Demetrios Vakras v Robert Cripps
[2015] VSCA 234
•4 September 2015
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2014 0098
S APCI 2014 0099
| DEMETRIOS VAKRAS & ANOR | Appellants |
| v | |
| ROBERT CRIPPS & ANOR | Respondents |
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| JUDGES: | WARREN CJ, ASHLEY JA and DIGBY AJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | On the papers |
| DATE OF JUDGMENT: | 4 September 2015 |
| MEDIUM NEUTRAL CITATION: | [2015] VSCA 234 |
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COSTS — Two proceedings — Five causes of action in defamation proceeding — Advancement of funds in part satisfaction of trial judgment — Appeals successful in respect of three causes of action in defamation proceeding, resulting in remittal of two causes of action for re-trial — Partial repayment of advanced funds appropriate — Stay of re-trial granted pending repayment — Portion of trial costs to abide outcome of re-trial.
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| APPEARANCES: | Counsel | Solicitors |
| For the Appellants | Mr D P Gilbertson QC with Ms S J Varney | HWL Ebsworth Lawyers |
| For the Respondents | Mr C J Dibb | Efron & Associates |
WARREN CJ
ASHLEY JA
DIGBY AJA:
When it made orders on 24 July 2015, the Court reserved the questions as to what orders for costs should be made in respect of the appeal and the first trial, and what order should be made in respect of moneys paid by the appellants in part satisfaction of the judgment below.
The parties have made written submissions. They differ in the proposed outcomes. We will deal seriatim with the issues agitated.
The application for repayment of moneys
In consequence of various steps taken by the parties subsequent to delivery of the judgment at first instance, the appellants paid the respondents $380,900 in part satisfaction of judgment.
The appellants submit that they should now be repaid $284,869, plus simple interest at 5% from the dates respectively on which the payments were made totalling $380,900. $284,869 is the net amount remaining after deducting from $380,900 the amount awarded in favour of Cripps against Ms Raymond and the amount awarded in favour of Redleg against Vakras, and the interest entitlement in respect of both amounts.
It is submitted for the respondents that, although the disposition of moneys paid over was reserved by the Court, no leave was given or order made for submissions on the issue of repayment of such moneys. Presumably for that reason, nothing substantive is submitted by the respondents in opposition to the argument advanced by the appellants as to why the respondents should now repay the sum of $284,869, plus interest and the retrial which has been ordered should be stayed until those sums are repaid to the respondents.
We observe however that the Orders 8 and 9 of 27 July 2015 provide for sequenced written submissions from the parties in relation to questions as to the costs of the appeal and the trial. Order 7 reserves the question of the disposition of moneys paid by the appellants to the respondents pursuant to the trial judgment. In accord with the orders of 27 July 2015 the appellants filed and served written submissions, which by paragraphs 1–8 made a number of submissions as to the orders which should be made in respect of the payments made by the appellants in relation to the Trial Judge’s orders. The respondents have, as noted, not addressed this issue in their written submissions, however at the time judgment in these appeals was handed down on 24 July 2015, we raised with the parties the need to provide the court with any materials in support of applications for costs and also with proposed minutes to deal with any other orders necessary to dispose of the matter.
In the circumstances we consider that the parties have had ample opportunity to make submissions and proffer proposed orders in relation to all extant issues, including the costs of the trials and the appeals, the disposition of the moneys paid by the appellants to the respondents and whether the retrial should be stayed pending such payment.
In our opinion, an order for repayment should be made, together with an order for interest as sought by the appellants. That is distinct from Cripps’ and Redleg’s entitlement to interest on the amounts due to them from Ms Raymond and Vakras respectively until 9 September 2014, on which date a sufficient amount to satisfy those judgments was paid by the appellants to the respondent.
It may be, as the respondents submit in another connection, that Cripps will, in time, recover damages against Vakras for defamatory imputations contained in the first and/or second Vakras articles. However, it is not possible for this Court to evaluate the outcome of the retrial with sufficient certainty. In this regard we note that there is a real possibility that the plaintiff will in due course apply to replead a number of imputations prior to retrial; accordingly the pleaded case at retrial may be materially different to the case currently articulated. Furthermore, to so postulate does not, in any event in our view, justify the retention by the respondents of a large sum of money in the interim. The successful plaintiffs below extracted their judgment in the usual way and the successful appellants are now in the usual way entitled to recover the sums which on appeal have been held to be unjustifiably extracted. Moreover, the sum was paid over by the appellants, not simply Vakras.
Nor is retention justified as against the prospect that such costs orders as the Court will make in respect of the appeal and the first trial might yield a net amount payable by the appellants. Whether that will be so is speculative, and in any event lies in the indefinite future.
