Metcalf v Wellington

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S EAPCI 2024 0049

KIRSTY METCALF	Applicant
v
HEATHER WELLINGTON	Respondent

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JUDGES:	BEACH and LYONS JJA
WHERE HELD:	Melbourne
DATE OF HEARING:	26 June 2024
DATE OF JUDGMENT:	26 June 2024
MEDIUM NEUTRAL CITATION:	[2024] VSCA 147
JUDGMENT APPEALED FROM:	[2022] VCC 1759 (Judge Clayton)

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PRACTICE AND PROCEDURE – Stay – Application for stay of taxation of costs order made by trial judge – Whether special or exceptional circumstances exist – Judgment sum already paid by defendant to plaintiff – Whether taxation of costs should be stayed pending appeal – Whether payment of costs into interest bearing controlled money account sufficient to protect defendant’s position.

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Counsel
Applicant:		Mr SK Wilson KC with Mr TJ Mullen and Ms H Jager
Respondent:		Mr DP Gilbertson KC with Mr JE McIntyre
Solicitors
Applicant:	LA Warren Lawyers
Respondent:	Verduci Lawyers

BEACH JA
LYONS JA:

Heather Wellington (‘the plaintiff’) is a local councillor on the Surf Coast Shire Council. Kirsty Metcalf (‘the defendant’) is a ratepayer in the Surf Coast Shire.
In 2021, the plaintiff commenced a County Court proceeding against the defendant claiming damages for defamation in respect of seven posts published by the defendant on a Facebook page. On 21 November 2022, following a nine day trial in August 2022, the trial judge gave judgment for the plaintiff in the sum of $100,000.[1]
[1]Wellington v Metcalf [2022] VCC 1759 (‘Reasons’).
In the course of her reasons, the judge concluded that six of the publications on the defendants’ Facebook page conveyed 13 imputations concerning the plaintiff which were defamatory (including imputations of dishonesty and corruption).[2] In giving judgment for the plaintiff, the judge rejected the defendant’s truth defence;[3] rejected the defendant’s statutory qualified privilege defence;[4] rejected the defendant’s Lange[5] qualified privilege defence;[6] rejected the defendant’s reply to attack qualified privilege defence;[7] rejected the defendant’s common law qualified privilege defence;[8] and concluded that, in any event, the defendant had been ‘motivated by malice’, because her conduct was ‘so reckless and so unreasonable as to amount to malice’.[9] In the reasons, the judge described the plaintiff as ‘an impressive witness’,[10] but said that the defendant was ‘not a reliable witness’.[11]
[2]Ibid.
[3]Ibid [323]–[417].
[4]Ibid [418]–[478].
[5]Lange v Australian Broadcasting Corporation (1997) 189 CLR 520.
[6]Reasons [479]–[492].
[7]Ibid [493]–[534].
[8]Ibid [535]–[541].
[9]Ibid [542].
[10]Ibid [237]–[253].
[11]Ibid [254]–[265].
On 15 December 2022, her Honour ordered the defendant to pay the plaintiff’s costs of the proceeding on an indemnity basis (‘indemnity costs order’).
On 21 December 2022, the defendant paid the plaintiff the $100,000 she had been ordered to pay by way of damages.
On 18 September 2023, the plaintiff’s solicitors sent the defendant’s solicitors a bill of costs totalling $664,674.60, of which the amount of $361,383.76 was for disbursements. On 25 March 2024, the defendant filed and served a notice of objections. On 2 April 2024, the plaintiff filed and served a response to the notice of objections. On 8 April 2024, the Costs Court provided a notice of estimate that the plaintiff’s costs would likely tax at the sum of $547,280.
On 8 May 2024, the defendant applied to the Costs Court for an adjournment of the taxation until the hearing and determination of an application for leave to appeal (which at that time had not yet been filed) from the orders made by the trial judge. On 9 May 2024, the Costs Court refused that application on the basis that such an order would amount to a stay of the trial judge’s orders, which the Costs Court did not have the power to grant.
On 14 May 2024, the defendant filed in this Court an application for leave to appeal; a written case in support of that application; and an application for orders granting her an extension of time within which to seek leave to appeal, leave to rely upon fresh evidence which was not before the trial judge and ‘stay[ing] the execution of the costs order’. The taxation of the costs order is currently listed for hearing on 4, 11, and 12 July, although it is possible that the taxation may take longer than that to complete which, in the plaintiff’s words, ‘could take the taxation into August or September 2024 or beyond’.
The application presently before the Court is the defendant’s application for a stay. The plaintiff opposes the application for a stay, but has sworn an affidavit in which she said:
Even if the costs order is taxed before this appeal is disposed of, and [the defendant] is required to pay the costs, I will instruct my lawyers to hold any sum paid by [the defendant] in respect of the costs order in their trust account, pending disposition of this appeal.

