Pinksterboer v Coumi (No 2) - [2018] SADC 136

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
PINKSTERBOER & ORS v COUMI & ORS (No 2)
[2018] SADC 136
Judgment of His Honour Judge Beazley
13 December 2018
DEFAMATION - ACTIONS FOR DEFAMATION - COSTS
PRACTICE AND PROCEDURE - COSTS - GENERAL RULE OR STATUTE - WHETHER COSTS FOLLOW THE EVENT
PRACTICE AND PROCEDURE - COSTS - DEPARTING FROM THE GENERAL RULE - CONDUCT OF PARTIES
Application by the first, second, and third plaintiffs for costs against the first defendant - where different parties and different causes of action - the first plaintiff succeeded in claim for Defamation against the first defendant in respect of 3 out of 7 pleaded publications allegedly defamatory of him and 1 republication - whether costs to follow the event - whether costs to be determined on an indemnity basis pursuant to s 38 of the Defamation Act 2005 (SA) - the first plaintiff had also claimed damages from second and third defendants for separate allegations, including for Defamation, which claims were compromised prior to trial - the first, second and third plaintiffs claimed relief against first defendant in Nuisance and/or Harassment, which claims were compromised by agreement between those parties save for the question of costs - no further hearing on the merits of the claim in nuisance - whether either party entitled to costs in respect of that claim - where plaintiffs filed a Rules of Court offer in respect of all claims which offer was more favourable to the first defendant than the award of damages in Defamation upon which the first plaintiff alone succeeded - whether solicitor/client costs ought to be awarded to all of the plaintiffs - whether the court has discretion to not order costs on that basis - difficulty in any event in determining whether order for costs pursuant to s 38 of the Defamation Act to the first plaintiff alone is more or less favourable than award for costs under the Rules of Court offer - question of indemnity costs - offers of compromise - filed offer - informal offers - settlement offers under the Defamation Act - Calderbank offer - whether first defendant unreasonably failed to agree to settlement offers proposed by the first plaintiff - the proper exercise of the courts discretion.
Held: Such costs as are awarded, must exclude the costs incurred by the plaintiffs in their claims against the second and third defendants - the court orders that, notwithstanding the plaintiffs' filed offer, each party should bear its own costs of and incidental to the plaintiffs' claims in Nuisance and/or Harassment against the first defendant - while the plaintiffs' filed offer in respect of all of the claims, was more favourable to the first defendant than the quantum of damages awarded to the first plaintiff in the claim for Defamation, and would usually result in an award of solicitor and client costs to the plaintiffs for the whole of the action - that filed offer must be seen in light of the events which followed its filing, including the compromise of the claim against the second and third defendants, and the conduct of the parties - in any event the remedy most advantageous to the plaintiffs may be an award of costs on an indemnity basis to the first plaintiff alone in respect of the defamation proceedings - in the exercise of the discretion, the order of the court is that the first defendant is to pay 85% of the first plaintiff's costs of action in the Defamation claim, only, on an indemnity basis, with no other orders as to costs.
Defamation Act 2005 (SA); District Court (Civil) Rules 2006 R 263(1), referred to.
