Ghougassian v Fairfax Community Newspapers Pty Ltd

[2015] NSWCA 307

Court of Appeal

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Ghougassian v Fairfax Community Newspapers Pty Ltd [2015] NSWCA 307

Hearing dates:

On the papers

Date of orders:

30 September 2015

Decision date:

30 September 2015

Before:

Emmett JA

Decision:

1   Order the applicant in proceedings 2014/175465 to pay the costs of the respondents in those proceedings in a gross sum of $31,000.

 

2   Order that the costs ordered by Basten JA on 16 February 2015 be paid as a gross sum of $10,000.

 3   Order the respondent to the notice of motion filed on 9 June 2015 to pay the costs of the applicants on that motion in a gross sum of $2,500.

Catchwords:

COSTS – application for indemnity costs – appeal abandoned the afternoon before the day fixed for hearing – whether the appeal had any prospects of success – conduct of applicant in the appeal in not complying with the Uniform Civil Procedure Rules 2005 (NSW) and court directions

  COSTS – application for order of specified gross sum of costs – whether the conduct of the applicant in the appeal contributed unnecessarily to the incurring of costs

Legislation Cited:

Civil Procedure Act 2005 (NSW), ss 98(1)(c), 98(4)(c)
District Court Act 1973 (NSW), s 127
Legal Profession Act 2004 (NSW), s 377
Limitation Act 1969 (NSW), s 14B
Uniform Civil Procedure Rules 2005 (NSW), rr 28.2, 28.3, 28.4, 42.19, 42.26, 51.22, 51.32, 51.37, 51.56

Cases Cited:

Cultus Petroleum v OMV Australia [1999] NSWSC 435
Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397
Ghougassian v Fairfax Community Newspapers Pty Ltd [2015] NSWCA 21
Griffith v John Fairfax Publications Pty Ltd [2004] NSWCA 300
Hamoud v State of New South Wales [2011] NSWCA 375
Harrison v Schipp [2002] NSWCA 213; 54 NSWLR 738
Huntsman Chemical Company Australia Ltd v International Pools Australia Ltd (1995) 36 NSWLR 242
International Produce Merchants Pty Ltd (1988) 81 ALR 397
Lahoud v Lahoud [2006] NSWSC 126
Nationwide News Pty Ltd v Hibbert [2015] NSWCA 13
Younan v Nationwide News Pty Ltd [2013] NSWCA 335

Category:

Costs

Parties:

Michael Ghougassian (Applicant)
Fairfax Community Newspapers Pty Ltd (First Respondent)
Fairfax Digital Australia & New Zealand Pty Ltd (Second Respondent)
Jade Wittmann (Third Respondent)

Representation:

Counsel:
Mr R Rasmussen (Applicant)
Mr A Dawson (Respondents)

  Solicitors:
Robert Balzola & Associates (Applicant)
Banki Haddock Fiora (Respondents)

File Number(s):

2014/175465

Publication restriction:

Nil

 Decision under appeal 

Court or tribunal:

District Court of New South Wales

Jurisdiction:

Civil

Date of Decision:

22 May 2014

Before:

Bozic DCJ

File Number(s):

2014/60764

Judgment

1. EMMETT JA: The question raised in these proceedings was whether Fairfax Community Newspapers Pty Ltd (Fairfax Newspapers), Fairfax Digital Australia & New Zealand Pty Ltd (Fairfax Digital) and Ms Jade Wittmann (Ms Wittmann) published material of and concerning Mr Michael Ghougassian that, with the aid of certain extrinsic facts, conveyed defamatory imputations about Mr Ghougassian. On 22 May 2014, a judge of the District Court of New South Wales (the primary judge) dismissed, with costs, defamation proceedings commenced by Mr Ghougassian against Fairfax Newspapers, Fairfax Digital and Ms Wittmann (together, the respondents) on the basis that the material in question was not capable of conveying the alleged imputations. [1]

   1.    Michael Ghougassian v Fairfax Community Newspapers Pty Ltd trading as Blacktown Sun (District Court (NSW), Bozic DCJ, 22 May 2014, unrep).

2. Mr Ghougassian sought to appeal to this Court from that dismissal. The proceedings were fixed for hearing on 3 June 2015. However, on the afternoon of 2 June 2015, Mr Ghougassian’s solicitors informed the respondents’ solicitors and the Registrar of the Court that he proposed to discontinue the proceedings. Accordingly, the fixture for 3 June 2015 was vacated.

3. On 9 June 2015, the respondents filed a notice of motion seeking orders that:

• Mr Ghougassian pay their costs of the proceedings in this Court on an indemnity basis;

• Mr Ghougassian pay their costs, including the costs referable to a costs order made on 16 February 2015, as a specified gross sum instead of assessed costs.

4. On 5 February 2015, Mr Ghougassian had filed a notice of motion in this Court seeking a stay of the costs order made in the District Court. On 16 February 2015, Basten JA dismissed that motion and ordered Mr Ghougassian to pay the respondents’ costs of it.

5. The respondents seek the order for indemnity costs on the following bases:

1. Mr Ghougassian’s failure in the proceedings in this Court to comply with the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) and with directions of the Court;

2. Mr Ghougassian’s conduct in abandoning the proceedings in this Court on the afternoon prior to the day on which they were listed for hearing; and

3. the absence of any merit in Mr Ghougassian’s arguments in the proceedings in this Court.

