Hennessy v Lynch (No. 4)
[2008] NSWDC 15
•29 February 2008
CITATION: Hennessy v Lynch (No. 4) [2008] NSWDC 15 HEARING DATE(S): 14 February 2008
JUDGMENT DATE:
29 February 2008JURISDICTION: Civil JUDGMENT OF: Gibson DCJ DECISION: (1) Vary order 6 of the orders of 13 December 2007 and order the defendant pay three quarters of the plaintiff’s costs up until the final date for acceptance of the defendant’s Offer of Compromise dated 20 April 2007 and that the plaintiff pay the defendant’s costs thereafter on an indemnity basis. CATCHWORDS: Tort - defamation - costs - s.48A Defamation Act 1974 (NSW) - offer of compromise LEGISLATION CITED: Civil Procedure Act 2005 (NSW)
Defamation Act 1974 (NSW), ss.7A, 13 and 48A
Defamation Act 2005 (NSW), s.40
Supreme Court Rules 1970 (NSW), Part 52A r.33
Uniform Civil Procedure Rules 2005 (NSW), Parts 26 and 42CASES CITED: Antoniadis v TCN Channel Nine Pty Ltd (Supreme Court of New South Wales, 24 April 1997)
Arian v Nguyen [2001] NSWCA 5
Cooper v Whittingham (1880) 15 Ch D 501
Dering v Uris [1964] 2 QB 669
Haertsch v Andrews and Ors (Ireland J, 1 December 2000)
Hennessy v Lynch (No.3) [2007] NSWDC 268
Jones v Sutton (No.2) [2005] NSWCA 203
Morgan v Wallis (1907) 33 TLR 495
Morosi v Mirror Newspapers Ltd [1977] 2 NSWLR 749
National Auto Glass Supplies (Aust) Pty Ltd v Nielsen & Moller Auto Glass (NSW) Pty Ltd (No.9) [2007] FCA 1826
Packer v Meagher [1984] 3 NSWLR 486
Ritter v Godfrey [1920] 2 KB 47
Roache v News Group Newspapers [1998] EMLR 161
Skalkos v Assaf [2002] NSWCA 14
Skalkos v T S Recoveries Pty Ltd [2004] NSWCA 281
Stevens v Sullivan [2002] 1 DCLR (NSW) 138
Williams v Ward (1886) 55 LJQB 556
West and Fortunate Investments Pty Ltd v Nationwide News Pty Ltd [2003] NSWSC 767TEXTS CITED: Gatley on Libel and Slander, 10th ed.
Gazette of Law and Journalism (GLJ Archives, “Costs – October 2003”)PARTIES: Plaintiff: Paul James Hennessy
Defendant: John LynchFILE NUMBER(S): 2288 of 2006 COUNSEL: Plaintiff: B.A.M Connell
Defendant: D Campbell SC / R WeaverSOLICITORS: Plaintiff: Courtenay & Co
Defendant: Higgins & Higgins
Introduction
1. The plaintiff and the defendant each apply for costs orders following the handing down of my judgment in these proceedings: Hennessy v Lynch (No.3) [2007] NSWDC 268. I note that interest on the judgment debt has been mathematically agreed in the sum of $1,038.39.
2. Each of the parties seeks costs orders pursuant to s.48A Defamation Act 1974 (NSW) as follows:
(b) the defendant seeks an order that each party pay his own costs of these proceedings up until the expiry date of an offer of compromise served on 20 April 2007 and that thereafter the plaintiff pay the defendant's costs on an indemnity basis.(a) the plaintiff seeks orders that the defendant pay the plaintiff's costs of these proceedings on a party/party basis;
3. In the judgment handed down on 13 December 2007, I made the following orders:
(1) Judgment for the plaintiff in relation to the first publication (on or about 6 October 2001) in the sum of $1,000.
(2) Judgment for the plaintiff on the second publication (on or about 14 October 2002) in the sum of $5,000.
(3) Judgment for the defendant in relation to the third publication (on or about 18 December 2005).
(4) Judgment for the plaintiff in relation to the fourth publication (27 March 2006) in the sum of $10,000.