Maras v Lesses (No3) [2017] SASCFC 154; Green v Ellul (No2) [2018] SASCFC 105; Cornes v The Ten Group Pty Ltd (No2) [2012] SASCFC 106; Jones v Sutton (No2) [2005] NSWCA 203; Dimos v Willetts [2000] VSCA 154; Doedens & Others v Owen (No2) [2018] SASC 23; Australian Securities Commission v Aust-Home Improvements Ltd & Others (1993) 44 FCR 194; Gribbles Pathology Pty Ltd v Health Insurance Commission (1997) 80 FCR 284; Boscaini Investments Pty Ltd v Corp of City of Kensington & Norwood (1999) SASC 327; Blake v Leonidou (No2) [2012] SASC 131; Champagne View Pty Ltd v Shearwater Resort Management [2000] VSC 214; Aretzis v Larwood [2002] SASC 367; Copping v ANZ McCaughan (1995) 63 SASR 523; Blong Ume Nominees Pty Ltd v Semweb Nominess (No2) [2017] SASC 178; Ann Street Mezzanine Pty Ltd v KPMG [2011] FCA 453; Clark & Others v Lester [2018] SASC 107; Clark & Other v Lester [2018] SASC 107; Sands v Channel Seven Adelaide (No2) [2009] SASC 365; Kenneally v Pouras & Others [2007] SASC 303; PT Krakatau Steel v Felix Resources (No2) [2010] SASC 217; Machado & Anor v Underwood (No2) [2016] SASCFC 123; Rapuano (Trading as Raps Electrical) v Karydis Frisan & Anor [2013] SASCFC 93; Giles v Jeffrey [2016] VSCA 314; Hardie v Wingecaraibee Shire Council (No2) [2015] NSWSC 1191; Anchorage Capital Partners Pty Ltd v ACPA Pty Ltd (No 2) [2018] FCAFC 112; Reckitt Benckisser (Australia) Pty Ltd v Glaxosmithskline Australia Pty Ltd (No 2) [2018] FCAFC 153; Reckitt Benckisser (Australia) Pty Ltd v Glaxosmithskline Australia Pty Ltd (No 2) [2018] FCAFC 153; De Poi v Advertiser-News Weekend Publishing Company Pty Ltd (No2) [2016] SASCFC 45; Poniatowska v Channel Seven Sydney Pty Ltd (No5) [2017] SASC 32; Fitch v S & A Gallow Pty Ltd [2013] SASC 144; Animal Liberation (Vic) Inc v Gasser & Anor (1991) 1 VR 51; Nationwide News Pty Ltd v Weatherup [2017] QCA 70; Rolph, Defamation Law p 397; Hardie v H & WT (No2) [2016] VSCA 130; George, Defamation Law In Australia (3rd Ed) Chapter 41; Sands v Channel Seven Adelaide (No2) [2009] SASC 365; Basbuild Pty Ltd v Hall [2014] SASC 44; Shaw v Jarldon [1999] 76 SASR 28, considered.

PINKSTERBOER & ORS v COUMI & ORS (No 2)
[2018] SADC 136
Introduction

On 29 March 2018.[1] I entered judgment for Gavin Scott Pinksterboer (the first plaintiff) against Andrew Coumi (the first defendant), for the sum of $47,280, inclusive of interest.
[1] Pinksterboer v Coumi [2018] SADC 25.
The judgment was entered only in respect of the first plaintiff’s claim in Defamation.
Counsel for the plaintiffs sought an order for costs, amongst other bases, upon an indemnity pursuant to s 38 of the Defamation Act 2005 (SA), (the Act), or pursuant to the Rules of Court.
Amongst the alternative bases for the award of costs to the plaintiffs as opposed to the first plaintiff alone was for solicitor and client costs in consequence of the first defendant’s failure to accept their filed offer in respect of all of their causes of action against him.
The action has had a long and somewhat vexed history. While the trial itself was ultimately concerned only with the first plaintiff’s claims in Defamation, directed to the 3 separate publications and 1 republication by the first defendant, upon which the first plaintiff succeeded; the action had included a claim by him in respect of 4 other publications by the first defendant, alleged to be defamatory of him; other causes of action by 3 plaintiffs, including the first plaintiff against the first defendant in Private Nuisance and Harassment; and a claim by the first plaintiff in Defamation and Assault in respect of two other defendants.
The determination of the question of costs has been made unduly complex because of the other pleaded causes of action. However, on any view of those other claims, the first plaintiff’s claims in Defamation were the principal proceedings, in respect of which the bulk of the costs would have been incurred by the parties. It is necessary to examine the conduct of the parties in respect of each of the causes of action, in light of the filed offer of settlement.
I accordingly reserved the question of costs to enable the parties to consider those reasons. I gave them liberty to file submissions on the outstanding issue of costs. Both parties have filed affidavit evidence; and written submissions directed to the questions of costs, and have supplemented them with oral submissions.
In my published reasons, I set out at length the background to the action, together with a synopsis of the pleadings, including those of the other causes of action. However, in order to understand the respective submissions of the parties as to the question of costs, it is necessary to revisit some of the background to the action.
