the 2016 proceeding but, as I discuss below, it did not.
A better approach is that proposed by Mr Defteros, which is to order Google to pay a proportion of Mr Defteros’ costs of both proceedings from 16 August 2019. I do not, however, accept that the proportion should be 80%, as was sought by Mr Defteros.
As ‘a matter of impression and evaluation’ I consider that substantial justice between the parties would be achieved by ordering Google to pay one third of Mr Defteros’ costs of both proceedings from 16 August 2019. I have arrived at that proportion having regard to the following:
(a) While Mr Defteros succeeded in the 2016 proceeding, Google was entirely successful in defending the 2017 proceeding.
(b) The 2016 proceeding concerned a single publication, while the 2017 publication concerned four separate publications.
(c) Mr Defteros had succeeded on the questions of publication and common law qualified privilege, issues common to both proceedings. He had mixed success on the issue of statutory qualified privilege, with Google making out that defence in the 2016 proceeding in relation to most but not all of the persons to whom it published the Underworld article.
(d) Nearly an entire day of the trial was spent on the evidence of Dr Kondepudy, which formed the basis for my findings about the internet and the operation of the Google search engine,[4] and was relevant to the issue of publication. Most of this time was taken up by a mystifying cross-examination that bore little relationship to Mr Defteros’ pleaded case, or to his opening or closing submissions. Dr Kondepudy’s evidence was consistent with findings of fact made in earlier defamation proceedings against Google.[5] The matters covered by him were the subject of a detailed notice to admit served by Google in June 2018, much of which was not admitted by Mr Defteros,[6] but which was not contested by him at trial. This meant that Google was put to proof of matters that were, in the end, not contentious. Rather than attempting to strictly apply rr 35.06 and 63.18 of the Rules,[7] I have taken the pragmatic approach of reducing the proportion of Mr Defteros’ costs that is to be paid by Google.
[4]Reasons, [20]–[34].
[5]See, e.g., Duffy v Google Inc (2015) 125 SASR 437, [23]–[42], where Blue J set out findings of fact about the World Wide Web and Google, with the comment that much of the evidence on which the findings were based was ‘common knowledge’.
[6]In a Further Notice of Dispute dated 29 November 2018, Mr Defteros admitted only paragraphs 1 to 7 of the Notice to Admit. By an Amended Further Notice of Dispute dated 10 September 2019, Mr Defteros also admitted paragraphs 8, 19–21, 23–28, 30–31, 35–40, 49 and 66, and disputed the remainder — i.e. paragraphs 9–18, 22, 29, 32–34, 41–48, 50–65, and 67–80.
[7]Together, those rules provide that, where a party serves a notice under r 35.03(2) disputing a fact, and afterwards that fact is proved in the proceeding, that party shall pay the costs of proof, unless the Court otherwise orders.
I will exclude from the costs orders any costs incurred in relation to Mr Defteros’ claim for Andrews damages. This claim was abandoned half way through the trial. Mr Defteros’ submissions on costs informed me that this claim was resolved on the basis that, upon Mr Defteros abandoning the claim, each party would bear its own costs of and incidental to the claim. Google did not dispute this in its reply submissions.
Costs on an indemnity or a standard basis?
Relying on s 40(2)(a) of the Defamation Act, Mr Defteros submitted that Google should be ordered to pay his costs of the 2016 proceeding on an indemnity basis, because it made no settlement offer, and its failure to do so was unreasonable. He argued that it was unreasonable for Google not to make an offer in the circumstances of this case, because the issues of publication and qualified privilege had been authoritatively determined against it by the Full Court of the Supreme Court of South Australia in Google Inc v Duffy.[8] Rather than making some offer, he submitted, Google took all possible points it could in disputing his claim.
[8](2017) 129 SASR 304 (Duffy).
Google’s position was that s 40(2)(a) of the Defamation Act has no application in this case, because it did not unreasonably fail to make a settlement offer. It submitted that the ultimate outcome was not obvious, and its defences and arguments on the question of publication were reasonably open and reasonably made. It further argued that, in circumstances where Mr Defteros’ concerns notices sought damages totalling $700,000, it was reasonable for Google to conclude that Mr Defteros was intent on a trial in any event.
Having regard to the circumstances identified as relevant in Hockey v Fairfax Media Publications Pty Ltd (No 2),[9] I consider that it was reasonable for Google not to make a settlement offer in the 2016 proceeding. The outcome of the proceeding was not obvious, and it cannot be said that Google should have known its defence would necessarily fail. In particular:
[9](2015) 237 FCR 127, [69].