(5) Parties have liberty to bring in short minutes of order containing the mathematically agreed interest payable on the judgment of $16,000.
(7) Exhibits remain with the file for 28 days.(6) Issues of costs reserved, and the parties have liberty to apply.
4. The matters complained of in these proceedings were a series of slanders published over a long period to only one person, a Mr Hasler, an employee of the plaintiff.
5. This application for costs raises important questions concerning costs in defamation actions, and in particular concerning the ambit of s.48A Defamation Act 1974. Although this section has been in force since 17 February 2003, the only case in which its provisions have been considered and applied, following an application by a defendant, is the decision of Graham J in National Auto Glass Supplies (Aust) Pty Ltd v Nielsen & Moller Auto Glass (NSW) Pty Ltd (No.9) [2007] FCA 1826. No applications have previously been made by plaintiffs, although I have recently heard an application by a plaintiff in other proceedings in this court.
6. The plaintiff and the defendant each rely on different parts of s.48A. While there is nothing in s.48A indicating that the court should adopt a different approach where the applicant is the defendant (as is the case in England – see Gatley on Libel and Slander, 10th ed., [35.15]), in practical terms applications by plaintiffs under s.48A involve different considerations. In addition, the general principle has always been that considerations sufficient to justify refusal of costs to a plaintiff may not be sufficient if the applicant is the defendant, because the former initiates the litigation while the latter is brought into it against his will: Ritter v Godfrey [1920] 2 KB 47 at 53 per Lord Sterndale MR.
7. Section 48A is referred to in passing in Jones v Sutton (No.2) [2005] NSWCA 203, but the Court of Appeal (at [74]) noted that the provisions of this section were not relied upon and considered the costs application on common law principles. The plaintiff in those proceedings successfully appealed a judgment for the defendant but did not appeal the trial judge’s assessment of $5,000 for three publications (two to one person and one to three persons). The costs for this action were well over $1 million (Hansard, 12 October 2005, p, 18518) and it was because of his concern that costs were “massively out of proportion to the damages” that Mr David Barr MLA introduced the Defamation Amendment (Costs) Bill in 2002 which, although unsuccessful, led to the enactment of s.48A.
8. There are no decisions on s.48A of the Supreme Court or the Court of Appeal to guide me as to the interaction between the Civil Procedure Act 2005 (NSW) and Uniform Civil Procedure Rules 2005 (NSW), and in particular Parts 26 and 42 of the Rules concerning the offer of compromise provisions.
9. Since this application raises important issues relating to costs in defamation proceedings, it is appropriate that I should set out the history of attempts by the legislature to make special provisions in relation to costs in defamation actions, particularly concerning costs where the verdict is of modest size.
Law reform proposals for defamation costs.
10. The question of whether there should be special rules for costs in defamation proceedings was first raised in the legislative assembly as long ago as Friday, 30 April 1886 when Mr George Reid moved a second reading of a bill to limit costs in defamation actions to verdicts of more than 40 shillings. Mr Reid said:
"I do not think that I need apologise to the House for introducing a measure with reference to the law relating to libel and slander, because I think that it is generally admitted, and there have been striking instances of the fact, that the law is not at all in a satisfactory condition at the present time."
11. Mr Reid went on to note that if a defendant in an action for libel and slander was unable to pay the verdict, he could be imprisoned for up to a year. Mr Reid's intention was not to reform the law of libel, but to bring about reforms designed to assist defendants who were "substantially acquitted of the charge which forms the subject of the action" where the jury had returned a small verdict. It had been for centuries the law in England that in slander, where the verdict was for an amount less than 40 shillings, the costs should not exceed the amount of a verdict (21 James I, Chapter 16). This had in turn been replaced by Act 58 George III, Chapter 30, which provided that where damages were assessed under 30 shillings "then the plaintiff or plaintiffs in such action or suit shall have and recover only so much costs as the damages so given or assessed shall amount to without any further increase of the same" (see Hansard, 30 April 1886, page 1609).