The relevant background matters, include the following:
1.   In or about 2012, well before the commencement of the proceedings, and indeed before the first plaintiff had become aware of the statements made by the first defendant, there were escalating neighbourhood disputes, particularly as between the first plaintiff and the first defendant. The first plaintiff had complained that he and his family had been subjected to acts by the first defendant, which he asserted constituted private nuisance and/or harassment.
2.   In paragraphs 65 to 73, inclusive, of the Statement of Claim the first, second and third plaintiffs had claimed relief, in particular injunctive relief, against the first defendant for private nuisance and harassment.
3.   At the commencement of the action there were 3 plaintiffs, the first plaintiff; his wife, Vicki Dimitra Pinksterboer (the second plaintiff); and the family’s trustee company Invest in Property Pty Ltd, as the registered proprietor of the family home (the third plaintiff).
4.   It is not unusual for plaintiffs to claim injunctive relief in nuisance as well as for defamation, because of the restrictive approach to injunctive relief in defamation.
This is relevant to the issue as to whether the plaintiffs’ claims in Private Nuisance and/or harassment, were bona fide, or were simply brought to assist in obtaining injunctive relief. [2] In my opinion those plaintiffs’ claims in nuisance were bona fide. There was no interlocutory injunction sought by them at any early stage of the proceedings, and the claim was contested at trial before a compromise was reached.
[2]    See Animal Liberation (Vic) Inc v Gasser & Anor [1991] 1 VR 51; Service Corp International PLC v Channel Fourt Television Corp [1999] EMLR 83; Swinsure (Laborities) Pty Ltd v McDonald [1979] 2 NSWLR 796 at 800; and Mahon v Mach 1 Financial Services Pty Ltd [2012] NSWSC 651.
5.   The first defendant had at all times consistently denied the allegations of nuisance and harassment in his pleadings.
6.   There were, initially 3 defendants to the proceedings involving different causes of action. They were respectively the first defendant; and persons referred to as JA (the second defendant) and CA (the third defendant). The first plaintiff had sought relief:
6.1    from the first defendant in respect of 7 separate publications and    one republication alleged to be defamatory of him; and
6.2    from the second and third defendants respectively for the publication of statements by them, allegedly defamatory of the first plaintiff, at about the same time as the publications alleged against the first defendant.
6.3    from the second defendant, alone, for an alleged assault, by him upon the first plaintiff.
7.   The claims against the second and third defendants in defamation, and that against the second defendant for alleged assault were compromised, with the terms of settlement contained in a Deed of Compromise and Release dated 18 August 2015. On 24 September 2015, by order of the court, in accordance with the terms of the Deed, the first plaintiff’s claims against the second and third defendants were dismissed with no order as to costs. The first defendant was not privity to the terms of settlement, which were confidential to the plaintiffs and the second and third defendants.
8.   On 22 February 2016, the first defendant gave notice of his intention to admit the 3 defamatory publications and the 1 republication, in respect of which judgment ultimately was entered for the first defendant. The first defendant did not however file an amended pleading until the commencement of the trial.
9.   Shortly prior to the commencement of the trial the first plaintiff intimated that he would not proceed in respect of the remaining four of the seven alleged defamatory publications. The first defendant had continued to deny each of those four publications.
10. The first defendant provided a written apology dated 14 May 2016.[3] There was however no compromise as to the quantum of the first plaintiff’s damages for the admitted 3 defamatory publications and the 1 republication. The trial commenced on 16 May 2016, and it was necessary for the first plaintiff to establish the quantum of damages.
11. The claims of the first, second and third plaintiffs against the first defendant in private nuisance and harassment were maintained by them at the start of the trial. On the second day of the trial, counsel for the three plaintiffs announced to the Court that the parties had:
Come to an agreement … to dispose of that part of the case involving private         nuisance and harassment, save for the question of costs.
[3]    See letter from first defendant's solicitor dated 15 May 2016.
That agreement was expressed as follows:
1. By consent it is noted that upon the undertaking of (the first defendant) that he will not:
1.1Make any complaint to any public authority including the South Australia Police, the Environment Protection Authority of South Australia or the City of Charles Sturt in respect (the Pinksterboer home) or
1.2Carry out any surveillance of (the Pinksterboer home) or its occupants.