There is some overlap in those bases. The second and third bases are interconnected and it will be convenient to deal with them together. The respondents seek the gross sum of costs on the basis of Mr Ghougassian’s conduct in relation to costs in the District Court.

6. A direction has been given that the respondents’ notice of motion of 9 June 2015 be dealt with on the papers by a single judge. The respondents filed submissions in support of the motion on 16 July 2015, Mr Ghougassian filed submissions in response on 3 August 2015 and the respondents filed submissions in reply on 7 August 2015. I have now fully considered those submissions. Before dealing with the submissions, it is convenient to say something about the substantive issues raised in the District Court and the matter of costs in the District Court.

The Issues in the District Court

7. In his statement of claim filed in the District Court on 26 February 2014, Mr Ghougassian made the following allegations:

• Fairfax Newspapers was at all material times the owner, proprietor and publisher of the Blacktown Sun;

• Fairfax Newspapers or Fairfax Digital, or Fairfax Newspapers and Fairfax Digital, was or were, at all material times, the owners, proprietors and operators of the website (the website);

• Ms Wittmann was, at all material times, a journalist employed or engaged by Fairfax Newspapers or Fairfax Digital or Fairfax Newspapers and Fairfax Digital, and was their servant or agent;

• In the Blacktown Sun of 19 February 2013, the respondents published of and concerning Mr Ghougassian certain material (the newspaper material);

• On or about 28 February 2013, the respondents published, on the website, certain material of and concerning Mr Ghougassian (the digital material);

• The newspaper material, and the digital material, with the aid of certain extrinsic facts, conveyed defamatory imputations of Mr Ghougassian;

• The extrinsic facts are that the newspaper material and the digital material were published to and read by persons who knew that Mr Ghougassian was the public officer and manager of the St Gregory’s Armenian School at Rouse Hill (the School), that the School had been the subject of liquidation proceedings and that a group of teachers from the School claimed that they had been retrenched during the closure of the School;

• By reason of the above, Mr Ghougassian has been greatly injured in his character, credit and in his personal, business and professional reputation.

8. Apart from a headline and details at the end of the article, the digital material and the newspaper material are identical. The headline of the digital material is “Armenian Language School Lives On”. The headline of the newspaper material is “School Keeps Language Alive”.

9. The identical material, with the addition of paragraph numbers, is as follows:

[…]

2.   A group of teachers retrenched during the closure of St Gregory’s Armenian School at Rouse Hill are keeping the Armenian language alive for a younger generation through a Saturday school in Sydney’s north-west.

3.   The school’s public officer and teacher, Irina Ghougassian, said about 40 children aged four to 16 attend classes at Terra Sancta College in Quakers Hill to learn Armenian language, grammar, history, culture and music.

4.   Volunteer teachers run the classes and children practice songs in a school choir in the last half hour of lessons.

5.   “We hold carols in December in English and Armenian,” Mrs Ghougassian said.

6.   “Language is the main thing but we always focus on values and principles. We don’t actively teach religion but what comes across is a sense of family, sanctity and unity that is very important.

7.   “The main reason to establish the school was for the students who are not attending an Armenian day school because geographically it is too far away for them,” she said.

8.   Mrs Ghougassian said it was difficult to gauge how many Armenian families there were in the local area, though some travelled on buses from Glenwood and Bonyrigg.

9.   Parent from the local Armenian community Raffi Melkonian registered the Saturday school with the Department of Education’s community languages program in 2010, after St Gregory’s was liquidated and sold due to a financial dispute between school owners and the Commonwealth Bank.

10.   The Kellyville resident’s two children travel an hour and 20 minutes one way to to [sic] get to the nearest Armenian day school in Terrey Hills each day.

11.   He said there were plans to turn the Saturday school into a full-time primary school in the future.

12.   “Awareness is first,” he said.

13.   “These teachers are really experienced – that’s why parents send their children from as far as Fairfield.”

14.   Classes are at Terra Sancta College, Eastern Road, Quakers Hill on Saturdays, 10am-2pm. […]

10. The imputations alleged by Mr Ghougassian are identical for the newspaper material and the digital material, save for the words shown in bold below, which are alleged in relation to the digital material, but not the newspaper material:

1. Whilst Mr Ghougassian managed the School, he was responsible for retrenching a group of teachers during the closure of the School;

2. Whilst Mr Ghougassian managed the School, he was negligently responsible for the liquidation and sale of the School;

3. Whilst Mr Ghougassian was the manager of the School, he so incompetently managed the School that it was liquidated and sold due to a financial dispute with the Commonwealth Bank;

4. Whilst Mr Ghougassian was the manager of the School, he so incompetently managed the School that he caused the owners of the School and the Commonwealth Bank to get into a financial dispute which resulted in the School being liquidated and sold;

5. Whilst Mr Ghougassian managed the School, he was responsible for it actively teaching religion at the expense of the Armenian language.

11. By notice of motion filed on 2 May 2014 (the May motion), the respondents sought, relevantly for present purposes, orders that the question of whether the newspaper material and the digital material were capable of conveying the imputations alleged be determined separately under r 28.4 of the UCPR and, if the question be answered in the negative, an order under r 28.4 that the proceedings be dismissed. The motion was heard by Bozic DCJ on 22 May 2014 when his Honour made orders, relevantly, as follows:

1. Pursuant to rule 28.2 UCPR I order that:

(i) the question of whether [the digital material and the newspaper material] were reasonably capable of identifying [Mr Ghougassian] be determined separately.