12. At the time Mr Reid proposed this amendment, judges in the Supreme Court had to certify for costs in cases where the verdict was under £30 if there was "sufficient reason for bringing and trying the said case in the Supreme Court". However, the general principle was that, where the matter in contest involved difficult questions of law or complicated questions of fact, costs could be certified even for a small amount, and this is what in fact occurred. A plaintiff could establish that despite the verdict being small he may justly have expected a larger sum, costs could be awarded, and since these were matters that were within the province of a jury to decide, considerable latitude was given concerning costs by the judge presiding at the trial. In particular, a rule justifying a plaintiff in bringing his case before "a superior tribunal" meant that an action could be commenced in the Supreme Court and the litigation conducted in a most expensive way. Even if the plaintiff was awarded a farthing, under this rule, it would be held that it was an action which should be brought before a superior court and a certificate for costs would issue.
13. Mr Reid went on to describe a series of cases where a derisory verdict of a farthing had been awarded but the defendants, including journalists from the bulletin, although having been substantially vindicated by the farthing verdict, had been consigned to gaol because of their inability to pay the costs.
14. I have set this out in some detail because the problems described by Mr Reid have a familiar ring today. Defamation cases are often “combative”, to use Levine J’s description of the multiple trials in Antoniadis v TCN Channel Nine Pty Ltd (Supreme Court of New South Wales, 24 April 1997); Levine J awarded indemnity costs at the third trial of these proceedings to the plaintiff for an offer of compromise of $5,000, noting the two earlier trials had been discharged by “the fault of the defendant” (at 11). Even where the extent of publication is limited, defamation actions still result in very substantial legal costs. In Skalkos v Assaf [2002] NSWCA 14, where there were two limited publications (one to one person), the costs certificate for the trial totalled $941,444.77: Skalkos v T S Recoveries Pty Ltd [2004] NSWCA 281.
15. These were cases that went to trial; costs in actions that never go to trial can also be high, particularly if the defendant is an ordinary member of the community without the financial resources to pay thousands of dollars of legal fees. The introduction of so-called SLAPP suits to stifle free speech was an issue of concern in the NSW Parliament when the Defamation Bill 2005 had its second reading speech (Hansard, page 18518). The bringing of an action for an ancillary dominant improper purpose has long been recognized as being a basis for the granting of indemnity costs at common law: Packer v Meagher [1984] 3 NSWLR 486; Stevens v Sullivan [2002] 1 DCLR (NSW) 138.
16. After many years of complaints in the press about litigation costs, particularly in articles in a newspaper in his electorate about a controversial local case, Mr David Barr, the Member for Manly, introduced the Defamation Amendment (Costs) Bill 2002, which sought to restrict costs orders to the quantum of damages awarded. Although this Bill was rejected at the time, Mr Barr was able, as he later noted (Hansard, 16 October 2003), to add his recommendations into an amendment to the NSW Government's Defamation Amendment Bill 2002 resulting in subsection 1(b) being inserted into s.48A Defamation Act 1974.
17. Mr Barr was not convinced that this measure went far enough, in that this provision did not necessarily inhibit unnecessary and frivolous court actions, and as a result of the defamation proceedings which were the subject of controversy in his electorate, introduced the Defamation Amendment (Costs) Bill. It introduced a threshold figure of $25,000 and was modelled on a provision of s.101.02A South Australian Supreme Court Rules which provided that plaintiffs were unable to claim costs in defamation where the damages awarded were less than $25,000 unless the Court otherwise ordered. Mr Barr's bill sought to exclude this discretionary power because the experience in New South Wales in defamation actions was that the Court was "too inclined to exercise this kind of discretionary power in favour of the plaintiff". The purpose of the threshold figure was to "discourage trivial actions where the plaintiff's reputation might be slightly dented at worst but the cost incurred could be enormous". Mr Barr referred to the heavy onus placed on defendants by SLAPP writs. As this Bill was defeated, it is of historical interest only, but it does indicate what he considered to be a “trivial” verdict.
18. Thus s.48A, unlike its predecessors, is intended to protect both plaintiffs and defendants from the enormous costs burdens that can result from defamation litigation, if the manner of conducting the litigation by either of them falls foul of its provisions.