(a) My finding that Google published the Underworld article — a third-party webpage reached by clicking on a hyperlink within a Google search result — was not a foregone conclusion. Contrary to the submission of Mr Defteros, the question of publication was not determined by the reasoning of the Full Court in Duffy.[10] It was always going to depend on the evidence to be led at trial.[11]
(b) Publication of the article was significantly more limited than was contended by Mr Defteros. The evidence did not support a finding of substantial publication to unknown recipients.
(c) Google had partial success in relation to its defence of statutory qualified privilege. The rejection of that defence in Duffy did not dictate its rejection on the evidence in this case.[12] To the extent that the defence applied, Google established that it had acted reasonably in publishing the Underworld article.[13]
[10]Reasons, [44]–[55].
[11]In 2018 Mr Defteros applied to strike out or summarily dismiss Google’s denial of publication. The application was dismissed: see Defteros v Google Inc (No 3) [2018] VSC 375, [14]–[20]; Defteros v Google Inc LLC [2018] VSCA 176, [8]–[10]; Defteros v Google LLC [2018] HCASL 381.
[12]Reasons, [191]–[203].
[13]Reasons, [208]–[220].
I do not accept Google’s submission that I should conclude that Mr Defteros was intent on a trial in any event. There is no direct evidence on which I could make such a finding. I am not prepared to draw that inference only from the amounts claimed by Mr Defteros and the fact that both proceedings were hard fought.
Even if I had been satisfied that Google had unreasonably failed to make a settlement offer, I would have ordered that it pay Mr Defteros’ costs on a standard basis. I would have done so primarily because of the modest damages recovered by Mr Defteros in the 2016 proceeding, which put the proceeding within the County Court’s jurisdiction. The purpose of r 63.24 of the Rules is to ‘deflect smaller cases, demonstrated as such by the judgment returned, to a lower court’, by directing attention to and influencing an appropriate choice of court.[14] Although Google does not seek to enforce the costs penalty contemplated by the rule, its underlying policy provides guidance in judging where the interests of justice lie in this case. In my view, the outcome of the 2016 proceeding does not warrant an indemnity costs order for a Supreme Court proceeding, in which Mr Defteros was represented during the trial by three counsel.
[14]John Fairfax & Sons Ltd v Palmer (1987) 8 NSWLR 297, 305 (Kirby P) concerning Pt 52 r 24 Supreme Court Rules1970 (NSW); see also Glare v John Fairfax Publications Pty Ltd [2000] VSC 493.
Further, as discussed above, I have awarded Mr Defteros one third of his costs of both proceedings from 16 August 2019, in view of the mixed outcome of the trial, including that he was wholly unsuccessful in the 2017 proceeding. In view of that apportionment, and the considerations set out at [27] above, I do not think it would be in the interests of justice to order Google to pay that proportion of Mr Defteros’ costs on an indemnity basis.
Can Mr Defteros recover professional costs of Defteros Lawyers?
Mr Defteros’ submissions on costs addressed the circumstance that his firm, Defteros Lawyers, acted on his behalf in both proceedings. Defteros Lawyers is an incorporated legal practice, of which Mr Defteros is a director and the principal. He submitted that this did not disentitle him to costs on the basis of the High Court’s decision Bell Lawyers Pty Ltd v Pentelow,[15] which precludes a solicitor from recovering professional costs for work done in a proceeding in which the lawyer was self-represented.
[15](2019) 93 ALJR 1007. See also United Petroleum Australia Pty Ltd v Herbert Smith Freehills [2020] VSCA 15.
Mr Defteros filed an affidavit, in which he deposed to the effect that he did not perform professional work in relation to either proceeding; rather, the work was undertaken by staff employed by Defteros Lawyers. Mr Defteros’ affidavit did not exhibit any invoices to him from Defteros Lawyers, or provide any detail about the basis on which his firm acted on his behalf in the litigation.
Google reserved its position on this question, submitting that this issue was a matter for taxation.
I accept Google’s submission that the issue need not be decided now, without any information about the costs actually incurred by Mr Defteros. The costs to be paid by Google will be taxed on the standard basis — that is, ‘all costs reasonably incurred and of a reasonable amount’[16] — if the parties are unable to agree on the amount to be paid. As Google submitted, the form of the costs order to be made is not affected by this issue.
[16]Supreme Court (General Civil Procedure) Rules 2015 (Vic), r 63.30.
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