Palmer v McGowan (No 6)

Case [2022] FCA 927

FEDERAL COURT OF AUSTRALIA

Palmer v McGowan (No 6) [2022] FCA 927

File number: NSD 912 of 2020
Judgment of: LEE J
Date of judgment: 11 August 2022
Catchwords: COSTS – appropriate award for costs – artificiality in assessing success of claim by reference to only economic considerations – need to assess whether, as a matter of substance, one state of affairs (that provided for by the judgment) is more favourable than another state of affairs (that provided for by the offer) – ultimate question is what is a just cost order in all the circumstances – indemnity costs awarded but related only to cross-claim
Legislation:

Federal Court of Australia Act 1976 (Cth) ss 37M(3), 37N(1), 37N(4)

Federal Court Rules 2011 (Cth) rr 25, 40.08

Defamation Act 2005 (NSW)

Defamation Act 2005 (WA) s 40
Cases cited:

Calderbank v Calderbank [1976] Fam 93

Foots v Southern Cross Mine Management Pty Ltd [2007] HCA 56; (2007) 234 CLR 52

Murphy v Nationwide News Pty Ltd (No 2) [2021] FCA 432

Oliver v Nine Network Australia Pty Ltd [2019] FCA 583

Palmer v McGowan (No 5) [2022] FCA 893

Stead v Fairfax Media Publications Pty Ltd (No 2) [2021] FCA 65; (2021) 386 ALR 237
Division: General Division
Registry: New South Wales
National Practice Area: Other Federal Jurisdiction
Number of paragraphs: 43
Date of hearing: 11 August 2022
Counsel for the Applicant / Cross-Respondent: Mr B Dean
Solicitor for the Applicant / Cross-Respondent: Sophocles Lawyers
Counsel for the Respondent / Cross-Claimant: Mr B W Walker SC
Solicitor for the Respondent / Cross-Claimant: Clayton Utz

ORDERS

NSD 912 of 2020
BETWEEN:

CLIVE FREDERICK PALMER

Applicant
AND:

MARK MCGOWAN

Respondent
AND BETWEEN:

MARK MCGOWAN

Cross-Claimant
AND:

CLIVE FREDERICK PALMER

Cross-Respondent

ORDER MADE BY:

LEE J

DATE OF ORDER:

11 AUGUST 2022

THE COURT ORDERS THAT:

1.The cross-respondent pay the cross-claimant’s costs of the Cross-Claim from 11am on 22 December 2021 and otherwise, there be no order as to costs.

2.The order for costs in favour of the cross-respondent be awarded in a lump sum pursuant to r 40.02(b) of the Federal Court Rules 2011 (Cth).

3.In the absence of any agreement between the parties as to the quantum of costs payable, the Registrar is directed to determine the quantum of the cross-respondent’s costs in such a manner as the Registrar deems fit including, if thought appropriate, on the papers.

4.At the conclusion of the process provided for by these orders, the Registrar is to make orders about the payment of the cross-respondent’s costs in the sum or sums determined, to be payable within 14 days of such orders.

Note:   Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


REASONS FOR JUDGMENT
(Delivered ex tempore)

LEE J:

A        INTRODUCTION

  1. Having heard from the parties today, it is possible to make orders as to costs immediately.

  2. The principled approach to determining costs is well known: the discretion is broad, but must be exercised judicially, in accordance…

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Details
AGLC
Palmer v McGowan (No 6) [2022] FCA 927
Case
[2022] FCA 927
Decision Date

CaseChat Overview and Summary

In Palmer v McGowan (No 6), the Federal Court of Australia dealt with a dispute between two parties, Mr Palmer and Mr McGowan, regarding costs associated with a cross-claim. The court was required to determine whether an appropriate award for costs should be made, considering the artificiality in assessing the success of the claim by reference to only economic considerations. The ultimate question was what is a just cost order in all the circumstances.

The court considered the motivations of Mr McGowan in commencing the Cross-Claim, noting that Mr Palmer initiated the litigation and the Cross-Claim was defensive. The court also observed that Mr McGowan took no steps prior to the institution of this proceeding to raise any issue with the publications upon which he now sues. Despite considering the Cross-Claim to be a suboptimal use of the Court's resources, it was Mr Palmer who first engaged the Court's processes. The court found that the commencement of the Cross-Claim in relation to plainly defamatory publications could not be stigmatised as being unreasonable. The court also took into account the fact that an offer of compromise was made.

The court concluded that the rejection of the offer led to an award of indemnity costs, as the result was more favourable to the person making the offer than the terms of the offer. The court ordered that the cross-respondent pay the cross-claimant’s costs of the Cross-Claim from 11am on 22 December 2021. The order for costs in favour of the cross-respondent was awarded in a lump sum pursuant to r 40.02(b) of the Federal Court Rules 2011 (Cth). The Registrar was directed to determine the quantum of the cross-respondent’s costs in such a manner as the Registrar deemed fit, including, if thought appropriate, on the papers.

Orders

Orders of the court

1. The cross-respondent pay the cross-claimant’s costs of the Cross-Claim from 11am on 22 December 2021 and otherwise, there be no order as to costs.

2. The order for costs in favour of the cross-respondent be awarded in a lump sum pursuant to r 40.02(b) of the Federal Court Rules 2011 (Cth).

3. In the absence of any agreement between the parties as to the quantum of costs payable, the Registrar is directed to determine the quantum of the cross-respondent’s costs in such a manner as the Registrar deems fit including, if thought appropriate, on the papers.