Section 48A
19. Section 48A provides as follows:
(1) In awarding costs in respect of proceedings for defamation, the court may have regard to the following matters:“ 48A Costs in proceedings for defamation
(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),
(c) such other matters as the court considers relevant.(b) whether the costs in the proceedings may exceed the quantum of damages to be awarded in the proceedings,
(2) Without limiting subsection (1), a court must (unless the interests of justice require otherwise):
(b) if proceedings for defamation 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.(a) if proceedings for defamation are successfully brought by a plaintiff and costs in the proceedings are to be awarded to the plaintiff—order costs of and incidental to the proceedings to be assessed on an indemnity basis if the court is satisfied that the defendant unreasonably failed to make a settlement offer or agree to a settlement offer proposed by the plaintiff, or
(3) In this section:
"settlement offer" means any genuine 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). ”
20. Despite the introduction of s.48A, and the inclusion of an almost identical provision in s.40 Defamation Act 2005, it is not generally referred to in costs applications. In West and Fortunate Investments Pty Ltd v Nationwide News Pty Ltd [2003] NSWSC 767 Simpson J awarded damages totaling $50,000 but awarded the plaintiff only three-quarters of the costs because the damages fell so far below the threshold ($225,000) in Part 52A r.33 Supreme Court Rules; consequently, the action could have been commenced in, or transferred to, the District Court. In its summary of the case the Gazette of Law and Journalism (GLJ Archives, “Costs – October 2003”) noted that one week after this “costs contortion”, Part 52A r.33 Supreme Court Rules was amended to exempt defamation cases from this requirement.
21. The purpose of s.48A, and its interaction with Part 52A r.33 Supreme Court Rules, was explained by Mr Neville Newell (Hansard at page 7134):
It is important to keep in mind that the aim of s.48A, which was introduced by the government in December 2002, was to protect ordinary members of the community against potentially ruinous cost implications from defamation actions. Section 48A commenced on 17 February 2003, and I am unaware of any defamation case invoking s.48A having been finalised. While it is too early to tell whether the amendments have achieved their aim and whether there is any need for further amendment along the lines advocated by the Honourable Member for Manly, calls for amendment are premature.""While the addition of proposed s.48A(2) will provide greater discretion to a judge in awarding costs in instances where parties have been recalcitrant than currently exists, s.48A(1) makes it abundantly clear that in awarding costs the Court may take account of the way the parties have conducted their case. The Court will be able to take into account such matters as whether either party has used their significantly more powerful financial position in a way that hinders the effective discharge of justice.
22. Mr Newell considered that Part 52A rule.33 would not impinge on s.48A. This rule was expressed to be:
I believe it is essential that the Supreme Court continue to hear defamation matters which give rise to complex legal issues. The rule change will ensure that that will be the case. I am also confident that there exists sufficient safeguards to prevent the Supreme Court presiding over shorter, less complex defamation matters that ought rightly to be tried in the District Court ... These factors include the status of the plaintiff and the circulation of the newspaper, the quantum of damages likely to be obtained, whether the imputations are serious or of the utmost gravity, whether there are any major matters of principle that would warrant consideration of the Supreme Court, and the prospect of the matter being dealt with more quickly in either the Supreme Court or the District Court.""an acknowledgment that while the majority of defamation matters decided in the Supreme Court result in damages awards of less than $225,000, the Supreme Court may well be the appropriate jurisdiction in which to hear the matter because of the complex legal issues raised. It is important to note, however, that judges will still be required to take into account the matters referred to in s.48A of the Defamation Act , and that judges will have the discretion to make a range of costs orders, including that no costs be payable.
23. The verdict in West was comparatively low in comparison to other Supreme Court damages awards. The Opposition, in opposing Mr Barr’s Bill, noted that there were only four Supreme Court awards since 1999 where the verdict (net of interest and costs) did not exceed $25,000: Hansard, p.7134 (30 October 2003). This pattern has continued, with the majority of Supreme Court defamation verdicts exceeding $100,000, which is another reason why s.48A has never been invoked in the Supreme Court.