1.3The plaintiffs do not press their claims in either private nuisance or harassment as outlined in paragraphs 72 and 73 of Part I or for orders 6 and 7 of Part 2 of the Statement of Claim dated 24 September 2014.
2. Nothing in paragraph 1 hereof limits the right of any party to seek the costs of the action or part thereof or to make submissions in relation to those costs.
·Applications by the respective parties as to costs
The plaintiffs or alternatively, the first plaintiff sought an order that the first defendant pay to them the costs of and incidental to the proceedings brought by them against him on an indemnity basis on the grounds that:
·       In respect of the defamation claim, the first plaintiff had succeeded against the first defendant.
·       In respect of the private nuisance and harassment claims brought by the first, second and third plaintiffs, the first defendant had consented to the above orders in favour of them.
·       The plaintiffs had allegedly made multiple informal offers of settlement to the first defendant which were more favourable to the first defendant then the outcome of the trial.
·       The plaintiffs had filed a formal offer of settlement which was more favourable to the first defendant than the outcome of the trial.
·       The first defendant’s conduct of the proceedings including obliging the first plaintiff to proceed to assess his damages justifies an award of costs on an indemnity basis.
· The first defendant unreasonably failed to make a reasonable settlement offer, and unreasonably failed to accept reasonable settlement offers from the plaintiffs, contrary to s 38(2)(a) of the Defamation Act 2005 (SA).
·The first defendant sought orders:
·Limiting the first plaintiff to his costs, on a party/party basis to the 3 defamatory publications and the republication upon which he succeeded at trial.
·Awarding to the first defendant his costs thrown away by the abandonment by the first plaintiff of the 4 other allegedly defamatory publications on a party/party basis.
·As to the nuisance and harassment claims – each party to bear its own costs.
·Background and offers relevant to costs
Pursuant to leave granted to them the parties filed affidavits in support of their respective submissions as to costs. Those affidavits were respectively the affidavit of Kate Ellen Bruce sworn on 26 April 2018, on behalf of the first defendant; and the respective affidavits of Theodosi John Cotsaris sworn on 28 April 2018 and 15 May 201, on behalf of the plaintiff.
The following matters are not in dispute:
·First defendant’s representation by solicitors
At various times, the first defendant was self-represented.
At other times, he did have solicitors representing him. Initially the one firm of solicitors acted for the first, second and third defendants between 29 September 2014 and 30 April 2015.
Between 6 May 2015 and 3 June 2015, the first defendant was represented by another solicitor. Between 16 July 2015 and November 2015, the first defendant was self-represented. Since that time the first defendant is and has been represented by his current solicitors.
Despite the periods of self-representation, there can be no suggestion that the first defendant was unable to appreciate the consequences of failing to respond to offers of compromise. Contrast Stokes v Ragless (No2).[4] There was no misuse of any superior financial position,[5] indeed there was no evidence called as to his financial circumstances.
[4] [2018] SASC 56.
[5] Defamation Act 2005 (SA) s 38(1)(a).
·Pre-action attempts by the plaintiffs to mediate the issues
·On 13 December 2013, by a Concerns Notice, the plaintiffs’ solicitors offered to resolve all of the claims in defamation, private nuisance and harassment, upon an undertaking by the first defendant to make no further publication; to pay their costs and to pay a sum of $355,000 in lieu of damages.
·On 27 June 2014, the plaintiffs offered the three defendants the opportunity to mediate the action.
·On 4 July 2014, the plaintiffs made a further offer to mediate the action.
·Settlement offers made by the plaintiffs
·On 2 April 2015, the plaintiffs filed an offer of settlement with the Court pursuant to Rules 187 and 188 of the Rules of Court (in force at that time) to settle all claims in the action against the first defendant as follows:
(1)That the first defendant pays to the plaintiffs the sum of $15,000 by way of damages.
(2)That the first defendant pays an additional sum to be taxed or agreed in respect of the plaintiffs’ costs and;
(3)That the offer may not be accepted with respect to the claim for damages unless it also is accepted with respect to costs.
