Haddon v Forsyth (No 2)
[2011] NSWSC 693
•08 July 2011
Supreme Court
New South Wales
Medium Neutral Citation: Haddon v Forsyth (No 2) [2011] NSWSC 693 Hearing dates: 9 June 2011 Decision date: 08 July 2011 Jurisdiction: Common Law Before: Simpson J Decision: The plaintiff pay the defendants' costs assessed on the ordinary basis up to 6 November 2009, and thereafter on an indemnity basis.
Catchwords: DEFAMATION - actions for defamation - verdict for defendants - costs - claim for indemnity costs - plaintiff unrepresented on application - allegations of misuse of superior financial position and conflict of interest - relevance of settlement attempts made by plaintiff prior to commencement of proceedings - refusal of "settlement offers" not unreasonable within s 40(2)(b) Defamation Act 2005 - application of rule 42.15A Uniform Civil Procedure Rules 2005 - characterisation of various "offers of compromise" - genuine offer rejected by plaintiff - costs ordered - to be assessed on indemnity basis following offer Legislation Cited: Civil Procedure Act 2005
Defamation Act 2005
Legal Profession Act 2004
Uniform Civil Procedure Rules 2005Cases Cited: Davis v Nationwide News Pty Ltd [2008] NSWSC 946
Haddon v Forsyth & Ors (NSWSC, 10 August 2009, unreported)
Haddon v Forsyth [2011] NSWSC 123Category: Costs Parties: Bruce Haddon (Plaintiff)
The Right Reverend Robert Forsyth (First Defendant)
The Reverend Dominic Steele (Second Defendant)
Evan Batten (Third Defendant)Representation: Counsel
In person (Plaintiff)
S T Chrysanthou (Defendants)
Solicitors
Not applicable (Plaintiff)
HWL Ebsworth Lawyers (Defendants)
File Number(s): 2009/297442
Judgment
On 8 March 2011 I delivered judgment ( Haddon v Forsyth [2011] NSWSC 123, "the principal judgment") in these proceedings, which involved a claim by the plaintiff (Bruce Haddon), that, in two email communications of 15 February 2008 published by two defendants (Reverend Dominic Steele and Mr Evan Batten), he had been defamed. The defendants pleaded defences of substantial truth, contextual truth, honest opinion ( Defamation Act 2005, s 31), qualified privilege (at common law) and qualified privilege ( Defamation Act , s 30). I found that, of the five imputations Mr Haddon pleaded, three were conveyed and were defamatory; two were not conveyed. In respect of each imputation, I upheld the defences of substantial truth, qualified privilege at common law, and statutory qualified privilege. I rejected the defences of contextual truth and honest opinion. I also rejected Mr Haddon's claim that the defendants were actuated by malice. Accordingly, I entered a verdict for the defendants; and I indicated that Mr Haddon would have to pay the defendants' costs. I expressed the last matter in that way, without making a formal order, in anticipation of submissions as to the nature of the costs orders that ought to be made.
The defendants have now sought a more specific order as to costs. They claim, alternatively (in descending order of preference) an order as follows:
"(a) The plaintiff pay [the defendants'] costs of the proceedings [ie the whole proceedings] on an indemnity basis;
(b) Alternatively, the plaintiff pay [the defendants'] costs on an indemnity basis from 14 May 2009 to date and on a party/party basis prior to 14 May 2009; or
(c) Alternatively, the plaintiff pay [the defendants'] costs on an indemnity basis from 5 November 2009 to date and on a party/party basis prior to 5 November 2009."
The reason for the selection of dates will become apparent.
The defendants rely upon a number of statutory provisions, directed to the award of costs, which apply to defamation proceedings. They are:
- Civil Procedure Act 2005, s 98:
"(1) Subject to rules of court and to this or any other Act:
(a) costs are in the discretion of the court, and
(b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and
(c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis.
...
(4) In particular, at any time before costs are referred for assessment, the court may make an order to the effect that the party to whom costs are to be paid is to be entitled to:
(a) costs up to, or from, a specified stage of the proceedings ..."