(ii) the question of whether [the newspaper material and the digital material] were capable of conveying the imputations alleged in the statement of claim be determined separately.

(iii) the question of whether [imputations (a) and (e)] are capable of being defamatory be determined separately.

2. Pursuant to rule 28.4, I dismiss the proceedings;

3. I order [Mr Ghougassian] to pay the costs of [the respondents].

12. The May motion raised four questions as follows:

1. whether the cause of action for defamation in respect of the newspaper material is not maintainable pursuant to s 14B of the Limitation Act 1969 (NSW);

2. whether the newspaper material and the digital material were capable of conveying the imputations alleged in the statement of claim;

3. whether imputations (a) and (e) are capable of being defamatory; and

4. whether the newspaper material and the digital material were reasonably capable of identifying Mr Ghougassian.

13. Division 2 of Pt 28 of UCPR deals with the separate decision of questions and consolidation. Rule 28.2 provides that a court may make orders for the decision of any question separately from any other question, whether before, at or after any trial or further trial in the proceedings. Under r 28.3, if any question is decided under Pt 28, the court must, subject to r 28.4, either cause the decision to be recorded or give or make such judgment or order as the nature of the case requires. Rule 28.4 applies if the decision of a question under Div 2 (which includes r 28.2) substantially disposes of the proceedings or renders unnecessary any trial in the proceedings. Under r 28.4(2), in those circumstances, the court may, as the nature of the case requires, dismiss the proceedings, give any judgment or make any other order. As the orders extracted above show, the primary judge determined that the second, third and fourth questions mentioned above should be determined separately.

14. The primary judge concluded that no ordinary reasonable reader would conclude on rational grounds that any of the relevant paragraphs in the newspaper material and the digital material referred to Mr Ghougassian. His Honour considered that any conclusion that Mr Ghougassian was referred to in the material or that the material was of and concerning him would not be based on what the reader’s understanding of what the material was saying, but on the reader’s own beliefs and prejudices.

15. The primary judge then considered, in the event that his Honour was wrong in relation to the issue of identification, whether or not the imputations alleged were reasonably capable of being conveyed. His Honour said that any strained or forced or utterly unreasonable interpretation should be rejected, but bore in mind that the ordinary reasonable reader would not read the material with a degree of analytical care and that such a reader would be prone to engage in a certain amount of loose thinking. His Honour concluded that imputations (b), (c) and (d) were not reasonably capable of arising. His Honour considered that there was nothing in the material that could convey notions of negligent responsibility for the liquidation of the School or incompetent management of the School causing either its liquidation or causing the owners of the school and the Commonwealth Bank to become involved in a financial dispute.

16. The primary judge concluded that imputation (e) was incapable of arising and that there was nothing that was capable of conveying an imputation that, while Mr Ghougassian managed the School, he was responsible for actively teaching religion at the expense of the Armenian language. His Honour considered that imputation (a) was “perhaps borderline”, because of the reference (in paragraph 2) to retrenchments. However, his Honour considered, even if the material was capable of conveying the statement that Mr Ghougassian was responsible for the retrenchments, that statement, in the context of the material, was incapable of being defamatory because it was simply a statement that a group of teachers had been retrenched. In the light of those conclusions, his Honour ordered that the proceedings be dismissed under r 28.4.

Costs in the District Court

17. Having ordered that the proceedings be dismissed, the primary judge ordered, on 22 May 2014, that Mr Ghougassian pay the respondents’ costs of the proceedings. On 15 July 2014, the respondents served on Mr Ghougassian’s solicitors an application for assessment of party-party costs and a bill of costs in respect of the proceedings in the District Court. The assessment was served under cover of a letter from the respondents’ solicitors saying that any objection to the assessment of party-party costs must be lodged within 21 days. By then, Mr Ghougassian had, on 12 June 2014, already filed notice of intention to appeal from the orders of the primary judge. On 18 September 2014, the respondents filed an application for assessment of party-party costs in the Supreme Court and that application was served on Mr Ghougassian’s solicitors on 19 September 2014.

18. On 16 October 2014, Mr Stephen Lancken, the costs assessor appointed by the Court, wrote to the solicitors for the parties attaching a notice requiring Mr Ghougassian to forward, within 21 days, any objections to the claimed costs, together with submissions in respect of the objections. Mr Ghougassian’s solicitor responded on 21 October 2014 saying that Mr Ghougassian had filed, on 22 August 2014, a notice of appeal from the orders of the District Court, that it had been served on the respondents, and that it was “poor form” for the respondents to press their claim for costs to be assessed in the knowledge that there was an appeal pending.

19. Later on 21 October 2014, Mr Ghougassian’s solicitors wrote to the respondents’ solicitors inviting the respondents to consent to a stay of the costs assessment until the conclusion of the appeal. The respondents’ solicitors responded that no notice of appeal said to have been filed had been served on them. Later that day, Mr Ghougassian’s solicitors acknowledged that they did not have any record of service of the notice of appeal on the respondents’ solicitors.

20. On 22 October 2014, at a directions hearing before the Registrar, counsel appearing for Mr Ghougassian acknowledged that, while the notice of appeal had been filed, it had not been served in accordance with the UCPR. The Registrar made directions, inter alia, that Mr Ghougassian file and serve a summons seeking leave to appeal by 19 November 2014, along with a white folder.