We also consider that it is just and appropriate to stay the retrial pending repayment of the sum of $284,869 plus interest to the date of repayment. This is a just and fair concomitancy to the enforcement of the judgment sum below against the appellants and will help ensure satisfaction of the Court’s most recent orders.
Costs of the appeal
The appellants submit that Cripps and Redleg should pay 85% of their costs of the appeals on the standard basis. They submit that the primary focus of the appeals was upon the credit findings made by the judge and upon the imputations which his Honour found in the defamation proceeding. They argue that their appeal in that proceeding was partially successful.
The respondents contend, with respect to the costs of the appeal, that on balance it was they who were the successful parties. The respondents submit that such success as the appellants enjoyed was a little less than the success enjoyed by the respondents. Overall, the costs order should reflect that outcome. In the event, the respondents submit that, as a matter of impression and evaluation, the appropriate order would be that the appellants pay 20% of the respondents’ costs of the appeals on the ordinary basis.
In submitting that the respondents were, on balance, the successful parties on the appeal, the respondents draw attention to the fact that Cripps’ causes of action in defamation against Vakras are remitted for rehearing (it is submitted that Cripps is highly likely to be vindicated and to receive an award of damages) and that much of the Court’s time on the appeal was devoted to issues of factual and credit findings below which the Court had not found it necessary to decide. So, it is argued, it could not be said that either side was successful in relation to those issues.
Both parties submit, in substance, that the Court should determine the costs of the appeal as a matter of impression and evaluation, without becoming enmeshed in minutiae. We agree that this is the proper approach where there was such a mixed result.[1]
[1]Chen & Ors v Chan & Ors [2009] VSCA 233, [10].
In our opinion, the appellants’ position more closely reflects the appropriate costs outcome than does the position adopted by the respondents.
It is certainly the case that argument on the appeals concentrated on the defamation proceeding, and particularly the issues identified by the appellants, as noted at [12] above. The appeal in the contract proceeding occupied almost none of the hearing. It was the subject of quite confined written argument.
It is also the case that the appeal in the defamation proceeding partially succeeded. Five causes of action were pleaded. At trial, the judge found that all of them were established. In this Court, judgment for a particular plaintiff was upheld in two instances. In three instances, the appeal was allowed. In two of those three instances, the cause of action was remitted for retrial. In the third instance, the Court entered judgment for the particular appellant. The instances in which the appeal was allowed and the matter was remitted for retrial included, importantly, the two causes of action pleaded by Cripps against Vakras. It was those causes of action which resulted in the large amount of damages awarded in favour of Cripps against Vakras.
A good part of the written submissions in the defamation appeal did focus upon credit findings made by the judge, and a good deal of the oral argument in respect of the defamation causes of action did focus upon those findings. It is also the case that the Court resolved the appeal in respect of those causes of action by focusing upon textual issues, rather than credit-based findings. But both in written and oral argument there was considerable textual analysis, and that analysis also prevailed, at least to a significant extent in respect of Cripps’ causes of action against Vakras.
In our opinion, viewing the matter globally, the appellants enjoyed the balance of success. That is so although the appeal in the contract matter, which occupied almost none of the Court’s time, failed, and although judgment in favour of Cripps against Ms Raymond and in favour of Redleg against Vakras was upheld. A great deal of the argument, understandably given the magnitude of the judgment, focused on Cripps’ causes of action against Vakras. The Court allowed the appeal against judgment entered below in respect of those causes of action. As we have earlier alluded to, it is not to the point that Cripps may succeed on one or both of those causes of action on a retrial. Were it otherwise, then, depending upon this Court’s assessment of the likely outcome of a retrial, there would be orders for costs on a successful appeal which varied greatly from one case to the other and which were informed by a secondary assessment of the prospective retrial. That is simply not the basis upon which costs orders are ordinarily made.
Having regard to all the circumstances, we consider that the respondents should pay 65% of the appellants’ costs in the defamation appeal on the ordinary basis, and that there should be no order for costs in respect of the contract appeal which assumed a very minor part in the appeal and which should for that reason be dealt with holistically and as part of the costs event determined by the substantive outcome of the defamation appeals.
Costs of the trial
The effect of this Court’s decision is that three causes of action in the defamation proceeding have been brought to a conclusion — in two instances by upholding the judge’s decision, and in one instance by reversing that decision; and that the contract proceeding has been brought to a conclusion. Only part of the defamation proceeding is to be remitted for retrial. In our view it would be unfair, in those circumstances, to order simply that the costs of the first trial in the defamation proceeding abide the result of the second trial. Indeed, neither side so contends.