- Uniform Civil Procedure Rules 2005 ("UCPR")
The UCPR provide, in Pt 20 Div 4, for offers of compromise. UCPR 42.15A concerns the award of costs where an offer of compromise is made by a defendant, not accepted by the plaintiff, and the result is equally or more favourable to the defendant. In that case, sub-r (2) provides:
"(2) Unless the court orders otherwise:
(a) the defendant is entitled to an order against the plaintiff for the defendant's costs in respect of the claim, to be assessed on the ordinary basis, up to the time from which the defendant becomes entitled to costs under paragraph (b), and
(b) the defendant is entitled to an order against the plaintiff for the defendant's costs in respect of the claim, assessed on an indemnity basis:
(i) if the offer was made before the first day of the trial, as from the beginning of the day following the day on which the offer was made, and
(ii) if the offer was made on or after the first day of the trial, as from 11 am on the day following the day on which the offer was made."
- Defamation Act 2005
Specific provision is made in respect of costs in defamation proceedings by s 40. Relevantly, that section provides:
"40(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) ...
(b) if defamation proceedings are unsuccessfully brought by a plaintiff and costs in the proceedings are to be awarded to the defendant order costs of and incidental to the proceedings to be assessed on an indemnity basis if the court is satisfied that the plaintiff unreasonably failed to accept a settlement offer made by the defendant.
(3) In this section:
' settlement offer " means any offer to settle the proceedings made before the proceedings are determined, and includes an offer to make amends (whether made before or after the proceedings are commenced), that was a reasonable offer at the time it was made."
To the extent that there are differences between the various provisions, particularly UCPR 42.15A and Defamation Act , s 40, a question arises as to which ought take precedence over the other. In my opinion, because of its specific application to defamation proceedings, it is s 40. The interesting difference between the two is that, while UCPR 42.15A envisages a calculation of costs on an indemnity basis only from an appropriate time after an offer of compromise is made, s 40 does not draw any such distinction: s 40(2)(b) is open to the interpretation that, if the plaintiff is unsuccessful in the proceedings and, if the pre-condition (that the plaintiff unreasonably failed to accept a settlement offer made by the defendant) is met, then a calculation of costs on an indemnity basis applies to the whole of the costs of the defendant(s). It is not limited to a time relevant to the time when the offer is made. That that is the correct interpretation is supported by a consideration of the purpose for which the legislature made specific provision for costs in defamation proceedings. That purpose is to oblige parties to defamation proceedings to take a reasonable approach to settlement negotiations: see Davis v Nationwide News Pty Ltd [2008] NSWSC 946 at [27]. The sanction against failure to take that reasonable approach is the risk of an award of indemnity costs. Why that sanction ought to apply to defamation cases as distinct from others is not stated.
Both s 40 and UCPR 42.15A involve consideration of any settlement negotiations between the parties. In my opinion, although it is not expressly so stated, such negotiations may also be a relevant consideration under s 98 (if resort to that section is necessary). All provisions are directed to promoting a spirit of compromise and early resolution of disputes. A party who unreasonably fails to make an offer of settlement will, or may, be disadvantaged; as will, or may, a party who unreasonably rejects an offer of settlement. The outcome of the proceedings is of limited relevance; the power is predicated upon failure in the proceedings. The critical factor is the reasonableness or otherwise of the unsuccessful party's conduct.
The evidence
In the substantive proceedings, Mr Haddon was represented by solicitors and senior and junior counsel. On the costs application he appeared unrepresented.
Initially, the only material put before me showing the course of negotiations was a series of offers made after the commencement of the litigation (the statement of claim was filed on 4 February 2009, almost 12 months after the publications). However, Mr Haddon referred to, and put before me, some evidence of attempts by him to achieve a resolution of his complaints shortly after publication and well prior to the filing of his statement of claim, and, ultimately, I was provided with additional material with respect to the communications that took place after the publications and before the statement of claim was filed. An issue arose as to the relevance of that material. I will return to that.
Defamation Act , s 40(2)(b)
Following Mr Haddon's reference to his attempts to negotiate a solution prior to the commencement of proceedings, a chain of email correspondence, pre dating the filing of the statement of claim, was provided to me on behalf of the defendants. Given the way such correspondence is conducted, and is printed, it is not always easy to follow the sequence. It would have been helpful had it been provided in chronological order, and limited to those communications relevant to the attempts to negotiate a settlement. What follows is my understanding of the discussions that took place (by email) prior to 4 February 2009, when the statement of claim was filed.