21. On 27 October 2014, Mr Lancken enquired whether the respondents consented to the costs assessment being stayed pending the outcome of the appeal. The respondents’ solicitor replied on 31 October 2014, saying that the respondents were not satisfied that Mr Ghougassian had identified any particular reason warranting a stay of the costs assessment and requesting that Mr Lancken proceed with the assessment.

22. On 19 November 2014, at a further directions hearing before the Registrar, Mr Ghougassian sought and obtained leave to file in Court a summons seeking leave to appeal, along with written submissions. However, the foreshadowed white folder had not been prepared. The Registrar made directions, inter alia, that Mr Ghougassian file and serve the white folder by 26 November 2014.

23. On 7 December 2014, Mr Lancken informed the parties that he had not received any objections or submissions on behalf of Mr Ghougassian in relation to the costs assessment. (The respondents had sent submissions and annexures in support of their application on 6 November 2014.) Mr Lancken said that he required Mr Ghougassian to make any objections and submissions no later than 19 December 2014, failing which he would assess the costs on the basis of the material before him at that time. On 22 December 2014, not having received any submissions or objections from Mr Ghougassian, Mr Lancken finalised the costs assessment by issuing a certificate of determination of costs, a certificate of determination of costs of the costs assessment, and reasons for his decision. Those documents were sent to the parties on 21 January 2015 after the respondents had paid Mr Lancken’s costs in respect of the assessment. The amount of costs allowed on the assessment was $39,028.70 and the amount of the costs of the assessment was $1,170.49.

17. As I have said, on 5 February 2015, Mr Ghougassian filed a notice of motion in this Court seeking a stay, until the determination of the appeal, of the costs order made by the primary judge on 22 May 2014. The basis on which the stay was sought was that, where a review of a costs assessment is sought, there is a lacuna between the date on which a costs assessor’s determination is made and the suspension of such a determination provided by s 377 of the Legal Profession Act 2004 (NSW). That section provided that, if the Manager, Costs Assessment refers a determination of a costs assessor to a panel for review, the operation of that determination was suspended. The lacuna was said to arise because the suspension operated only from the date when the Manager, Costs Assessment referred a determination to a panel for review, rather than when the review was sought. It was said that that delay could be for a significant period.

18. On 16 February 2015, Basten JA ordered that that notice of motion of 5 February 2015 be dismissed with costs. [2] Basten JA observed that, if the application for a stay had come on at any other point in the process, it was unlikely that an order would have been made. It was not suggested that, if the order was eventually enforced and the amount paid, the respondents would be unlikely or unable to repay the amount. Further, it was not submitted that Mr Ghougassian was impecunious to the extent that he would incur real prejudice in being required to pay the amount of the costs at that stage. Accordingly, his Honour would not have been minded to grant a stay in any event. [3] His Honour ordered that Mr Ghougassian pay the respondents’ costs of the motion, other than the costs of an affidavit of Mr Phillip Beattie sworn 16 February 2015, which did not advance the respondents’ case and which had only been made available to Mr Ghougassian on the day of the hearing.

    2. See Ghougassian v Fairfax Community Newspapers Pty Ltd [2015] NSWCA 21.

    3. [2015] NSWCA 21 at [3].

19. On or about 18 February 2015, Mr Ghougassian filed an application for review of Mr Lancken’s costs assessment determination. On 23 March 2015, the costs review panel (the Review Panel) wrote to the parties advising that it had completed its review and that the costs of the review amounted to $1,058.75, payable to the Supreme Court of New South Wales. Those costs were required to be paid in order for the Review Panel’s certificate of determination of costs, certificate of determination of costs assessment, and statement of reasons to be released to the parties. Neither Mr Ghougassian, nor the respondents, has paid those costs.

20. Accordingly, the Review Panel’s certificate of determination of costs, certificate of determination of costs assessment, and statement of reasons have not been made available to any of the parties. The respondents have taken the stance that the Review Panel’s costs are payable by Mr Ghougassian and that they should not be required to pay the costs. Nevertheless, they will not be able to take any steps to register the costs certificates or to enforce the order for costs until the costs certificates of the Review Panel are released to the parties.

The Conduct of the Proceedings in this Court

28. As outlined above, on 12 June 2014, Mr Ghougassian filed notice of intention to appeal from the orders of the primary judge of 22 May 2014 and, on 22 August 2014, he filed a notice of appeal. However, he failed to serve the notice of appeal as required by the UCPR. Mr Ghougassian served his notice of appeal on the respondents for the first time on 21 October 2014. Under r 51.22 of the UCPR, Mr Ghougassian was required to file an affidavit in support of his notice of appeal (since, in the absence of a summons seeking leave to appeal, it was necessary for Mr Ghougassian to establish that his appeal involved a matter at issue amounting to $100,000 or more[4] ) and, under r 51.37(1)(a), he was required to file and serve written submissions by 3 October 2014. He failed to comply with both of those requirements. He also failed to comply with r 51.32, in that he did not file a red appeal book by 3 October 2014.

    4. District Court Act 1973 (NSW), s 127(2)(c).

29. As I have said, a directions hearing in relation to the notice of appeal took place on 22 October 2014. At that hearing, counsel for Mr Ghougassian acknowledged that the notice of appeal had not been served in accordance with the UCPR and that he would need leave to appeal. Counsel foreshadowed that a summons seeking leave to appeal would be filed. Mr Ghougassian was directed to file, no later than 19 November 2014, any summons seeking leave to appeal, any affidavit under r 51.22 (if leave were not sought) and the required white folder in support of the application for leave to appeal.