24. Having set out the legislative history of s.48A, I should also note the general principles of common law that are applicable in its interpretation. The general rule has always been that cost should not be denied to a successful plaintiff in a defamation action unless there has been some misconduct on his or her part: Cooper v Whittingham (1880) 15 Ch D 501 at 504 per Jessel MR. Examples commonly pointed to include a contemptuous verdict (such as the famous farthing verdict in the ‘QBVII’ case, Dering v Uris [1964] 2 QB 669, where the plaintiff unwisely failed to accept a payment into court); where the plaintiff has pursued the action not to vindicate a legitimate interest but for reasons of malice and personal spite: Morgan v Wallis (1907) 33 TLR 495; or where “it appears that it was oppressive to bring the action, or that the action was oppressively conducted.” (per Lord Escher MR in Williams v Ward (1886) 55 LJQB 556 at 567.)
25. There have been a number of cases in Australia where a plaintiff who prolongs or delays litigation may be denied costs if later successful, notwithstanding success in court, and the circumstances of these cases form the bases for s.48A.
26. Two particular evils have been identified in s.48A. The first is misuse of a party’s superior financial position. This can occur whether the party with the superior financial position is the plaintiff or the defendant. Section 48A(2) is, however of particular relevance in the present case in that it provides that where a plaintiff has commenced proceedings for defamation, if the defendant has unreasonably failed to make a settlement offer “or agreed to a settlement offer proposed by the plaintiff” a court “must” order costs of and incidental to the proceedings on an indemnity basis.
27. This is a very strong incentive to defendants to make offers of compromise of a reasonable nature. That is the primary basis upon which the defendant’s application is brought here.
The issues in these proceedings
28. The plaintiff and defendant both referred to the provisions of s.48A and the provisions of the Rules relating to offers of compromise.
29. On behalf of the plaintiff, Mr Connell submitted that the provisions of s.48A must prevail over the Uniform Civil Procedure Rules concerning offers of compromise, as the latter are mere regulations. The Court has a wide discretion in relation to offers of compromise and should exercise it in favour of the party who, in reality, had won: Roache v News Group Newspapers [1998] EMLR 161; this discretion had been exercised generously in a number of defamation cases. The plaintiff did make offers, although above the sum awarded and just before the trial, and s.48A(2) should prevail over the offer of compromise regulations. The plaintiff should be entitled to his costs for the whole of the trial, including the cost of senior counsel. In particular, the plaintiff should have his costs of the s.7A jury trial, where the defendant did not give evidence, and where the plaintiff was successful. The defendant could have waived the need for a s.7A jury trial.
30. Mr Campbell SC, for the defendant, submitted that s.48A entitled his client not only to costs from the date of the offer of compromise, but to a favourable costs order (i.e. no costs order) for the period prior to the offer by reason of the plaintiff’s manner of conduct of the litigation. In addition, he submitted that Jones v Sutton (No. 2) was authority for the proposition that senior counsel was not required for this straightforward trial, where the publications were simple slanders and the defence was unlikelihood of harm (as had been the case in Jones v Sutton (No. 2)). As to waiving the s.7A jury trial, this was an unheard-of step and while it might be appropriate to do so in a newspaper publication, it was not reasonable where the matter complained of was a slander and where issues of whether the publications were merely vulgar abuse needed to be determined by a jury.
The offers that were made and the conduct of the litigation
31. In order to deal with these applications I should first set out a short history of the litigation and the offers of compromise.
32. These proceedings were commenced by statement of claim on 26 May 2006. Originally the plaintiff claimed damages for three oral publications on 14 October 2002, 18 December 2005 and 26 March 2006. There was a challenge to the imputations and, following the filing of amended pleadings, a fourth publication dated 6 October 2000 was added. A s.7A jury was empanelled on 14, 15 and 16 February 2007 and the jury found that a series of imputations was conveyed by each of the publications.