In the consideration of the negotiations, the correspondence and the arguments, it will be necessary to refer to some features of and evidence from the substantive proceedings. I do not propose to restate what is in the lengthy principal judgment; at times, in what follows, I will assume a knowledge of the relevant facts and circumstances there stated at length, and of the individuals involved. It will be necessary to read these reasons in conjunction with the principal judgment.
The email correspondence to which I was referred for the purposes of the application commenced on 31 March 2008. It will be obvious that there had been some oral communication prior to the generation of those email communications. On 31 March 2008 Mr Haddon wrote to Bishop Forsyth in the following terms:
"Here then is my offer: I will quit the church and keep silent as to why, in return for the letter below [the email of 15 February] being withdrawn in writing and a public apology made. Public apology means an announcement in church to an agreed script explaining I was banned from ministry on theological grounds only and that rumours or accusations that it resulted from misconduct are untrue."
On 2 April, apparently after discussions with Mr Steele and the officeholders of St Aiden's Church, Bishop Forsyth replied, saying that he had their agreement that they "would like to meet your conditions, if possible." This included withdrawal, in writing, of the 15 February email, and a statement read out in church, a suggested text of which he attached.
On 21 April 2008 Mr Haddon wrote to Bishop Forsyth and referred to a conversation they had previously had, in which he had offered to leave St Aiden's in return for "an apology/retraction" in various proposed forms. He added, for clarification, that that settlement would be "full and final", and he would undertake not to pursue any remedy "in the secular system". Bishop Forsyth replied on the same day by promising "get back to you".
The correspondence shows that Bishop Forsyth passed on the offer to Mr Steele and the officeholders of St Aiden's.
In a long letter to Bishop Forsyth (also signed by the Wardens of St Aiden's Church), Mr Steele gave a (negative) response, and an explanation for that response. Importantly, the signatories declined to withdraw the 15 February email, saying that they stood by its contents and the conditions of Mr Haddon's conduct they required therein stated. They considered a statement made in church to be inappropriate, as well as a statement proposed to be contained in the church e-Newsletter. On the same date Bishop Forsyth passed this on to Mr Haddon, inviting careful attention to the explanation given, and to the possibility of resolution if Mr Haddon were able to give a written undertaking to abide by the terms of the 15 February letter.
On 2 May Mr Haddon wrote another long letter to Bishop Forsyth, concluding that:
"Legal action is therefore the only way forward for me."
and inviting Bishop Forsyth to "instruct" Mr Steele to comply with his proposed terms.
There followed some discussion, which it is unnecessary here to detail, about the existence or otherwise of rumours that Mr Haddon claimed were circulating within the church.
The correspondence concluded on 19 May with, in effect, an impasse.
Counsel for the defendants argued that, by reason of the definition of "settlement offer" in s 40(3) of the Defamation Act , those negotiations which pre-date the commencement of proceedings are not relevant to s 40(2)(b). That, it was argued, emerges from the words "offer to settle the proceedings "; and it would appear to be so from the express inclusion, in relation to an offer of amends, of an offer made before, as well as after, the proceedings are commenced. Section 40(2)(b) obliges the court to order that the costs of the proceedings be assessed on an indemnity basis if the stated circumstances - the first of which is that a plaintiff has unsuccessfully brought defamation proceedings, and the second (and more important) of which is that the plaintiff unreasonably failed to accept a settlement offer made by the defendant - arise. The first leaves no room for consideration of negotiations that pre-date the commencement of the proceedings. Four matters, however, qualify that stark position. First, sub-s (2) is expressed not to limit sub-s (1); second, sub-s (1)(a) permits the court to take into account, additionally to the circumstances mentioned in sub-s (2)(b), the way in which the parties conducted "their cases " (as distinct from "the proceedings"); third, sub-s (1)(b) permits the court to have regard to any other matters it considers relevant; fourth, sub-s (2) itself permits the court not to make the order, even if both sub-s (2)(b) circumstances are otherwise established, if satisfied that the interests of justice require otherwise.
I am satisfied that, in considering the question of costs under s 40(2)(b), the court may take into account negotiations that took place prior to the commencements of proceedings. I propose to do so.
I turn now to the negotiations that took place after proceedings had been commenced. On 14 May 2009, the solicitors representing the defendants wrote in the following terms:
"In a further effort to de-escalate this dispute, our clients have instructed us to propose:
1. we defer filing the Defence, for say one week.
