Moses v State of New South Wales (No. 4)

[2010] NSWDC 286

CITATION:	Moses v State of New South Wales (No. 4) [2010] NSWDC 286
HEARING DATE(S):	9 November 2010
JUDGMENT DATE:	17 December 2010
JURISDICTION:	Civil
JUDGMENT OF:	Gibson DCJ
DECISION:	(1) Vary order 9 of Gibson DCJ’s orders made on 14 October 2010 to provide that the defendant pay 80% of the plaintiffs’ costs on a party and party basis. (2) Plaintiffs’ application for indemnity costs refused. (3) Each party pay their own costs of their application for costs.
CATCHWORDS:	COSTS - proceedings for wrongful arrest, false imprisonment, malicious prosecution and defamation - defendant's partial success includes success in defamation action - interaction of s 40 Defamation Act 2005 (NSW) and "walk away" offers - whether defendant should pay part only of the plaintiff's costs - whether the plaintiff is entitled to indemnity costs by reason of the defendant's conduct of the action
LEGISLATION CITED:	Civil Procedure Act 2005 (NSW), s 98 Defamation Act 2005 (NSW), s 40 Uniform Civil Procedure Rules 2005 (NSW), r 42.1
CASES CITED:	Baker v Towle [2008] NSWCA 73 Cretazzo v Lombardi (1975) 13 SASR 1 Dean v Stockland Property Management Pty Ltd (No 2) [2010] NSWCA 141 Garrison v Eastwood (1918) 15 OWN 273 Melchior v Sydney Adventist Hospital Ltd (No 2) [2009] NSWSC 65 Morosi v Mirror Newspapers Ltd [1977] 2 NSWLR 749 Moses v State of New South Wales (No. 3) [2010] NSWDC 243 Nowlan v Marson Transport Pty Ltd [2001] NSWCA 346 Palavi v Nationwide News Pty Ltd (Colefax DCJ, District Court of New South Wales, 9 November 2010) Preston v Harbour Pacific Management Underwriting Pty Ltd [2008] NSWCA 216 Ritter v Godfrey [1920] 2 KB 47 Roach v News Group Newspapers Limited, The Times, 23 November 1992, [1998] EMLR 161 Short v Crawley (No 40) [2008] NSWSC 1302 Sunday Times Newspaper Company Limited v McIntosh (1933) 33 SR (NSW) 371
PARTIES:	First Plaintiff: David Moses Second Plaintiff: Tangiwai Kawenga Defendant: State of New South Wales
FILE NUMBER(S):	6191 of 2008
COUNSEL:	Plaintiffs: Mr C A Evatt First Defendant: Mr D Caspersonn
SOLICITORS:	Plaintiffs: Friend & Co Lawyers First Defendant: Henry Davis York Lawyers

JUDGMENT

[1] These are proceedings for defamation, assault, wrongful arrest and false imprisonment and, in the case of Mr Moses, for malicious prosecution. Liability on all these issues was strongly contested during the six-day trial and submissions which followed. I handed down judgment ([2010] NSWDC 243) and made the following orders:

(1) Judgment for the defendant for the defamation claim brought by the first plaintiff.
(2) Judgment for the defendant for the defamation claim brought by the second plaintiff.
(3) Judgment for the first plaintiff for the assault claim against the defendant in the sum of $10,000.
(4) Judgment for the defendant for the assault claim brought by the second plaintiff.
(5) Judgment for the first plaintiff for the false imprisonment claim against the defendant in the sum of $60,000.
(6) Judgment for the second plaintiff for the false imprisonment claim against the defendant in the sum of $60,000.
(7) Judgment for the first plaintiff for the claim for malicious prosecution against the defendant in the sum of $50,000.
(8) Liberty to the parties to bring in short minutes of order reflecting the agreed interest calculation in relation to the claims for general and aggravated compensatory damages.
(9) Costs reserved.
(10) Liberty to apply concerning interest and costs.
(11) Exhibits retained for 28 days.