(4)It was not conditional upon any apology or undertaking being given by the first defendant.
·On 9 April 2015, the plaintiffs’ solicitors wrote to the solicitor then representing all three defendants, informally offering to settle all of their claims against all of the defendants for the total sum of $25,000 inclusive of costs in addition to an apology and undertakings that the defendants would not repeat the defamatory publications nor harass the plaintiffs. It was asserted that the letter was sent in accordance with the principles in Calderbank v Calderbank [1975] 3 All ER 333.
·On 10 April 2015, the plaintiffs enclosed drafts of a form of apology for the first defendant to approve and a separate form of apology for the second and third defendants to approve.
·On 16 July 2015, the plaintiffs’ invited the defendants to make an offer as to settlement.
·On 28 September 2015, the plaintiffs made a further informal offer to settle their claim against the first defendant for the sum of $30,000 inclusive of damages, costs and interest but in addition to an apology and certain undertakings.
·I have already detailed the events which occurred in the days before trial, which had the effect of limiting the issues to be decided and the length of the trial.
·The first defendant’s settlement offers
·On 12 October 2015, the first defendant offered to settle the plaintiffs’ claims for $5,000 inclusive of costs together with a restricted letter of apology and on the proviso that the plaintiffs modify ‘security cameras which were located at the plaintiffs’ residence.
The apology so offered was ‘a formal letter of apology based upon my sincerest understanding that this matter has inadvertently, and without any intention on my part seriously upset, your clients’. The first defendant also stated that his ‘letter of apology be for your clients’ eyes only’.
·On 14 October 2015, the first defendant offered by letter to settle the plaintiff’s claim for the sum of $10,000 all-inclusive.
·On 26 November 2015, the first defendant by detailed letter to the plaintiffs’ solicitors offered ‘to fully and finally settle this matter’, on the following basis:
I will pay your clients the all-inclusive sum of $10,000 in total (ie to be attributed to costs or damages as your clients see fit);
I will provide your clients with a written apology based on my sincerest understanding that this matter has inadvertently, and without any intention on my part, seriously upset your clients;
Your clients will discontinue the [subject proceedings] and provide a full release to me in respect of all matters which are the subject of the [subject proceedings].
Each party will otherwise bear their own costs.
Other than the fact that your clients will be entitled to say that they settled their dispute, the precise terms of settlement will remain confidential.
·At the time of the commencement of the trial the first defendant was unaware of the terms of the Deed of Compromise between the first plaintiff and the second and third defendants.
·On 22 and 29 February 2016, the first defendant had offered to withdraw his defences to the 3 defamatory publications and 1 republication, and proceed on damages alone. That was rejected by the plaintiffs on 4 March 2016.
·On 15 May 2016, the day prior to the commencement of the trial, the first defendants’ solicitors wrote to the solicitors for the plaintiffs confirming that they would file a would incorporate those fourth defence amendments. Further they included a letter of apology
Counsel submissions
·The plaintiffs

Counsel for the plaintiffs Mr Bullock, correctly submitted that the Court’s general discretion as to an award of costs, should be seen in light of the general principle that costs should follow the event,[6] and take into account any formal offers of settlement in accordance with the Rules of Court including those as to solicitor/client costs,[7] any informal offers of settlement,[8] and the statutory provisions in a case involving claims in Defamation.[9]
[6]    Rule 6DCR 263(1).
[7]    Rule 6DCR 263(3) and Calderbank v Calderbank [1975] 3 All ER 333.
[8]    Rule 6DCR 188(6)
[9]    Defamation Act 2005 (SA) s 38.
He submitted that the ‘event’ was the first plaintiff’s claim against the first defendant in Defamation. The judgment awarded to the first plaintiff meant that he was prima facie entitled to costs. He referred to the above formal offer and the multiple informal offers of settlement from the plaintiffs to the first defendant. He submitted that they were more favourable to the first defendant than the judgment in favour of the plaintiff against the first defendant at trial. In particular the formal offer of settlement was more favourable than the order against the first defendant at trial, and pursuant to Rule 188(6) should lead to the first defendant paying the costs of all plaintiffs on a solicitor/client basis. He referred to the conduct of the proceedings by the first defendant as justifying indemnity costs. He turned then to s 38(1) of the Act, and submitted that the first defendant unreasonably failed to make a reasonable settlement offer, and despite having received multiple reasonable settlement offers from the plaintiffs, he had unreasonably failed to accept any of them.