The basis of the stay application

The defendant submitted that this Court ought to exercise its discretion to stay the taxation because there are special circumstances to grant a stay; the appeal could be rendered nugatory if a stay was not granted; there is no apparent prejudice to the plaintiff in granting a stay; and there is a real risk that the defendant would not be restored to her former position if the stay is not granted and the application for an extension of time, application for leave to appeal and the appeal are upheld.
Relying upon this Court’s decision in Neate v Thoroughbred International Marketing Pty Ltd (‘Neate’),[12] the defendant submitted that there was no apparent injustice to the plaintiff in a stay being granted, save for the plaintiff being ‘kept out of the fruits of [her] victory for a period’. The defendant submitted that, while this is a relevant factor, in circumstances where the plaintiff has already been paid $100,000 in damages and her solicitors have acted on a no win/no fee basis, this factor is ‘of less importance than it might usually be’.
[12](2012) 34 VR 318, 322 [11] (Mandie JA and Cavanough AJA).
As part of her submission that, if the appeal is successful, there is a real risk that the plaintiff would not be able to restore the defendant to her former financial position if the costs order is executed against the defendant, the defendant said that, if the costs were paid to the plaintiff’s solicitors, ‘it may be hard to recover them’.
Recognising that the merits of the proposed appeal are a matter relevant to the exercise of the discretion to order a stay, the defendant submitted that the appeal ‘enjoys reasonable prospects of success’. Given that submission, it is necessary to say something briefly about the proposed appeal.

The proposed appeal

There is a single proposed ground of appeal as follows:
The interests of justice favour the appeal being allowed and the judgment and orders below being set aside, with a new trial ordered, following further discovery and interlocutory steps.
In support of that proposed ground, the defendant contends that the orders below should be set aside as a result of the plaintiff’s ‘serious unexplained failure to discover numerous relevant documents, which would likely have led to a “different result”, including by reason of the effect of her “litigation misconduct” on damages’.
Essentially, the defendant’s proposed appeal relies upon an assertion that approximately 130 pages of documents (‘the additional documents’), which were not discovered by the plaintiff prior to the conclusion of the trial, should have been discovered. These additional documents were obtained in subsequent FOI applications made by the defendant.
The defendant submits that the Court does not need to positively find that there is a realistic possibility that the fresh evidence would have led to a different result. This is because the defendant submits that where the misconduct of the successful party has resulted in the late production of fresh evidence, it will be for that successful party (i.e. the plaintiff) to establish the ‘absence of a realistic possibility’[13] of a different result below on the basis of that fresh evidence. The defendant submits that this standard should apply here because some parts of the additional documents remain redacted and/or further documents are yet to be provided by the plaintiff.
[13]Relying upon Clifton (Liquidator) v Kerry J Investment Pty Ltd (2020) 379 ALR 593, 644–648 [184]–[190]. [201]- [204] (Besanko, Markovic and Banks-Smith JJ) (‘Clifton’).
On the application for a stay pending the application for leave to appeal, it is not necessary to decide this issue. Indeed, we shall deal with the test to be applied on this stay application in the next section of these reasons.