2. we provide you with the form of Defence that has been prepared, which has for the same reasons of de-escalation, been edited to obliterate the names of complainants. That document is enclosed.
3. we provide your client with an opportunity for reflection before the Defence is filed with the Court."
Included with the letter was an Offer of Compromise. The offer was:
"1. Verdicts for each Defendant.
2. Each party to pay his own costs."
The offer was expressed to be made in accordance with UCPR Pt 20 Div 4, and to be open until 5.00pm on 11 June 2009.
On 30 October 2009, Mr Haddon gave notice of an Offer of Compromise in the following terms:
"1. Verdict and judgment for the Plaintiff in the sum of $24,000.
2. Defendants to pay the Plaintiff's costs as agreed or assessed."
On 5 November 2009, on behalf of the defendants, a further Offer of Compromise was made, in the following terms:
"1. Proceedings be dismissed.
2. Defendants to pay the plaintiff the sum of $20,000.00 contribution towards the plaintiff's legal costs.
3. Otherwise each party is to pay his own costs with all previous costs orders vacated."
Finally, on 17 March 2010, just days before the hearing was due to commence, on behalf of the defendants a further offer, this time without prejudice, was made. This included a proposed statement (without apology), which would be available to the parties to use, but with restrictions on any further statements to be made by any party; discontinuance by Mr Haddon of the proceedings, with a bar on any further proceedings arising out of "the same circumstances", and no order as to costs. It will be seen that this proposal did not include any monetary payment. Mr Haddon did not accept it, as he had not accepted either of the earlier offers.
The primary position taken on behalf of the defendants was that the evidence disclosed that Mr Haddon "unreasonably failed to accept a settlement offer" made by them and that, accordingly, pursuant to s 40(2)(b), the Court must (unless the interests of justice require otherwise) order that the costs (which must follow the event) be ordered to be assessed on an indemnity basis. Alternatively, it was submitted on behalf of the defendants that the UCPR concerning offers of compromise ought to be applied, with the result that the court would order that costs be assessed on an indemnity basis as and from the relevant date following the making of the offers to which I have referred above.
Mr Haddon argued that the pre-commencement correspondence demonstrates, on the part of the defendants, an unreasonable refusal to engage in negotiation that potentially could have obviated the need to commence proceedings.
On behalf of the defendants it was again submitted that the pre-commencement negotiations are irrelevant.
For reasons given above, I reject that as a global proposition: the parenthesised words in s 40(2) ("unless the interests of justice require otherwise") provide ample basis for the Court to examine the whole course of discussion and negotiation and conduct between and by the parties.
I do not reject the evidence of pre-commencement correspondence as irrelevant. However, I also do not find that those negotiations indicate, on the part of the defendants, unreasonable conduct such as to bear upon the costs to which they otherwise would be entitled. Nor do they impact on the unreasonableness or otherwise of Mr Haddon's conduct in failing to accept subsequent settlement offers (properly so called) made on behalf of the defendants. In my opinion, the response to Mr Haddon's proposals given to Bishop Forsyth by Mr Steele on 23 April 2008 adequately explains the defendants' declining to agree to Mr Haddon's proposals. The pre-commencement discussions are, in my opinion, neutral.
For the purposes of s 40(2)(b), I have to determine whether it was unreasonable for Mr Haddon to refuse to accept any or all of the settlement offers made by the defendants after the commencement of the proceedings.
The mere fact that a plaintiff is unsuccessful in proceedings is insufficient to justify an award of indemnity costs. Failure in the proceedings is a necessary, but not sufficient, condition for such an award. If that were not so, the suffix to s 40(2)(b) would be redundant. The central fact that must also be established is that a settlement offer was unreasonably not accepted. Just what constitutes unreasonableness is not spelled out in the legislation. It is not every refusal of a settlement offer that is unreasonable.
Of some significance is the first offer communicated on behalf of the defendants, as early as 14 May, just weeks after the Statement of Claim was filed. The defendants' solicitors provided Mr Haddon with the draft Defence, in order that he be informed of the issues that would be litigated if the matter proceeded; and they offered to allow time for consideration and reflection. In my opinion, this was a very reasonable approach for the defendants to take. Does that mean that it was unreasonable for Mr Haddon to decline to accept the attached offer of compromise? Of itself, perhaps not. But it is a relevant circumstance. The draft Defence must have given him considerable information about the issues that would be raised, particularly in respect of the justification defence; this gave him the opportunity to reflect upon the circumstances that led to the emails of 15 February (2008). The content of the offer is to be borne in mind. It was that Mr Haddon agree to a verdict for the defendants, and that each party pay his own costs. I discuss below the extent to which this was truly an "offer of a compromise" for the purposes of UCPR 42.15A. There is no doubt that, for the purposes of s 40(2)(b), it was "a settlement offer".
