Khan v Hassan (Ruling as to costs)
[2024] VCC 93
•19 February 2024
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMON LAW DIVISION | Revised Not Restricted Suitable for Publication |
DEFAMATION LIST
Case No. CI-23-04265
| NURAL KHAN (also known as MANIK, formerly known as MOHAMMAD NURUL ISLAM KHAN) | Plaintiff |
| v | |
| MOHAMMAD MAHBUBUL HASSAN | Defendant |
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JUDGE: | HER HONOUR JUDGE CLAYTON | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | On the papers | |
DATE OF RULING: | 19 February 2024 | |
CASE MAY BE CITED AS: | Khan v Hassan (Ruling as to costs) | |
MEDIUM NEUTRAL CITATION: | [2024] VCC 93 | |
RULING
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Subject:DEFAMATION – COSTS
Catchwords: Application for indemnity costs – whether defendant’s offer constitutes “offer” that enlivens s40 of the Defamation Act 2005 – reasonableness of rejecting offer – whether there is sufficient basis for award of indemnity costs
Legislation Cited: Defamation Act 2005, s23; Limitation of Actions Act 1958, s23B, s40
Cases Cited:Anderson Group Pty Ltd v Tynan Motors Pty Ltd (No 2) (2006) 67
NSWLR 706
Banksia Securities Ltd v Insurance House Pty Ltd (Costs) [2020] VSC 234
Herning v GWS Machinery Pty Ltd (No 2) [2005] NSWCA 375
Holt v TCN Channel Nine Pty Ltd(No 2) [2012] NSWSC 968
Leichhardt Municipal Council v Green [2004] NSWCA 341
Segal v Commonwealth Bank of Australia [2016] NSWCA 90
Zoef v Nationwide News Pty Ltd(No 2) [2017] NSWCA 2.
Ruling: The defendant’s application for indemnity costs is dismissed.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | J A Castelan | SR Lawyers |
| For the Defendant | J P Wheelahan | Gadens Lawyers |
HER HONOUR:
1On 7 December 2023, I refused an application by the plaintiff for leave to bring these proceedings, pursuant to s23 of the Defamation Act 2005 (“the Act”) and for an extension of time pursuant to s23B of the Limitation of Actions Act 1958 (“LOA Act”).
2The defendant brings this application for his indemnity costs of the proceeding.
3For the reasons below, the defendant’s application is refused.
4The plaintiff is to pay the defendant’s costs of the proceeding on a standard basis. The defendant is to pay the plaintiff’s costs of this application for indemnity costs on a standard basis. The proceeding is otherwise dismissed.
Is s40 of the Defamation Act enlivened?
5Section 40 of the Act provides:
“(1) In awarding costs in defamation proceedings, the court may have regard to—
(a) the way in which the parties to the proceedings conducted their cases (including any misuse of a party's superior financial position to hinder the early resolution of the proceedings); and
(b) any other matters that the court considers relevant.
(2) Without limiting subsection (1), a court must (unless the interests of justice require otherwise)—
(a) if defamation proceedings are successfully brought by a plaintiff and costs in the proceedings are to be awarded to the plaintiff— order costs of and incidental to the proceedings to be assessed on an indemnity basis if the court is satisfied that the defendant unreasonably failed to make a settlement offer or agree to a settlement offer proposed by the plaintiff; or
(b) if defamation proceedings are unsuccessfully brought by a plaintiff and costs in the proceedings are to be awarded to the defendant—order costs of and incidental to the proceedings to be assessed on an indemnity basis if the court is satisfied that the plaintiff unreasonably failed to accept a settlement offer made by the defendant.”
6On 25 August 2023, the defendant made an offer (“the August offer”) to the plaintiff that:
(a) The plaintiff discontinue proceeding CI-23-04265;
(b) His summons for leave to bring those proceedings and his extension of time applications are dismissed;
(c) The plaintiff pay the defendant’s costs of the proceeding and the summons on a party/party basis;
(d) The plaintiff releases the defendant from any further claims arising out of the “Nahid Rains” publication the subject of proceeding CI-21-05334 and CI-23-04265.
7The plaintiff did not accept the August offer. The defendant says the plaintiff’s failure to accept the offer was unreasonable in circumstances where the defendant’s offer was accompanied by an adequate explanation of why the plaintiff’s application would fail, and was made at the earliest opportunity. Further the plaintiff is himself a lawyer and was represented by experienced counsel. Had the plaintiff accepted the offer, there would have been a “sensible commercial resolution of the parties’ respective legitimate interests”.[1] The defendant submits that his assessment of the plaintiff’s prospects of success that accompanied the August offer was supported by this Court’s ruling on that application.
[1]Defendant’s submissions on costs at paragraph [14]
8The defendant says the operation of s40 is enlivened and the Court must award indemnity costs unless the interests of justice require otherwise. The defendant says the interests of justice do not require otherwise, and that he should not be left out of pocket because of an unsuccessful application by the plaintiff to relitigate the matter.