He submitted that the first defendant’s offers of settlement could not be regarded as reasonable given their low quantum, and the conditions as to confidentiality, as they did not allow for any vindication for the first plaintiff.
In respect of the costs incurred in the claims against the second and third defendant, he conceded that they ought not be awarded against the first defendant. He submitted that they should be left to the taxing Master to quantify them, if the parties are unable to agree.
He referred to the claims by the first, second and third plaintiffs in nuisance. He submitted that the court ought not attempt to separate the costs of the first plaintiff from those of the second and third plaintiffs. The nature of the claim in nuisance was inextricably linked to the claims by the first plaintiff for defamation. Accordingly, the plaintiffs had common representation throughout and maintained their united position, such that it would be unworkable to reduce the plaintiff’s costs of action on the basis that only the first plaintiff ultimately proceeded with the claim for defamation to judgment.
Mr Bullock submitted that the plaintiffs did not abandon the claims in nuisance. The plaintiff’s witnesses had commenced their evidence. He submitted that the claims were compromised on terms favourable to the plaintiffs with the first defendant giving the undertaking recorded by the Court.
He submitted that the filed offer was plainly more favourable to the first defendant than the outcome that he received at trial. He noted that the filed offer did not impose any requirement for an apology or an undertaking. Accordingly, he submitted that the plaintiffs are entitled to the whole of their costs of the action against the first defendant on a solicitor/client basis, under the Rules of Court. Mr Bullock then referred to s 38(1) of the Act, and submitted that the first defendant’s conduct unnecessarily prolonged the dispute and put the plaintiffs to additional cost, delay and distress. He also submitted that the first defendant delayed the process by pleading incoherent defences; failed to comply with deadlines imposed by the Court; and failed to comply with reasonable proposals by the plaintiffs to advance the matter in an efficient way. He submitted that the first defendant had failed to make proper disclosure and was disclosing documents for the first time on the eve of the trial.
He submitted correctly that the purpose of s 38 of the Act was to promote a speedy and non-litigious approach to defamation disputes.
As to the ‘abandoned’ 4 defamatory publications, he submitted that they were directly caused by the first defendant himself, in that he had asserted that he had contacted the persons referred to in the pleadings. In any event they were patently less serious that the 3 publications and 1 republication upon which the first plaintiff succeeded at trial.
He submitted that the decision to not pursue the 4 publications followed the first defendant’s letter of 22 February 2016, and did not increase the costs.
·The first defendant
Counsel for the first defendant, Mr Bayne, conceded that first plaintiff ought to receive the costs of action, but fixed on a party/party basis relating specifically to the first, second and fourth defamatory claims as pleaded together with what was referred to as the republication.
He submitted that the first defendant ought to receive the costs thrown away of the abandoned third, fifth, sixth and seventh defamatory claims on a party/party basis. In respect of the nuisance claim brought by the first, second and third plaintiffs he submitted that each party ought to bear his own costs.
He submitted that the first plaintiff had conducted his case in an unreasonable fashion commencing with the Concerns notice dated 13 December 2013. That had demanded payment by the first defendant of the sum of $355,000 in addition to an unspecified sum for costs. He submitted this was designed to ensure that the action would not be compromised. It was to be contrasted with the lesser terms of the Concerns notice forwarded to the second and third defendants who had made substantially similar defamatory remarks.
He submitted that at no time did the first plaintiff genuinely attempt to compromise the proceedings.
He submitted that the plaintiff’s series of Offers of Settlement on 2 April 2015, 9 April 2015, 28 September 2015 and 21 October 2015 were all mutually contradictory.
He stressed that the first defendant had made an offer on 22 and 29 February 2016, by letters to the first plaintiff in which he offered to withdraw his defences to the first, second and fourth defamatory claims and the republication and proceed to a trial on damages alone.