33. The defendant filed a defence of unlikelihood of harm, followed by an amended defence pleading a defence of partial justification to some of the imputations and a defence of qualified privilege at common law. On the day of the hearing, all defences except s.13 were abandoned. The matter was listed for hearing for 27-30 August, 4 September and 14 September followed by written submissions and judgment was handed down on 13 December.
34. In accordance with the usual procedure after a s.7A trial (as to which, see Haertsch v Andrews and Ors, Ireland J, 1 December 2000) no costs order was made following the s.7A trial, even though the plaintiff was substantially successful, on the basis that defamation cases are heard in a two stage hearing and any application for costs would be premature. The plaintiff was again substantially successful in the trial in that damages were awarded for three of the four publications (the defence of unlikelihood of harm succeeding in relation to the third publication). While modest damages of $1,000 were awarded for the first publication, damages of more substance were awarded for the second and fourth publications.
35. However, during the course of the litigation, the defendant served three offers of compromise upon the plaintiff. Two of these three offers were for sums substantially in excess of the total damages awarded. In addition, the defendant made an offer at an informal settlement conference. The plaintiff made two offers of compromise for sums substantially in excess of the damages awarded.
36. The history of these offers is as follows:
(a) 20 June 2006
Approximately a month after proceedings were commenced the defendant served an offer of compromise for $2,000 plus costs.
(b) 20 April 2007
After the s.7A jury trial, the defendant served an offer of compromise in the sum of $20,000 plus costs as agreed or assessed.
(c) Undated informal offer
According to a letter dated 23 August 2007 at about this time there was an informal discussion as to settlement in the course of which the defendant offered to settle the plaintiff's claim for the sum of $70,000 inclusive of costs. According to the letter from Higgins & Higgins of 23 August 2007, the plaintiff's legal representatives advised that they had no instructions to respond to that offer. This led to the third offer of compromise of 23 August 2007, which was a response to the plaintiff's offer of compromise of 12 July 2007.
(d) Plaintiff's offer of 12 July 2007
The plaintiff on 12 July 2007 offered to settle for $50,000 plus costs by way of offer of compromise.
(e) 23 August 2007
The defendant offered to settle by way of an offer of compromise for $33,500 plus costs.
The plaintiff offered to settle for $65,000 plus costs, in a without prejudice letter.(f) 24 August 2007
37. The proceedings commenced on the following Monday, 27 August 2007.
38. I note that after the proceedings were concluded the plaintiff made an offer of settlement of $10,000 plus costs. The defendant responded to this in a letter of 3 September 2007 offering to accept the sum of $10,000, to pay the plaintiff's costs up to 20 April 2007 on a party/party basis but for the plaintiff to pay the defendant's costs from 21 April 2007 on an indemnity basis.
39. Each of the parties agreed that this offer of settlement, which occurred after the hearing was over, could not be relied upon as being an offer of compromise in accordance with the Rules. Mr Campbell SC submitted, however, that it was part of the whole chain of reasonable conduct by the defendant that this offer was made. In other words, the defendant had offered to pay the plaintiff's costs up to 20 April 2007 on a party/party basis (subject to the costs orders already made in favour of the defendant remaining), and it was submitted that the defendant's failure to accept this offer was a matter relevant to the exercise of discretion pursuant to s.48A.
Application of these principles to the facts in this case
40. The defendant in these proceedings clearly complied with his obligation under s.48A to make offers of compromise. He made three offers, one immediately after the litigation was commenced and two before the trial. They were all substantial offers and, in the case of the second and third offers, far exceeded the damages awarded. There was no reply to these offers, although a counter-offer was made in the days before the trial on liability.
41. The provisions of s.48A are not intended to undercut the Offer of Compromise provisions in the Uniform Civil Procedure Rules; they are intended to reinforce them. There is no inconsistency between the provisions. Accordingly, the plaintiff must pay the defendant’s costs on an indemnity basis from the date of the April offer, which exceeds the sum I awarded to the plaintiff.
42. This brings me to the question of the costs order I should make in relation to the balance of these proceedings. The plaintiff asks me to make no order as to costs or, if I am disposed to make a costs order, not to allow the costs of Senior Counsel, for the reasons set out by the Court of Appeal in Jones v Sutton (No. 2). The plaintiff draws my attention to the similarity between the two cases, in that in each case there were oral publications to one person where no issue of legal difficulty arose.