The next offer of compromise made on behalf of the defendants included their offer to make a significant contribution towards to Mr Haddon's costs, to that date, of $20,000. The outcome of the proceedings establishes that it would have been in Mr Haddon's best interests to have accepted that offer. But that does not demonstrate that his failure to do so was unreasonable.
Following the hearing of this application, and following the provision, on behalf of the defendants, of the correspondence pre-dating the commencement of proceedings, Mr Haddon also filed a lengthy supplementary submission. As I have mentioned, he is now unrepresented, and much of what is contained within that lengthy (18 typed pages) is of an evidentiary nature. Some of it is repetitive of what has already been put into evidence, and some of it, if not all, appears to be (factually) uncontroversial. Some of it is new material.
In part, Mr Haddon sought to canvass an amount of material going to the dispute between himself and St Aiden's Church. I cannot take this into account: I must confine myself to the reasonableness or otherwise of his failure to accept the various offers of settlement.
Mr Haddon's supplementary written submissions focus upon a number of aspects, some of which bear little relation to the question of costs. These could be summarised as:
(i) the reasonableness of his conduct preceding the commencement of proceedings, which he characterised as attempts on his part to leave the Church with dignity and without loss of face either by himself or by the defendants or other participants;
(ii) a number of propositions put on behalf of the defendants, in their written submissions, with which he took issue;
(iii) a question, based upon s 40(1)(a), whether the defendants misused their superior financial position to hinder the early resolution of the proceedings.
In my opinion the matters raised under the first head have, if any, only the most marginal relevance to the present question. The present question is whether he has been shown to have unreasonably failed to accept a settlement offer, and, if so, whether other considerations dictate that the interests of justice require other than an order that the costs be assessed on an indemnity basis. Nor do I consider that the matters of detail by which he responded to the defendants' written submissions advance the consideration of those questions.
It is, however, necessary to say more about the last matter, the assertion that the defendants misused their superior financial position to hinder the early resolution of the proceedings. To start with, I note that that is a composite concept: it is not any misuse of a party's superior financial position that is relevant - it is the misuse of such a financial position in the way stated in the section, that is, to hinder the early resolution of the proceedings. The second thing to note is that the defence parties to the proceedings were Mr Steele and Mr Batten. There is no reason to conclude that either occupied a superior financial position to Mr Haddon. However, it is not to be overlooked that, up to a very late stage in the proceedings, Bishop Forsyth was named as the first defendant. Moreover, Mr Haddon asserts, and having regard to what I was able to observe during the course of the trial (including the regular attendance of Bishop Forsyth), it is reasonable to accept, that the defence was funded by the Church of England. Mr Haddon then referred to what he called "well publicised investment losses post 2008" on the part of the Church of England, a matter which is unproved, and, in any event, immaterial, and which I disregard.
Mr Haddon then referred to the quantum of the costs claimed that he said had been served upon him, and put:
"That they misused their superior financial position is partly in evidence from the size of their costs claim made on me. Assuming their party party costs claim of over $537,000 represents 70% of total legal costs, that total is therefore over $767,000. The sum is so wildly excessive it suggests they deliberately spent far more than necessary to exhaust my funds and force me to discontinue the case ." (italics added)
I reject this contention. There is no basis in the evidence to conclude that the Church of England, or any of the named defendants, deliberately incurred excessive costs in order to exhaust Mr Haddon's funds. Indeed, that would require the active involvement of the defendants' solicitors, in breach of their obligations under the Legal Profession Act 2004. Mr Haddon then argued that the decision by the defendants to brief senior (as well as junior) counsel forced him to take a similar tactical decision. He asserted then that the defendants requested mediation, with no intention of taking mediation seriously, and that he accepted the invitation, thus incurring further costs. He supported his claim that the defendants did not intend to take the mediation seriously by asserting that they failed to produce "a position paper". There is no evidence on which I could make any finding about these claims.