[2] The quantum of interest having been mathematically agreed upon, and the judgment sum inclusive of interest has been paid to the plaintiffs. The remaining issue is the determination of costs. The applications before me are:

(a) The plaintiffs’ application for costs ( Uniform Civil Procedure Rules 2005 (NSW) r 42.1) on a party/party basis for the whole of the trial, which is resisted by the defendant, on the basis of success on the defamation claims and, in the case of Mr Kawenga, the assault claim;

(b) The plaintiffs’ application for costs on an indemnity basis (s 98 Civil Procedure Act 2005 (NSW)).

[3] These are my reasons for decision for orders that the defendant pay 80% of the plaintiffs’ party/party costs, and for refusing the plaintiffs’ application for payment of their costs on an indemnity basis.

The court’s discretion to award costs

[4] The discretion to award costs, although it must be exercised judiciously and in accordance with the provisions of the Civil Procedure Act 2005 (and, in the present case, s 40 Defamation Act 2005) remains an unfettered discretion. The rule that costs follow the event needs to be seen in the context of the demands for greater economy and efficiency of litigation. Nevertheless, Bray CJ’s statement in Cretazzo v Lombardi (1975) 13 SASR 1 at 11 that the general discretion is absolute and unfettered, except that it must be exercised judiciously, continues to be referred to with approval. In Baker v Towle [2008] NSWCA 73 at [84] Basten JA, referring to a series of decisions commencing with Cretazzo noted that “unless there are severable elements on which the plaintiff failed, in a case of that kind apportionment will rarely be appropriate.”

[5] In Cretazzo Jacobs J urged courts to exercise caution concerning the practice of unsuccessful parties seeking to vary the usual order of costs following the event on the basis of partial success. However, where there are severable causes of action, and a party has succeeded in one cause of action but failed in another, costs orders reflecting the success or failure in these different causes of action may be appropriate. In addition, a successful party “can expect a costs penalty if he or she unnecessarily litigates or causes expense” (Sunday Times Newspaper Company Limited v McIntosh (1933) 33 SR (NSW) 371 at 377).

[6] The following principles should specifically be noted in actions where there is a claim for defamation:

(a) The courts will take into account that successful defendants are not the moving party but are brought into the litigation against their will: Ritter v Godfrey [1920] 2 KB 47 at 53 per Lord Sterndale MR. This includes actions such as claims for defamation: Garrison v Eastwood (1918) 15 OWN 273. The purpose of such costs orders is to discourage plaintiffs from bringing, and defendants from defending, defamation actions they were likely to lose: Roach v News Group Newspapers Limited, The Times, 23 November 1992, [1998] EMLR 161.

(b) The question in defamation litigation is, as Sir Thomas Bingham explained in Roach, “who, as a matter of reality, has won.” Generally speaking, when determining such issues, each case must turn on its own facts, as Long Innes J noted in Sunday Times Newspaper Co v McIntosh (1933) SR (NSW) 371 at 378.

(c) Costs orders may be varied where a party enjoys partial success in defamation proceedings, as occurred in Morosi v Mirror Newspapers Ltd [1977] 2 NSWLR 749 where the defendant succeeded in three out of nine defamation actions, and where the total of damages awarded to the plaintiff were $17,000. There were many issues in this “extremely complex” (at 809) trial which led the court to reduce the plaintiff’s costs to two-thirds of the general costs of these actions.

(d) Section 40 Defamation Act 2005 (NSW) contains provisions aimed at encouraging early settlement. Those provisions are as follows:



“ 40 Costs in defamation proceedings

(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.


(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.”

[7] A “walk away” offer was made by the defendant in relation to the whole of the proceedings. While the plaintiffs received significant damages awards for some of their claims, they failed in relation to the defamation claim. The making of the “walk away” offer, in relation to the defamation claim, is a factor of some weight in favour of the defendant, by reason of the obligation under s 40 to make offers.