30. A second directions hearing was fixed for 19 November 2014. On that day, as I have said, Mr Ghougassian filed a summons seeking leave to appeal and a summary of argument. He failed to file the required white folder and was directed to file and serve the white folder by 26 November 2014. The respondents were directed to file and serve their summary of argument by 22 January 2015. Mr Ghougassian failed to comply with the direction to file the white folder by 26 November 2014.

31. A third directions hearing was fixed for 9 February 2015. Mr Ghougassian filed the white folder on that day and the respondents were ordered to file and serve their response by 2 March 2015.

32. A fourth directions hearing was appointed for 9 March 2015. On that day, the application for leave to appeal, and any appeal if leave were to be granted, were fixed for a concurrent hearing on 3 June 2015. Directions were given for the filing and serving of updated submissions.

33. At 3.50 pm on 1 June 2015, the solicitor for Mr Ghougassian sent an email to the respondents’ solicitors containing an offer that was stated to be open until 12 noon on 2 June 2015. At 2.20 pm on 2 June 2015, the respondents’ solicitors informed Mr Ghougassian’s solicitor that the offer was not acceptable. Mr Ghougassian’s solicitor then informed the respondents’ solicitors that Mr Ghougassian would not be proceeding with argument in the proceedings, which had been fixed for hearing the following day. At 2.53 pm on 2 June 2015, Mr Ghougassian’s solicitor sent an email to the respondents’ solicitors attaching a draft notice of discontinuance under which Mr Ghougassian was to pay the respondents’ costs. The email referred to “our correspondence on 25 May 2015”. The solicitors for the respondents had not received any correspondence on that date. It may be that Mr Ghougassian’s solicitor intended to refer to his email of 1 June 2015.

34. At 3.05 pm on 2 June 2015, Mr Ghougassian’s solicitor sent an email to the Registrar of this Court, attaching a letter stating that he had been instructed by Mr Ghougassian to discontinue the proceedings in this Court. The letter said that a notice of discontinuance had been served seeking consent to discontinue and that, if consent should not be forthcoming, “we notify this Court that we shall be moving the attached Notice tomorrow at hearing”. It is not clear what the author had in mind by that statement.

35. At 4.33 pm on 2 June 2015, the Registrar of the Court sent a communication to the solicitors for both parties indicating that, in light of the advice from Mr Ghougassian’s solicitor, the Court did not propose to sit on 3 June 2015. The Registrar indicated that the hearing date would be vacated and drew attention to r 51.56 of the UCPR, which provides that the filing of a notice of discontinuance in appeal proceedings does not require the consent of a respondent. As the question of costs was still live, the Registrar drew the attention of the parties to r 42.19 and r 42.26 as to how the question of costs may be resolved. The Registrar pointed out that Mr Ghougassian’s liability for costs continued until a notice of discontinuance was filed. The Registrar’s letter notified the parties of the following orders:

1. Hearing date of 3 June 2015 is vacated;

2. Matter is listed for a directions hearing on Wednesday, 10 June 2015 at 9.30 am, which will be vacated if a notice of discontinuance is filed.

36. On 9 June 2015, the respondents filed the notice of motion to which I have already referred. On 22 June 2015, Mr Ghougassian filed a notice of discontinuance of the proceedings in this Court. The notice stated that “consent” to the proceedings being discontinued was given on terms that “plaintiff to pay the defendants’ costs”. It is unclear whether the “consent” intended was that of Mr Ghougassian or of the respondents.

Mr Ghougassian’s Arguments in the Appeal

37. Mr Ghougassian complained in his written submissions to this Court that it was inappropriate for an order to be made under r 28.2 for the separate determination of the questions stated above. He complained that the primary judge did not consider the appropriateness of such a procedure in circumstances where Mr Ghougassian relied upon extrinsic facts for identification and capacity of the material complained of to give rise to the pleaded imputations.

38. Mr Ghougassian said that his Honour should have found that readers with the particularised extrinsic facts in mind, who read and understood the newspaper material and the digital material, could reasonably have come to the conclusion that the material was of and concerning him. He asserted that it is not to the point that the material makes no reference to him if knowledge of the extrinsic facts could reasonably permit identification of him, as, he asserted, it would in the present case.

39. Mr Ghougassian contended that it was not necessary that the entire material had to be about him, in order to satisfy the element that the material was “of and concerning” him. He said that, read with knowledge of the particularised extrinsic facts, the material could have supported a reasonable identification of him. While the material is ostensibly about an Armenian language school, which arose from the ashes of a prior, named, school, the named school had been the subject of liquidation proceedings and the teachers at the new school claimed to have been retrenched from it. He said that, in circumstances where he was the public officer and manager of the named school, a conclusion that the material could reasonably have been of and concerning him was not the result of the reader’s own prejudices and beliefs (as concluded by the primary judge), but was based properly upon the particularised extrinsic facts.

40. Mr Ghougassian complained that, in dealing with the issue of the capacity of the newspaper material and the digital material to convey imputations (b), (c), (d) and (e), the primary judge failed to consider the effect of knowledge of the particularised extrinsic facts upon the ordinary reasonable reader. He asserted that his Honour approached the issue as if such extrinsic facts did not exist and asserted that, with knowledge of the extrinsic facts and the other qualities of the ordinary reasonable reader, such as a degree of loose thinking and a propensity to draw implications much more freely than lawyers, the imputations in question are capable of being conveyed. He said that the allegations of incompetent management of the school, leading to a financial dispute that resulted in liquidation, are the result of such implications.