43. With great respect to the Court of Appeal in Jones v Sutton (No. 2), I do not understand their reasons for excluding Senior Counsel’s fees from any part of the trial of an action which, in addition to being a complex s.7A jury trial concerning republication issues, was the first post-1995 trial on the defence of unlikelihood of harm before a judge. The large number of appeals from perverse verdicts in s.7A trials (which were described in Parliament as “an abomination” during the Second Reading speech of the Defamation Act 2005 on 13 September 2005) is another sound reason why it is appropriate to retain an experienced Senior Counsel for these actions.
44. I was the trial judge in the judgment appealed from in Jones v Sutton (No. 2), and I noted that if I had awarded the $5,000 damages I assessed, I would not have awarded costs on common law principles, by reason of the very small size of the verdict. The Court of Appeal in Jones v Sutton (No. 2) does not refer to this finding, preferring instead to deprive the plaintiff of selected costs on other grounds. The issue of proportionality as to the costs of the action and the damages awarded is of central importance, not only in defamation proceedings but for all civil litigation: s.60 Civil Procedure Act 2005.
45. It is my view that the Court of Appeal’s decision in Jones v Sutton (No. 2) can be distinguished for two reasons. The first is that the damages award in Jones v Sutton is very close to nominal damages; the award to Mr Hennessy in these proceedings is three times as large. The second is that the publications in Jones v Sutton (No. 2) were made in the course of such extraordinary hatred and hostility that Mr Hennessy and Mr Lynch would seem almost friendly by comparison. In Jones v Sutton I did not accept any of the witnesses called by the plaintiff as to hurt to feelings, including the plaintiff, and these findings were referred to by the Court of Appeal as significant on costs. No similar finding was made here.
46. As to whether the defendant should have waived a s.7A trial, the defendant was sued over first three, and then four, publications he made long ago when he was angry and (in relation to the last three) affected by alcohol. In my view it was appropriate for him to await the s.7A jury finding before making a substantial offer. He discharged his obligations under s.48A(2) by making an offer early in the litigation, and by making further offers of very substantial sums after the s.7A hearing. The delay between the dates of publication and the commencement of proceedings are also relevant.
47. In Arian v Nguyen [2001] NSWCA 5 at 37 Ipp A-JA noted that an order that a successful party pay some part of the unsuccessful opponent’s costs requires “strong justification” and that an order to pay all the costs would only be made in “exceptional circumstances”. The justification in the present circumstances for any variation would be the factors set out in s.48A, on the facts in this case.
48. It would be a crushing blow to impose upon any plaintiff who had been defamed a number of times (and awarded damages) the burden of paying his own costs in addition to the order I must make against him for his failure to accept the offer of compromise. Accordingly I am not prepared to make any order other than that the costs follow the event.
49. However, the event in question is that the plaintiff succeeded in three claims for defamation but failed on one.
50. In Morosi v Mirror Newspapers Ltd [1977] 2 NSWLR 749 the plaintiff succeeded in six out of nine actions for a series of publications of a similar nature, recovering a total of $17,000 in jury verdicts. The costs were reduced on appeal to two thirds of the general costs of these actions, including a sustained attack on the plaintiff’s reputation. It is my view that I should be guided by the principles enunciated by the Court of Appeal in Morosi and award the plaintiff a proportion of his costs representing his success in the litigation.
51. Mr Connell submitted that the third publication, on which the plaintiff failed, took up very little time, but in my view, on the facts in this case, each of these publications was equally important. Accordingly I propose to order the defendant to pay three-quarters of the plaintiff’s costs up to the date of the offer of compromise filed in these proceedings.
Orders
1. Vary order 6 of the orders of 13 December 2007 and order the defendant pay three quarters of the plaintiff’s costs up until the final date for acceptance of the defendant’s Offer of Compromise dated 20 April 2007 and that the plaintiff pay the defendant’s costs thereafter on an indemnity basis.
5
7
5