Award of party-party costs for the proceedings

[8] The defendant’s argument may be summarised as follows:

(a) Mr Kawenga’s claims for assault and defamation failed, so he has only succeeded on the false imprisonment claim, and Mr Moses failed in the defamation claim but succeeded on his other three claims, and awards of costs should be made mathematically in proportion to the defendant’s successes;

(b) There must be proportionality between costs and the subject matter of the proceedings (s 60 Civil Procedure Act 2005 (NSW)) and costs may be apportioned where a party is successful in only part of the litigation: Morosi v Mirror Newspapers Ltd [1977] 2 NSWLR 749 at 808 – 810; Short v Crawley (No 40) [2008] NSWSC 1302 at [25] – [33]. The defendant does not put a precise figure for these costs, but describes these authorities in the written submissions as making costs apportionment “with a broad brush”, that “mathematical precision is illusory” and that it will often depend upon “matters of impression and evaluation”;

(c) The defendant should be given some credit for the “walk away” offer in that the defendant did better than this for the defamation claim.

[9] The plaintiffs’ submissions are very short and consist of saying that the plaintiffs have “substantially” succeeded and are therefore entitled to an order for costs.

[10] I note the hearing of the oral evidence was conducted very expeditiously, but applications to reopen and the tender of further documents by both sides required the matter to be adjourned for submissions about these matters. The hearing of submissions was complicated by the defendant bringing an unpleaded claim of a defence of “coherence” to the defamation action.

[11] I shall first deal with the question of costs in relation to the defamation claim and the determination of issues relevant to s 40.

The defamation claim and the “walk away” offer

[12] A “walk away” offer is generally made by a defendant to a plaintiff, and consists of an offer to the plaintiff to abandon the claim without any penalty for the defendant’s costs. If such an offer is made in non-defamation cases, and the plaintiff loses the case, an application may be made under rule UCPR r 42.15A for appropriate costs orders.

[13] The plaintiffs failed on the defamation claim and the defendant, in support of the claim to be relieved of some of the costs, relied upon a “walk away” offer made to settle the whole of the litigation. That offer was not tendered, and it was not made clear to me whether it was a formal offer of compromise; the requirements of s 40, however, are such that either would be sufficient to satisfy the obligations of the defendant to make “a settlement offer”.

[14] This special statutory regime means that offers in defamation actions should be considered in a different way to offers made in other causes of action. That would include consideration of a “walk away” offer because:

(a) Section 40 does not require the offer to be an offer of compromise, and refers only to a “settlement offer”;

(b) The complexity of defamation means that an offer to “walk away” would involve compromising costs of substance ( Dean v Stockland Property Management Pty Ltd (No 2) [2010] NSWCA 141 at [15]); and

(c) Since the offer must be made to avoid the costs penalty of not making an offer at all, concerns about the genuineness of the offer ( Melchior v Sydney Adventist Hospital Ltd (No 2) [2009] NSWSC 65 at [17] per Hoeben J) need to take this factor into account.

[15] The making of the “walk away” offer has two consequences: it may enable the defendant to escape any obligation for indemnity costs (as is set out in more detail below) and it may entitle the defendant to favourable costs orders in relation to the defamation action.

[16] In the present circumstances, the offer had little effect because it covered all causes of action. It is, however, still a factor to take into account because defendants are brought into proceedings against their will, and the offer would have had considerable force had the cause of action been for defamation only.

[17] Accordingly the offer is one to which weight should be given when considering the issue of costs.

[18] Apart from the assault claim for Mr Kawenga, the plaintiffs were successful on all other aspects of the claim. Brings me to a consideration of the claim for indemnity costs.

The claim for indemnity costs

[19] The plaintiffs seek indemnity costs on the basis of the way in which the litigation was conducted, including the application to reopen to tender documents not discovered and the bringing, in submissions, of a defence to the defamation claim which had never previously been adverted to.