In a later submission, to which I will refer below, the solicitor for the defendants denied any intention of claiming any more than the amount stated in their assessment of costs provided to him - $537,255.69.
Mr Haddon next claimed that the defendants misused their superior financial position by opposing an application made by him to transfer the proceedings to the District Court. Again, this was unsupported by evidence. I have therefore searched the Court file. There is an extempore judgment by Nicholas J ( Haddon v Forsyth & Ors (NSWSC, 10 August 2009, unreported)), which confirms that Mr Haddon made such an application, and that the defendants (successfully) opposed it. In the judgment Nicholas J recounted the procedural history of the proceedings; since his Honour referred to an affidavit of the solicitor representing the defendants sworn on 10 July 2009, it can be deduced that the application was made by Mr Haddon at some time shortly before that date. Nicholas J refused the application. The principal reasons were the history that he had recounted (including many interlocutory skirmishes and procedures); that all interlocutory steps had been taken in this Court; the timing of the application; and that it was this Court that was Mr Haddon's original jurisdiction of choice. Essentially, however, Nicholas J held that no material to justify the making of the order had been put before him.
I do not think the stance taken on this application on behalf of the defendants is indicative of the misuse of a superior financial position to hinder the early resolution of the proceedings. The defendants were entitled to maintain their position that this was their preferred Court for the hearing. By that time, much of the preliminary work had been done and the costs incurred. There is no reason to think that transfer to the District Court at that time (or, indeed, at any time) would have substantially reduced the costs. More to the point, there is no reason to think that the proceedings remaining in this Court significantly added to Mr Haddon's financial burden such as to hinder early resolution. Moreover, at that time, Bishop Forsyth was a party, the first defendant, and, as Nicholas J observed, there were potentially complex questions of law concerning his vicarious liability (presumably as representative or nominee of the Church of England) for the alleged tortious conduct of Mr Steele and Mr Batten. I therefore I do not see the defendants' opposition to Mr Haddon's application to transfer as a relevant consideration in respect of the costs question.
Mr Haddon also referred to voluminous interrogatories administered on behalf of the defendants, requiring the commitment of a good deal of time by his counsel, and subsequent further requests arising from his answers. He said that almost none of the particulars they produced were used in the trial.
I cannot conclude from that that this was a misuse of the defendants' superior financial position, particularly for the purpose stated in s 40(1)(a). Information obtained from interrogatories may well be used in ways other than by production at trial. I am unable to say that the administration of interrogatories (again, assuming that the facts are as asserted by Mr Haddon) represented the misuse of superior financial position.
Mr Haddon then complained that the defendants misused their superior financial position by having given notice of a significant number of witnesses who, in the end, were not called. Again, assuming that it is the fact, that does not suggest to me the misuse of a superior financial position, and certainly not misuse for the purpose of hindering the early resolution of the proceedings.
There is one final matter raised by Mr Haddon under this general heading that I must record. Under the sub-heading "My legal team switches sides", Mr Haddon claimed that the firm of solicitors which, throughout the proceedings, represented the defendants, had originally taken instructions from, and advised, him, to the point of drafting a "concerns notice" for the purpose of activating Pt 3 Div 1 of the Defamation Act . He claims that the solicitor with whom he had been dealing then telephoned him and advised that the firm had received instructions from "the Anglican Church", and would therefore cease acting for him.
There was objective material to support most of these assertions. Mr Haddon attached to his written submissions copies of email correspondence between him and two members of the firm. These contained some detail concerning his position in respect of the emails on which he ultimately sued, and some tactical considerations. It is a matter of record that the firm did represent the defendants in the proceedings. The only "fact" that is not objectively confirmed is the timing of the firm's taking instructions from "the Anglican Church" (or from the defendants). However, Mr Haddon states that, having twice experienced outlining his case to firms of solicitors he proposed to instruct, and having twice been later informed that the firms had a conflict of interest by reason of having previously represented the Church of England, he had, on instructing the third firm, taken the precaution of confirming that no such conflict existed.
The facts asserted were troubling. In saying that, I have difficulty in seeing how this set of circumstances (on the assumption that the circumstances are as stated by Mr Haddon) has any bearing on the question of costs, including what Mr Haddon asserts to be the misuse of the defendants' superior financial position. Indeed, there is no evidence on which to base a conclusion that either the Church of England, or Bishop Forsyth, or either of the defendants, was aware that the solicitors they instructed had already taken instructions from Mr Haddon.