Nevertheless we would observe, what was said in Commonwealth Bank of Australia v Quade,[14] (a case where misconduct on the part of the successful party had the result that relevant evidence in the possession of that party has remained undisclosed until after verdict) that ‘the question whether the verdict should be set aside will almost inevitably be answered in the negative if it does not appear that there is at least a real possibility that [an opposite result would have been produced]’.[15] This is notwithstanding that we are conscious that a different and lesser test was applied by the Full Federal Court in Clifton (Liquidator) v Kerry J Investment Pty Ltd[16] where the successful party at trial had become aware of the failure in discovery did not remedy that default and there was a basis to conclude there were further documents which were not made available by the successful party at the time of the appeal.
[14]See Commonwealth Bank of Australia v Quade (1991) 178 CLR 134, 142–3 (Mason CJ, Deane, Dawson, Toohey and Gaudron JJ) (‘Quade’).
[15]Ibid 143. See also Clone Pty Ltd v Players Pty Ltd (2018) 264 CLR 165, 190–1 [49]–[50] (Kiefel CJ, Gageler, Keane, Gordon and Edelman JJ); Mullett v Nixon [2022] VSCA 174, [64]–[65] (Ferguson CJ, Beach and McLeish JJA).
[16]Clifton (2020) 379 ALR 593.
The judge concluded that the defendant’s publications conveyed 13 imputations defamatory of the plaintiff.[17] These included that the plaintiff:
•used ratepayers’ money to challenge the planning scheme in VCAT;
•fraudulently claimed reimbursement for fuel expenses from the Council; and
•engaged in corruption in relation to the Council.
[17]Reasons [321].
We would also observe that none of the additional documents appear to call into question the judge’s conclusion about the defendant’s publication of these defamatory imputations.
Moreover, it is far from clear to us that there is any realistic possibility that the additional documents might lead to the reversal of other conclusions of the judge most relevantly relating to the defence of qualified privileged. This is because some of the qualified privilege defences were rejected because the judge concluded that publication had been made by the defendant to persons without a requisite interest,[18] and a common factor in the rejection of those defences is that the judge held the defendant’s conduct to be unreasonable.[19]
[18]See ibid [450], [478], [539].
[19]Ibid [478], [492], [531], [535].
The defendant submits that the further documents are relevant to the defences of truth and contextual truth. That may be so. In oral argument we were taken to two of the additional documents by counsel for the defendant. We observe that, based on the written and oral submissions, it is far from clear to us how these two documents of themselves give reason to believe there is a realistic possibility of a different result in any retrial. Indeed, in our view, the defendant’s interpretation of the 2 July email referred to in paragraph 25(a) of her written case appears inconsistent with the express words of that email.
The defendant also submits that the additional documents are relevant to the plaintiff’s credit given that her reputation was a factor which influenced the damages awarded. We accept that the additional documents may be relevant to damages to the extent that they relate to the plaintiff’s credit. We refer to our comments in relation to the two additional documents relied upon by counsel for the defendant in the previous paragraph.
In her written case, the defendant also submits the judgment sum was high and bordering on manifestly excessive in light of the limited extent of publication and the limited impact on the plaintiff. We would observe that this contention is not a proposed ground of appeal. In any event, we are of the strong preliminary view that the judgment sum was not manifestly excessive in light of the very serious nature of the defamatory imputations.[20]
[20]See eg, Howe v Zuchowski [2024] VSCA 56.
Notwithstanding these observations, we acknowledge that we have not had the benefit of full argument. Further, we are conscious that the defendant submits that a large number of documents have not been discovered by the plaintiff, totalling 130 pages. It may be that, with the benefit of full argument, the defendant’s proposed appeal might be stronger than currently appears to be the case.