9The defendant relies on an affidavit of Julia Bell dated 31 January 2023 setting out the costs he has incurred in this proceeding, which exceed $46,000, more than $33,000 of which is for counsel fees for preparing advice and submissions, including $5775 for preparing submissions and providing advice on the question of this indemnity costs application.
10The plaintiff says s40 is not enlivened because the August offer was not a settlement offer within the meaning of the Act as it was not a reasonable offer at the time it was made, and the plaintiff did not unreasonably fail to accept that offer.
11The plaintiff says he made a reasonable offer to resolve the matter, which would have cost the defendant less money ($20,000) than he has spent opposing the application and seeking his indemnity costs.
Findings
12An offer that represents a demand for capitulation or payment in full may not amount to an offer that triggers an entitlement to the operation of an indemnity costs provision.[2]
[2]Segal v Commonwealth Bank of Australia [2016] NSWCA 90
13Ordinarily there must be something of “a real and genuine element of compromise” in an offer if the rejection of it ought warrant the award of costs.[3]
[3](Ibid) at paragraph [44] citing Herning v GWS Machinery Pty Ltd (No 2) [2005] NSWCA 375; Anderson Group Pty Ltd v Tynan Motors Pty Ltd (No 2) (2006) 67 NSWLR 706; Leichhardt Municipal Council v Green [2004] NSWCA 341
14It is difficult to see what the genuine element of compromise was in the August offer, or how this represented a commercial settlement of the plaintiff’s legitimate interests.
15The Act imposes a mandatory obligation to award indemnity costs where there has been an unreasonable failure to accept a settlement offer, unless the interests of justice require otherwise.
16The Act does not define what constitutes a settlement offer. In Zoef v Nationwide News Pty Ltd(No 2),[4] Gleeson JA (with whom Ward and Payne JJA agreed) observed:
“To qualify as a “settlement offer” for the purposes of s 40, the offer to settle the proceedings must answer the description of a “reasonable offer at the time it was made”. If the offer of amends is not a reasonable offer, then it is not a “settlement offer” for the purposes of s 40.”[5]
[4][2017] NSWCA 2
[5](Ibid) at paragraph [59] citing Holt v TCN Channel Nine Pty Ltd(No 2) [2012] NSWSC 968 at [50] (Adamson J).
17In this case, the offer made by the defendant was an offer for the plaintiff to completely capitulate. There was no element of compromise. There was no offer of apology. Rather it was an articulation of the ordinary consequences – that costs follow the cause – of an unsuccessful application.
18I am not satisfied that the August offer constituted an “offer” that enlivens the operation of s40.
19If I am wrong about that, I am not persuaded that the plaintiff unreasonably failed to accept the offer.
20The concerns notice provisions of the Act are relatively new and there is little authority to provide guidance to a litigant. In circumstances where there was an arguable case for leave under s23 of the Act and for an extension of time under s23B of the LOA Act, it was not unreasonable for the plaintiff not to accept an offer that represented a complete capitulation of his claim, including payment of the defendant’s costs.
Ought indemnity costs be awarded?
21I have found that s40 of the Act is not enlivened. I turn now to consider whether indemnity costs ought nevertheless be awarded.
22At common law the discretion to award indemnity costs must be exercised judicially and not unreasonably.[6] Indemnity costs may be awarded where the circumstances warrant a departure from the usual order that costs are payable on a standard basis. Such circumstances might include an element of delinquency, or where there has been some unusual, blameworthy conduct, delay or where an application was doomed to fail.
[6]Banksia Securities Ltd v Insurance House Pty Ltd (Costs) [2020] VSC 234
23It is not submitted that any of those features are relevant in this case and I am not satisfied that there is anything about the conduct of this case that requires an indemnity costs order.
24The fact that the plaintiff lost his application is not a sufficient basis for an award of indemnity costs.
25I find that:
(a) The plaintiff’s conduct in the proceeding was reasonable;
(b) The outcome of that application was not a foregone conclusion; and
(c) The plaintiff made a genuine attempt to compromise his claim by offering to settle for $20,000 and an apology.
26As the defendant was successful in opposing the plaintiff’s application for leave, the defendant is entitled to his costs of the proceeding on a standard basis.
27I note that, on 11 December 2023, the plaintiff indicated he would not oppose such an order being made. However the defendant chose to bring this application for indemnity costs.
28The defendant has been unsuccessful in his application for indemnity costs and therefore the plaintiff is entitled to his costs of the application for indemnity costs.
29I will make the following orders:
(a) The plaintiff pay the defendant’s costs of the proceeding on a standard basis (excluding this application for indemnity costs);
(b) The defendant pay the plaintiff’s costs of and incidental to the application for indemnity costs on a standard basis;
(c) The proceeding is otherwise dismissed.
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