4. At the conclusion of the process provided for by these orders, the Registrar is to make orders about the payment of the cross-respondent’s costs in the sum or sums determined, to be payable within 14 days of such orders.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

In the primary judgment (Palmer v McGowan (No 5) [2022] FCA 893), I made two findings relevant to the motivations of Mr McGowan in commencing the Cross-Claim: at [144], I observed that it “was Mr Palmer who commenced the litigation and the Cross-Claim was, in substance, ‘defensive’”; and at [483], in dealing with the extent of Mr McGowan’s reaction to the publication, I noted that it was of “significance that Mr McGowan took no steps prior to the institution of this proceeding, unlike Mr Palmer, to raise any issue with the publications upon which he now sues.” Although I considered the Cross-Claim to be a suboptimal use of the limited resources of the Court, it was, after all, Mr Palmer who first engaged the Court’s processes. It would be incorrect to equate the Cross-Claim with Mr McGowan unilaterally taking action in this Court as an applicant. I am amply satisfied that, unless Mr Palmer sued, Mr McGowan would not have sued. In circumstances where Mr McGowan was already dragged into Court and was already required to expend legal costs, the commencement of the Cross-Claim in relation to plainly defamatory publications cannot be stigmatised as being unreasonable. My preliminary views in this regard have now been fortified by discovering, for the first time, that an offer of compromise was made. The notion that Mr Palmer and Mr McGowan are equally responsible for these proceedings having consumed significant private and public resources cannot be reconciled with the objective facts. This asymmetry of responsibility is of significance in fastening upon an appropriate order. Given the nature of the mutual dealings as discussed in the primary judgment, like the response to the feud between the houses of Montagues and Capulets, some might consider there is merit in saying a “plague on both your houses”, and making no order as to costs. But this result would not reflect the reality that it was Mr Palmer who first picked up the cudgels and, even more importantly, would give insufficient weight to their differing approaches to resolving the dispute. Both men went too far in their political jousting, and both men litigated, but only one was willing to draw back and avoid a long and costly hearing. Stripped of presently irrelevant complication, FCR 25 provides that if an offer is made by someone making a claim and it is unreasonably rejected, and a judgment is obtained in terms better than the offer, then indemnity costs follow; similarly, if someone defending a claim makes an offer and it is unreasonably rejected, and the result was more favourable to the person making the offer than the terms of the offer, indemnity costs follow. The Offer was also framed as a form of “without prejudice” offer, known as a Calderbank offer. The rejection of such a proposal can also lead to an award of indemnity costs if the offer is bettered by the result ultimately obtained by the offeror: see Calderbank v Calderbank [1976] Fam 93. It can be seen immediately that having obtained judgment in the sum of $20,000, Mr McGowan secured a more favourable outcome on his Cross-Claim than discontinuance with no order as costs as provided for in the Offer.

Ratio Decidendi

Legal Principle Established

At the very least, it is contended an order should be made that Mr Palmer pay Mr McGowan’s costs of the Cross-Claim from the date of the Offer, 20 December 2021, with such costs to be assessed on an indemnity basis.C CONSIDERATION AND CONCLUSION In the primary judgment (Palmer v McGowan (No 5) [2022] FCA 893), I made two findings relevant to the motivations of Mr McGowan in commencing the Cross-Claim: at [144], I observed that it “was Mr Palmer who commenced the litigation and the Cross-Claim was, in substance, ‘defensive’”; and at [483], in dealing with the extent of Mr McGowan’s reaction to the publication, I noted that it was of “significance that Mr McGowan took no steps prior to the institution of this proceeding, unlike Mr Palmer, to raise any issue with the publications upon which he now sues.” Although I considered the Cross-Claim to be a suboptimal use of the limited resources of the Court, it was, after all, Mr Palmer who first engaged the Court’s processes. It would be incorrect to equate the Cross-Claim with Mr McGowan unilaterally taking action in this Court as an applicant. I am amply satisfied that, unless Mr Palmer sued, Mr McGowan would not have sued. In circumstances where Mr McGowan was already dragged into Court and was already required to expend legal costs, the commencement of the Cross-Claim in relation to plainly defamatory publications cannot be stigmatised as being unreasonable. My preliminary views in this regard have now been fortified by discovering, for the first time, that an offer of compromise was made. The notion that Mr Palmer and Mr McGowan are equally responsible for these proceedings having consumed significant private and public resources cannot be reconciled with the objective facts. This asymmetry of responsibility is of significance in fastening upon an appropriate order. Given the nature of the mutual dealings as discussed in the primary judgment, like the response to the feud between the houses of Montagues and Capulets, some might consider there is merit in saying a “plague on both your houses”, and making no order as to costs. But this result would not reflect the reality that it was Mr Palmer who first picked up the cudgels and, even more importantly, would give insufficient weight to their differing approaches to resolving the dispute. Both men went too far in their political jousting, and both men litigated, but only one was willing to draw back and avoid a long and costly hearing. Stripped of presently irrelevant complication, FCR 25 provides that if an offer is made by someone making a claim and it is unreasonably rejected, and a judgment is obtained in terms better than the offer, then indemnity costs follow; similarly, if someone defending a claim makes an offer and it is unreasonably rejected, and the result was more favourable to the person making the offer than the terms of the offer, indemnity costs follow. The Offer was also framed as a form of “without prejudice” offer, known as a Calderbank offer. The rejection of such a proposal can also lead to an award of indemnity costs if the offer is bettered by the result ultimately obtained by the offeror: see Calderbank v Calderbank [1976] Fam 93.