It is submitted for the appellants that Cripps and Redleg should be awarded 15% of the costs of the first trial — that is, in respect of both proceedings below — on the standard basis. They argue that much of the evidence given at the trial focused upon issues which this Court did not need to decide. Implicit but unstated, is the proposition that those issues which will be agitated again in the new trial, and thus will be dealt with by the costs order then made, that is both in relation to the outcome of those issues on retrial and consistently with that outcome, in respect of the same issues in the initial trial.
The appellants submit also that there was an overlap between the evidence relied upon in the two proceedings. That appears to be the basis for their argument that a 15% costs order should be made in respect of both proceedings.
The respondents submit that —
14.In principle, the Second Appellant is entitled to an order reflecting her success in the defamation claim brought by Redleg (that is to say that her success would justify a reduction in the proportion of the costs of the trial awarded to the respondents). Likewise, the respondents are entitled, in principle and whatever the outcome of the retrial, to an order reflecting their successes, being the defamation claim of Redleg against Mr Vakras and the defamation claim of Mr Cripps against Ms Raymond.
15.But the majority of the time and evidence in the first trial was devoted to evidence that was principally relevant to the defamation claims against Mr Vakras and the bulk of the costs of the trials below, therefore, would appropriately await the outcome of the retrial.
16.It is submitted that nothing would lead the court to interfere with his Honour’s evaluation of the basis of costs. His Honour held that he should make the costs order on the indemnity basis because the defendants below had unreasonably failed to make a settlement offer, bringing into play the operation of s 40 Defamation Act2005: Cripps v Vakras (No 2) [2014] VSC 352 (28 July 2014). In so far as the appeals are dismissed, that position is not changed.
17.Accordingly, it is submitted that the court should order that the defendants pay 20 per cent of the costs of the trial below on the indemnity basis and that 60 per cent of those costs be reserved to abide the outcome of the retrial.
In our opinion, the respondents’ submissions, with one exception, should in the main be accepted. Three of the five causes of action in the defamation proceeding have now been brought to an end; so also the contract proceeding. In our view, that circumstance should be reflected in the costs order with respect to the first trial. The relative success of the parties with respect to those causes of action should also be reflected in any order made. Accepting that the Court’s determination as to the apportionment of costs, where appropriate, is a matter of impression and evaluation, and acknowledging the impossibility of arithmetical precision, the respondents should recover 25% of their costs of the first trial, particularly taking into account that the respondents were substantially successful at trial, and on appeal, in respect of the contract claim.
We further consider that 50% of the costs of the first trial referable to the defamation proceeding should abide the result of the retrial. As we have already said, Cripps’ claims against Vakras loomed large at trial.
Save as to the above percentage of costs which we consider the appellants should pay to the respondents in relation to the costs incurred by the respondents at trial, and the above percentage of costs to be set aside to abide the retrial, we shall make no order in relation to the allocation of the remainder of the costs incurred by the parties at trial.
There remains the question whether the Court should order that the 25% of the costs of the first trial be paid on an indemnity basis. The judge below concluded that the appellants had ‘unreasonably refused to make a settlement offer’; see Defamation Act 2005, s 40(2)(a). His Honour’s reasons for so concluding were as follows:
11.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.
12.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.
13.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.
Even so, his Honour did not order that the appellants pay the entirety of the appellants’ costs on an indemnity basis, but only 80%. This was to reflect the fact that the appellants had succeeded in their contract claim — though for a few dollars only — and that not all the imputations upon which the respondents had succeeded were connected with what his Honour identified as the key evidentiary issues.
The respondents’ submission does not advance any reason other than that given by the judge why they should have (partial) costs of the trial on an indemnity basis. His Honour’s reason involved factual findings about matters which will, no doubt, be agitated afresh on the new trial. But even if we were to treat those findings at face value, we would not make an order for indemnity costs. Rather, for the reasons which follow, the respondents should have their costs as to 25% of the first trial in both proceedings on the standard basis.
We are essentially concerned with costs referable to the Ms Raymond article, the first Vakras article only so far as it related to the Redleg ‘trust’ imputation, and the contract proceeding. The Ms Raymond article contained imputations the factual basis of which was distinct from the key evidentiary issues identified by his Honour.[2] Moreover, two of the imputations were found to be justified at trial, and there were elements of truth in others of them.[3] The contract claim was distinct. Only the Redleg ‘trust’ imputation picked up the evidentiary issues which were critical to his Honour’s conclusion that indemnity costs should be ordered.
[2]See our reasons in the principal judgment: Vakras v Cripps [2015] VSCA 193, [355], excerpting the judge’s reasons at [748].
[3]See the judge’s reasons at [756](a), (b) and (c), excerpted in our principal judgment at [355]; and [368] in our judgment.
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