Nevertheless, a tangential issue did arise, and it is one that, especially considering Mr Haddon's now unrepresented status, I could not ignore.
Accordingly, I invited from the defendants' solicitors a response to that part of Mr Haddon's written submissions, drawing particular attention to the relevant paragraphs. A response was received. Although the emailed response shows that it was copied to Mr Haddon, he has not sought to contradict it. The response satisfies me that, despite appearances, nothing untoward occurred. Ten days before the solicitor who handled the matter on behalf of the defendants received instructions, the firm by which he was employed and another firm merged. Mr Haddon later gave instruction to solicitors in the other firm. Although the pre-existing involvement with the defendants ought to have shown up in "a conflict search" of the computerised records of the merged firm, that did not occur, possibly because of difficulties in merging the computer records of the two firms.
The solicitor handling the proceedings on behalf of the defendants stated that he had no dealings with the solicitors who had advised Mr Haddon. Those solicitors told Mr Haddon of their inability to act for him as soon as they learned of the firm's conflict.
It is relevant to this issue, which I now consider to be tangential, that Mr Haddon was, in the proceedings, represented by a reputable and competent firm of solicitors, and by experienced senior and junior counsel. Mr Haddon is not nave about professional and commercial matters, and it is reasonable to assume that if he then perceived any disadvantage to himself in the defendants' being represented by a firm of solicitors he had previously retained, he would have drawn that to the attention of this subsequent legal representative and they would have taken any action they deemed appropriate.
This issue caused something of a distraction. I am satisfied that it raises no matters relevant to the questions posed by s 40(2)(b).
I return to the principal issue: was it unreasonable for Mr Haddon to refuse any or all of the offers of settlement? In my opinion, the only basis upon which he could be said to have been unreasonable was that the proceedings were unsuccessful. That is insufficient. I will not order, under s 40(2)(b), that the costs he must pay be assessed on an indemnity basis.
UCPR Pt 20 Div 4
The position is different with respect to UCPR 42.15A. There a defendant is "entitled" (unless the court otherwise orders) to an order that costs be assessed on an indemnity basis from the beginning of the day after an offer of compromise was made. No considerations of unreasonableness of refusal arise.
The first offer said to be an offer of compromise was made on 14 May 2009. It is relevant to consider the extent (if any) to which the offer truly represented an offer of compromise . In this offer, the defendants proposed verdicts for each defendant, suggesting that there was little, if any, element of compromise involved. The proposal that each party pay his own costs to that date, perhaps, represented some, limited, degree of compromise, since a verdict for a defendant would ordinarily be expected to be accompanied by an order for costs. There is no evidence what costs had been incurred at that stage, although a Defence had been drafted, and this, no doubt, (having regard to the issues raised and particularised) involved conferral with a large number of witnesses. I accept, therefore, that this offer did incorporate an element of compromise; however, I do propose to order otherwise than that costs be assessed on an indemnity basis from the day after this offer was made. In coming to this decision, I do take into account the course of discussion that preceded the commencement of proceedings, and the (at one stage) near finalisation of an agreement that did not involve litigation or the payment of money.
The second offer, however, in which the defendants offered to make to Mr Haddon a payment of $20,000 (even if characterised as a contribution to costs) cannot be dismissed. In my opinion, it represented a real effort on the part of the defendants to effect a resolution, and a real compromise. There is no reason why the defendants should not have the order to which the rule prima facie entitles them.
There is one other matter to which I should make reference. In his supplementary written submissions, Mr Haddon alluded to the possibility of an order that each party bear his own costs. In this event, he suggested, he would have to give consideration to abandoning an appeal he has already set in train. This is a submission that, if made be a legal practitioner, would certainly raise eyebrows as a suggested inducement to a judge to act otherwise than on correct principle. (It is, of course, a perfectly legitimate basis on which to attempt to negotiate with a successful party.) I mention the submission, not to make any criticism of Mr Haddon, but merely to state clearly that it has played no part in the conclusion to which I have come.
I order that the plaintiff pay the defendants' costs assessed on the ordinary basis up to 6 November 2009, and thereafter on an indemnity basis.
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Decision last updated: 08 July 2011
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