41. Mr Ghougassian referred to the fact that the liquidation of the School and the financial dispute between the Commonwealth Bank and the owners of the School are referred to and asserted that the missing link was knowledge of the management of the School by Mr Ghougassian. He said that it is not unreasonable to assume that the financial dispute was the result of the management of the School, including its finances, and that the element of “negligence” or “incompetence” is likewise not an unreasonable implication to be drawn from the language used in the material, such as the phrase “financial dispute” and the identification of that financial dispute as being between the Commonwealth Bank and the School’s owners.

42. Mr Ghougassian complained that, while the primary judge appeared to have assumed that imputation (a) was capable of being conveyed, his Honour failed to consider the issue of the capacity of the imputation to defame. He asserted that his Honour ignored the defamatory content of the imputation. He claimed that the question of whether a statement that a person is responsible for the retrenchment of school teachers is likely to lead ordinary persons, with the knowledge of the extrinsic facts, to think less of Mr Ghougassian, is quintessentially “a jury question”. He said that a statement that a person is responsible for the retrenchment of school teachers is arguably defamatory, whether there is a legitimate explanation for the retrenchment or not. He asserted that the reasons for the retrenchment would appear from the material to be the financial dispute that led to the liquidation and sale of the School. He said that a person who is responsible for the retrenchment of school teachers “is unlikely to be given a medal by any ordinary member of society” and that the defamatory nature of the imputation “is at least on the cards” and should have been left to a jury.

43. In relation to the primary judge’s decision to order the separate determination of the questions stated above pursuant to r 28.2 of the UCPR, such a determination is not unusual where a defendant in defamation proceedings wishes to contend that the matter complained of is incapable of conveying the imputation conveyed by the plaintiff. [5] Particularly in circumstances where Mr Ghougassian does not suggest that the result on the issue of identification would have been different had the matter been left to trial, there was nothing inappropriate in the primary judge’s decision.

    5. See, eg, Nationwide News Pty Ltd v Hibbert [2015] NSWCA 13 at [20].

44. In relation to the issue of identification of Mr Ghougassian, it is an essential element of the tort of defamation that the relevant publication be of and concerning the plaintiff. That is to say, it must be about the plaintiff. In order for a plaintiff to establish that a publication identifies the plaintiff, it must be established, to an objective standard, that the reasonable reader, having knowledge of the relevant facts, would have understood the material complained of to be referring to the plaintiff. [6] The material complained of was not about Mr Ghougassian and there was nothing defamatory imputed about any person, whether named or otherwise. There was nothing to direct the attention of the reader to Mr Ghougassian.

    6. See, eg, Younan v Nationwide News Pty Ltd [2013] NSWCA 335.

45. The next issue raised was that of the capacity of the pleaded imputations to arise. In deciding whether any particular imputation is capable of being conveyed by material about which complaint is made, the question is whether it is reasonably so capable. Accordingly, any strained or forced or utterly unreasonable interpretation must be rejected. If reasonable persons may differ as to whether the matter complained of was capable of carrying the imputation pleaded, the issue must be left to the jury. Otherwise, it is a matter for the court. Further, there is a distinction between what the ordinary reasonable reader, drawing on his or her own knowledge and experience of human affairs, could understand from what has been said in the matter complained of, on the one hand, and the conclusion that the reader could reach by taking into account his or her own belief, which has been excited by what was said, on the other hand. It is the former approach, and not the latter, that must be adopted. [7]

    7. Griffith v John Fairfax Publications Pty Ltd [2004] NSWCA 300 at [19].

46. None of the extrinsic facts that Mr Ghougassian asserted adds anything to the meaning conveyed to readers with knowledge of such facts by the digital material or the newspaper material. The assertion “that the school had been the subject of liquidation proceedings” adds nothing to the information in paragraph 10. If anything, it confirms that it was action by the Commonwealth Bank that led to the School’s sale and closure. The words “that a group of teachers from [the School] claimed that they had been retrenched during the closure of that school” adds nothing to the information in paragraph 2. If anything, it reduces the retrenchment to something less certain.

47. The material simply did not convey a negative impression about anyone. Imputations (a) to (d) refer to the closure and financial demise of the School but do not do so in a way that is derogatory of Mr Ghougassian. While the material refers to a financial dispute between the School’s owners and the Commonwealth Bank, the material does not implicate Mr Ghougassian in any way. The material does not suggest that the financial dispute and the liquidation were caused by the negligence, incompetence or any wrongdoing by any particular person. Such a meaning would require a strained, forced or unreasonable interpretation, and the particulars of identification and its extrinsic facts do not take the matter any further.

48. Imputation (e) does no more than refer to the teaching of language. It relates to teaching at a different school and says nothing about Mr Ghougassian to anyone who identified him. There is no suggestion that the Armenian language was not kept alive at the School. The message of the article is that, notwithstanding the closure of the School, where it might be thought that the Armenian language was being kept alive, a group of teachers who used to work there had volunteered to keep the Armenian language alive by providing lessons that are so worthwhile that students travel significant distances to be there. The reference to “religion”, which relates to the classes at the new school, has nothing to do with religion being taught at the expense of the Armenian language. The teacher quoted, who is apparently not related to Mr Ghougassian, is clearly saying that the language classes are not about teaching religion through language, but are nonetheless focused on “values and principles”, “family, sanctity and unity”. That says nothing derogatory about anyone.