The stay application

The general principles that govern the grant of a stay pending appeal are well settled.[21] They were recently summarised by Kennedy and Walker JJA in Kairouz v Jasper Nominees Ltd,[22] as follows:
As a starting point, a successful judgment creditor is entitled to the fruits of his or her victory. Accordingly, an applicant for a stay must satisfy the Court that ‘special or exceptional circumstances’ exist before a stay will be granted. Special circumstances may be shown to exist if the appeal will be rendered nugatory if a stay is not granted, or if the applicant will not be able to be restored to their former position if the judgment against them is executed.
An applicant for a stay should also demonstrate that there is at least an arguable ground of appeal. That is a relatively low bar — ordinarily the court does not have before it sufficient materials to consider, in detail, the merits of the grounds of appeal relied on in the application for leave to appeal, and the Court will generally not engage in speculation as to the ultimate prospects of success.[23]
[21]See generally Cellante v G Kallis Industries Pty Ltd [1991] 2 VR 653, 657 (Young CJ and Brooking J); Maher v Commonwealth Bank of Australia [2008] VSCA 122, [19]–[27] (Dodds‑Streeton JA, Redlich JA agreeing at [1]); Neate (2012) 34 VR 318, 320 [5]–[7] (Mandie JA and Cavanough AJA); [2012] VSCA 65; Quick v Lam-ly Pty Ltd [2019] VSCA 111, [27]–[29] (Beach JA).
[22][2024] VSCA 68.
[23]Ibid [9]–[10] (citations omitted).
Further, the Court in Neate adopted with approval the comments of Dawson J in Federal Commissioner of Taxation v Myer Emporium Ltd (No 1)[24] to the effect that special circumstances will exist where there is a real risk that it would not be possible for a successful appellant to be restored substantially to his or her former position if the judgment against them is executed.[25]
[24](1986) 160 CLR 220 (‘Myer Emporium’).
[25]Neate (2012) 34 VR 318, [6] (Mandie JA and Cavanough AJA) citing Myer Emporium (1986) 160 CLR 220, 222–3 (Dawson J).
The defendant relies upon three matters which she submits may constitute exceptional or special circumstances:
(a)the competing interests of the parties with the defendant submitting that, if she is successful in her applications and appeal, it is likely that the expenditure of costs and time associated with the taxation will be wasted. By contrast, while the plaintiff will not have the benefit of the indemnity costs order, the plaintiff has been paid the judgment debt and it appears that her solicitors have acted on a no win no fee basis;
(b)concern that the plaintiff may not have sufficient resources to repay any further sum paid by the defendant for her costs; and
(c)the merits of the proposed appeal with the defendant submitting that the appeal has reasonable prospects of success but conceding that, as this stay application is being heard before the substantive appeal, this Court is entitled to focus on matters relevant to the enforcement of the judgment, rather than the correctness of the judgment in question, relying upon Neate.[26]
[26]Neate (2012) 34 VR 318, 320 [8] (Mandie JA and Cavanough AJA).
We acknowledge that there is a risk that expenditure of costs and time associated with the taxation will be wasted if the defendant is successful on the leave application and the appeal. Nevertheless, we consider that the ultimate costs order in respect of the trial which has occurred might depend on the outcome of any retrial. The defendant also relied upon the affidavit of her solicitor that the ‘likely length of time for the taxation is 5 to 10 days’. That is potentially longer than the hearing of the trial itself. In oral argument counsel for the defendant emphasised it could last for up 10 days. However, counsel conceded that some of the fees were to be incurred by counsel in relation to matters which did not directly relate to the taxation of the plaintiff’s costs.
In this context, we would remind the parties of their obligations under the Civil Procedure Act 2010 (‘CPA’) to comply with their overarching obligations, including not to make any claim or make any response to any claim that does not have a proper basis (s 18), to cooperate in the conduct of a civil proceeding (s 20), to narrow the issues in dispute (s 23) and to ensure the costs are reasonable and proportionate (s 24).
As to the submission that any wasted expenditure of the defendant associated with the taxation of costs may not be recovered from the plaintiff, the defendant relied upon paragraph [56] of the affidavit of the plaintiff sworn 29 May 2024 that while she has already paid $474,000 in respect of her costs of the trial, her solicitors have not been paid in full and that she had to fund the litigation ‘by drawing upon [her] retirement savings and/or to incur interest to draw down the money (which continues to accrue)’. While this factor is relevant to the exercise of our discretion, we do not consider it to be determinative. In any event, we refer to our comments as to the overarching obligations under the CPA in relation to civil proceedings in the previous paragraph. We will address the risk that any costs paid to the plaintiff may not be recovered further below.
In this context we consider that the plaintiff is entitled to the ‘fruits’ not only of her damages judgment but also the indemnity costs order in her favour. As this case demonstrates, it takes time for bills of costs to be prepared and for taxation hearings to be fixed. The plaintiff is entitled to have her costs taxed and paid in accordance with the indemnity costs order. In our view, it is not to the point that some aspects of those costs might have been incurred on a ‘no win, no fee basis’.
As to the merits of the appeal, as we have already said, we have not yet heard full argument on the merits of the defendant’s proposed appeal. We note again the concession of the defendant as to the appropriateness of focussing on the merits in a case such as this. Consistently with authority, we do not propose to speculate about the defendant’s ultimate prospects of success.
That said, neither the merits of the proposed appeal, nor risk that the costs of the taxation might be wasted persuade us that special circumstances exist such that it would be appropriate to stay the taxation of the plaintiff’s costs, which is currently under way.
As to the risk that the plaintiff may not have sufficient resources to repay any further sum paid on account of her costs, which appears to be the substantial potential prejudice asserted by the defendant, the plaintiff and her solicitors by her counsel undertook to the Court to retain in an interest bearing controlled money account any and all sums paid by the defendant in respect of the costs of the trial until the hearing and determination of the application for leave to appeal, or any appeal or further order.

In all these circumstances, we are satisfied that the risk that it would not be possible for the defendant to substantially be restored to her former position if the judgment is executed (and the appeal successful) has been addressed.
As a result, we do not consider that special circumstances exist such that it would be appropriate to stay the taxation of the plaintiff’s costs.
Accordingly, the Court will order that:
Upon the respondent and the respondent’s solicitors undertaking to retain in an interest bearing controlled money account any and all sums paid by the applicant in respect of the costs of the trial until the hearing and determination of the applicant’s application for leave to appeal and any appeal or further order, the applicant’s application for a stay is refused.
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[2024] VSCA 147

26 June 2024