(a) Inadequate discovery by the defendant

[20] Mr Evatt submitted that indemnity costs should be awarded because of the defendant’s failure to discover documents concerning the series of robberies leading to the police covert operation to arrest the offender, the suspects under consideration as the offender in the first operation in which the plaintiff was arrested, documents relating to the plaintiff’s arrest (notably CD-rom photographs of the blue jumper, Mr Moses wearing the blue jumper and Mr Moses’s facial injuries), documents relating to the second covert operation in which the actual offender was arrested and subsequent documentation which would show that following arrest of the actual offender, these handbag robberies ceased.

[21] The precise objections are:

(a) Apart from the CD-ROM (which was referred to in the List of Documents, but the contents of which were accidentally not provided to the plaintiff) none of these documents were listed in the List of Documents;

(b) Lost documents such as the list of suspects were not listed in Schedule 2;

(c) As a result of Detective Porter referring to this material in his evidence, it was necessary for further material to be produced “on the run” during the trial and still further material to be provided after the trial by way of an application by the defendant to reopen its case; and

(d) The discovery problems extended the hearing time and created unfairness for the plaintiffs, especially Mr Moses.

[22] In support of this application, Mr Evatt referred to Palavi v Nationwide News Pty Ltd (Colefax DCJ, District Court of New South Wales, 9 November 2010), where the defendant sought discovery of “mobile phone and/or Facebook and/or Myspace pages” (Palavi at [8]). The plaintiff had replaced her mobile phones prior to accrual of the cause of action but failed to list their contents or to discover her current mobile phone contents. At the trial the defendant obtained orders which effectively struck out the statement of claim, the trial judge striking out two imputations because of the plaintiff’s misconduct, and opining that the remaining imputations were not conveyed. This decision is of little assistance as it turns on the finding (at [71]) that the plaintiff disposed of one of her current phones to avoid discovery.

[23] As I noted in Moses v State of New South Wales (No. 3) [2010] NSWDC 243 at [9](b), complaints of failure to discover are not uncommon in defamation litigation. This may be because procedures such as service of statements, agreed bundles of documents and concurrent expert evidence have not been used in defamation proceedings in the past, with the result that there is a level of “trial by ambush” of a kind not tolerated in other areas of litigation (Nowlan v Marson Transport Pty Ltd [2001] NSWCA 346). The consequences of failure to discover in defamation actions, as discussed by the NSW Court of Appeal in Preston v Harbour Pacific Management Underwriting Pty Ltd [2008] NSWCA 216 at [38] – [40], has been to take a robust approach to such issues, particularly where both sides of the litigation are likely to have been at fault, either by not discovering material themselves, or by failing to take a proactive approach prior to the trial to the opponent’s asserted failure to discover.

[24] The defendant’s failure to discover a large amount of documentation, although regrettable, made no difference to the result (cf Preston, supra) and appears to have occurred principally by oversights or mistakes. The defendant pointed out that Mr Moses could have discovered the jumper in question. In other words, as occurred in Preston, there was a degree of failure to discover on both sides, which underlines the undesirability of penalising litigants or their lawyers for the kinds of errors and oversights that tend to occur in complex litigation.

Pleading a defence of “coherence”

[25] The circumstances in which the handing down of judgment was delayed by this defence is discussed in detail in my judgment. The delay was unfortunate, as was the defence. Nevertheless, the defendant was successful on the defamation claim, so this objection has little merit.

Conclusions

[26] Taking all of the above into account, I consider the proposal by Mr Caspersonn of an order similar to that made in Morosi to be both appropriate and sensible. I differ from him only as to the percentage, in that he sought an order that the defendant only pay 75% of the costs, while I propose to award 80%. The principal claims in these proceedings were the false imprisonment and malicious prosecution claims, and on these the plaintiffs were entirely successful.

(1) Vary order 9 of Gibson DCJ’s orders made on 14 October 2010 to provide that the defendant pay 80% of the plaintiffs’ costs on a party and party basis.
(2) Plaintiffs’ application for indemnity costs refused.
(3) Each party pay their own costs of their application for costs.

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