49. The final issue raised was that of the capacity of imputation (a) to be defamatory. Contrary to the submissions of Mr Ghougassian, there is nothing defamatory about imputation (a). Retrenching staff cannot, of itself, in the absence of some sort of misconduct or improper motive concerning the retrenchment, amount to an act that would lead the ordinary reasonable reader to think less of the person who has made or implemented the decision to retrench. To say of someone that he or she has retrenched staff cannot, of itself, defame that person.

50. Mr Ghougassian’s contentions had no substance. There was no error on the part of the primary judge. Neither the newspaper material, nor the digital material, was a publication of and concerning Mr Ghougassian. Further, none of the four imputations is capable of being conveyed by either the digital material or the newspaper material. His Honour made no error in ordering that the proceedings be dismissed. Mr Ghougassian’s arguments had no substance whatever and the appeal was doomed to failure.

Resolution of the Present Application

51. I shall deal separately with the question of indemnity costs and the question of a gross sum for costs.

Indemnity Costs

52. In essence, the respondents contend that there was never any prospect that an appeal from the orders of the primary judge would succeed and that the commencement of proceedings by way of appeal was no more than a means of putting off the evil day. They rely particularly on the fact that, without any explanation whatsoever, the proceedings were abandoned late on the day before the day fixed for their hearing. By that stage, all of the costs of the respondents in relation to the hearing on 3 June 2015 had been incurred. The fact of that abandonment at the last moment, without explanation, they say, gives rise to an inference that Mr Ghougassian never had an expectation that appeal proceedings had any prospect of success.

52. Mere abandonment of a claim may not, of itself, be sufficient to warrant an order for indemnity costs. [8] If, upon material reflection and consideration of the questions, an appellant resolves to abandon an appeal at a stage when the issues have been clarified, it does not necessarily follow that indemnity costs should be ordered. Parties should not be discouraged from the proper, albeit late, abandonment of unwinnable appeals or points. The reality is that close attention to an appeal is often not made until shortly before the hearing of the appeal. Parties should not be discouraged from abandoning bad arguments by reason of the possibility of an order for indemnity costs. [9]

    8. See Lahoud v Lahoud [2006] NSWSC 126 at [38].

    9. See Huntsman Chemical Company Australia Ltd v International Pools Australia Ltd (1995) 36 NSWLR 242 at 247-9.

53. However, the overall attitude of Mr Ghougassian to the conduct of the proceedings gives rise to an inference that they had no legitimate object. That inference is confirmed by the complete abandonment at the last moment without any explanation. There may be good reasons why parties would seek to withdraw an appeal at hearing, quite unconnected with the acceptance of the proposition that the appeal is hopeless. Mr Ghougassian has had ample opportunity to adduce evidence to explain why the proceedings were abandoned at the last moment, but has elected not to do so. On the other hand, Mr Ghougassian submits that the respondents did not warn him in advance that they considered the appeal to be hopeless and that they would seek an order for indemnity costs should the appeal proceed.

54. The respondents’ response to Mr Ghougassian’s summary of argument had been filed on 2 March 2015. It ought to have been apparent to those advising Mr Ghougassian that the respondents had a good answer to his appeal. Nevertheless, he waited three months before indicating that he no longer wished to prosecute an appeal. Had Mr Ghougassian abandoned his appeal within a reasonable time after considering the respondents’ response, considerable costs would have been avoided. Further, the discourtesy to the Court is apparent. The failure to notify the Court at an earlier time that the appeal would not proceed may well have deprived other litigants of the opportunity of an earlier hearing. That, of itself, is not decisive, but it is a material factor in considering whether the conduct of Mr Ghougassian should lead to a different order for costs. His conduct is deserving of considerable criticism, although that, of itself, is not a justification for ordering indemnity costs.

55. An unrebutted inference is available that Mr Ghougassian commenced the proceedings for the purpose of delaying the time by which the costs order at first instance might become enforceable. [10] That inference is available in circumstances where he sought to stay the order for costs, sought review of the initial costs assessment (in respect of which he had advanced no submissions or objections) but failed to pay the costs of the review assessment, and abandoned the appeal on the day before it was fixed for hearing.

    10. See similarly Cultus Petroleum v OMV Australia [1999] NSWSC 435.

56. While, as I have said, the abandonment of unwinnable appeals or points does not of itself justify an order for indemnity costs, the other factors present in this case justify such an order. Abandonment without explanation, in combination with other factors, may justify an order for indemnity costs. [11] For example, where an action is commenced or continued in circumstances where the moving party, properly advised, ought to have known that there were no prospects of success, indemnity costs may well be appropriate. [12] In the present circumstances, the abandonment of the proceedings at the last moment, without explanation, exacerbates the matter.

    11.    See, eg, Lahoud v Lahoud at [44]-[69].

    12. Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 at 400-401.

57. For the reasons I have outlined above, there was no merit in the arguments advanced on behalf of Mr Ghougassian in support of his proposed appeal. His summary of argument disclosed no legal error on the part of the primary judge, who correctly applied well-known and established principles concerning the element of identification in a cause of action for defamation and correctly applied well-known established and uncontroversial principles concerning the question of capacity of an imputation to arise from a publication and to be defamatory. Mr Ghougassian’s claim involved a publication that did not, on any view, expressly identify him.

58. Added to the absence of any merit in the grounds of appeal is the apparent disregard on Mr Ghougassian’s part for the UCPR and directions of the Court. Mr Ghougassian, or perhaps those advising him, appear to have little sense of the importance of such matters in the conduct of litigation. The sequence of events set out above clearly indicates an apparent disregard for such rules and directions. No explanation has at any time been proffered for Mr Ghougassian’s failure to comply with the UCPR or the directions of this Court. While the costs incurred as a result of an apparent contumelious failure to comply with rules and directions may appropriately be the subject of an order for indemnity costs, those facts alone do not justify an order for indemnity costs overall. However, when coupled with the absence of any merit in the appeal and the last-minute abandonment, without explanation, of the appeal, they may support an order for indemnity costs overall.

59. An additional factor in the present case is that Mr Ghougassian required the leave of this Court to bring an appeal. First, by reason of his failure to serve the notice of appeal within the timeframe specified in the UCPR, it was out of time. Further, there must be a real question as to whether or not any damages that could possibly have been awarded, had Mr Ghougassian been successful, would have exceeded the minimum to give rise to an appeal as of right. Mr Ghougassian has made no attempt to establish that there was any prospect of damages that would have given rise to an appeal as of right, if the matter had gone to trial and he had been successful. No explanation has been offered for the failure to serve the notice of appeal in accordance with the UCPR. No submission has been made as to why leave would have been granted even if the notice of appeal had been served in time, in circumstances where there was no evidence whatsoever as to the likely damages to which Mr Ghougassian may have been entitled had he been successful. In those circumstances, the material presently before the Court indicates that Mr Ghougassian had no prospects of obtaining leave. That ought to have been apparent from a very early time. Nevertheless, he continued to prosecute the proceedings until abandoning them, without explanation, at the very last moment.

60. In those circumstances, I consider that the respondents have established a basis upon which this Court should make an order under s 98(1)(c) of the Civil Procedure Act 2005 (NSW) (the Civil Procedure Act) that Mr Ghougassian pay the costs of the respondents on an indemnity basis. That leaves the further question of whether Mr Ghougassian should be ordered to pay the respondents’ costs as a specified gross sum.

Specified Gross Sum

62. Under s 98(4)(c) of the Civil Procedure Act, the Court may make a costs order as a specified gross sum, rather than assessed costs. The discretion conferred by that provision may be exercised where the assessment of costs may be protracted and expensive and if it appears that a party obliged to pay the costs may not be able to meet a liability to do so. [13] The power may also be exercised where a party’s conduct contributes unnecessarily to the incurring of costs. [14]

    13. Harrison v Schipp [2002] NSWCA 213; 54 NSWLR 738 at [21]-[22] (relating to the equivalent provision under previous legislation).

    14. See, eg, Hamoud v State of New South Wales [2011] NSWCA 375 at [818].

63. In the present case, Mr Ghougassian has undertaken several steps that have resulted in the delay and disruption of the process of assessing and enforcing the order for costs made by the primary judge. He adopted the stance that, simply because he had purportedly commenced proceedings by way of appeal, no step should have been taken by the respondents to quantify the order for costs made by the primary judge. To that end, he took the somewhat unusual step of seeking a stay of the order for costs, which was dismissed by Basten JA. He sought review of the assessment made at the behest of the respondents, but has taken no steps to finalise the determination of that review by paying the fees involved. By that means, he has effectively kept the respondents out of their costs of the proceedings in the District Court. An inference is capable of being drawn that, if an order were made by this Court for the assessment of the costs in this Court, similar steps may well be taken to seek review of any assessment.

64. It appears that a judgment has been obtained against Mr Ghougassian in other proceedings and that a bankruptcy notice was issued in respect of that judgment. Mr Ghougassian apparently applied to have the bankruptcy notice set aside. Though this matter was raised by the respondents, it was not replied to in Mr Ghougassian’s submissions. While there is no evidence of the outcome of those proceedings, those circumstances give rise to an inference that there may be a risk that Mr Ghougassian may not be in a position to meet any order for costs that may be made against him. That is a justification for avoiding the incurring of further costs in the assessment and possible review of an assessment in respect of costs ordered by this Court.

65. The respondents have adduced evidence as to the costs that have been incurred in the conduct of the proceedings in this Court. Significantly, Mr Ghougassian does not dispute the amounts claimed by the respondents for the purpose of a gross sum order. The respondents have adduced unchallenged evidence as follows:

1. The costs of the stay application refused by Basten JA amount to $10,000.

2. The costs of the application for leave to appeal and appeal proceedings generally, other than the stay application and costs incurred after 9 June 2015, on the indemnity basis, amount to $31,000.

3. Costs incurred after 9 June 2015 amount to $2,500.

66. In all of the circumstances, particularly where there is no challenge to the quantification, I consider that the appropriate course is to order the payment of gross sums for costs in the amounts just described. Nothing will be achieved by the assessment of costs other than possible delay and the incurring of further costs.

Conclusion

67. The respondents have made out the bases upon which they are entitled to orders for indemnity costs and for orders for the payment of those costs as gross sums. Orders should be made as follows:

1. Order the applicant in proceedings 2014/175465 to pay the costs of the respondents in those proceedings in a gross sum of $31,000.

2. Order that the costs ordered by Basten JA on 16 February 2015 be paid as a gross sum of $10,000.

3. Order the respondent to the notice of motion filed on 9 June 2015 to pay the costs of the applicants on that motion in a gross sum of $2,500.

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Endnotes

Amendments

30 September 2015 - Coversheet - hearing date replaced with "On the papers"

[37] - removal of superfluous "was"