He acknowledged that the offer of 29 February 2016 was conditional upon the first, second and third plaintiffs withdrawing their claims for nuisance and/or harassment and the third, fifth, sixth and seventh defamatory claims.
That offer, he submitted, was declined by the first, second and third plaintiffs on 4 March 2016, and led to the first defendant preparing for trial on the basis that all defamatory claims and nuisance claims would be litigated against him.
He submitted that it was not until 10 May 2016 that the first, second and third plaintiffs withdrew the four additional defamatory claims and the trial proceeded simply on the question of quantum for the first, second and third defamatory claims and the republication. Mr Bayne submitted that as and from 4 March 2016 it was the failure of the plaintiffs to amend the terms of a proposed apology to ensure that references to all seven defamatory claims be omitted. He referred to the monetary offers of settlement which included an offer to make an apology, which had been provided by the first defendant on 12 October 2015, 14 October 2015 and 26 November 2015. In respect of the claim in defamation Mr Bayne submitted that the Court ought to decline to make an order pursuant to s 38(2)(a) of the Act and that any costs so ordered should be made instead pursuant to Rule 6DCR 264(2) of the Rules of Court.
He repeated that the three plaintiffs prolonged the prosecution of their claims for the third, fifth, sixth and seventh defamatory publications until the eve of the trial. He submitted that the first defendant did not provide an apology until just prior to the commencement of trial, because of the plaintiffs’ conduct.
Mr Bayne submitted that in light of the first plaintiff abandoning the 4 defamatory claims, the first defendant ought to be awarded the costs thrown away in the preparation of his defence to those claims.
As to the claim in nuisance by the first, second and third plaintiffs Mr Bayne submitted that that claim is sufficiently separate from a claim in defamation to warrant special consideration. He submitted that the Court could not make a determination on the likely outcome of those claims in nuisance and that it could not be said that the first defendant acted unreasonably in defending that claim.
He submitted that the conduct of the litigation by the first defendant in defending these claims was not unreasonable. He submitted that the plaintiff’s cause of action in nuisance was highly speculative.
Legal principles
·Costs in Defamation Proceedings
Section 38 of the Defamation Act 2005 (SA) provides:
38—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.
The scope of this section has been explained in a number of recent decisions of the Supreme Court including Lesses v Maras (No3) [2017] SASCFC 154, De Poi v Advertiser-News Weekend Publishing Co Pty Ltd (No2),[10] Cornes v The Ten Group Pty Ltd & Ors (No2),[11] and Machado & Anor v Underwood (No2.).[12]. The provisions do not displace the Courts power to order indemnity costs for some other reason nor do they displace the Rules of Court which enable parties to obtain protection in respect of costs by making a formal offer to settle.
[10] [2016] SASCFC 45.
[11] [2011] SASC 141.
[12] [2016] SASCFC 123.
In Davis v Nationwide News Pty Ltd,[13] McClellan CJ at Common Law said:
The special costs provisions in [the Act] were introduced following a concern that the costs of defamation proceedings may prohibit persons who have a legitimate claim from pursuant relief. Unless in appropriate cases costs were awarded on an indemnity basis a plaintiff may be out of pocket to such an extent that the risks in bringing proceedings were unacceptable.
[13] [2008] NSWSC 946 at [26].
In The Ten Group Pty Ltd v Cornes (No2)[14] the Full Court explained that the purpose of s 38(2)(a) was to broaden the situations in which indemnity costs are awarded to plaintiffs to encompass (even) situations in which a plaintiff falls short of bettering a defendant’s offer, in addition to the situation in which a plaintiff achieves substantially more than a defendant’s offer.
[14] [2012] 114 SASR 106 at [14].
In Lesses v Maras (No3) the Court said:
Several features of section 38 should be noted. First paragraphs 38(2)(a) and 38(2)(b) create two discrete rules that are mandatory subject only to the interests of justice otherwise requiring. However, these discrete rules do not otherwise limit the generality of the very broad discretion conferred by subsection 38(1) addressed further below.
Secondly the discrete rules only apply to costs recovery by successful parties. They do not apply to unsuccessful parties who for example make reasonable offers to settle: this is left to be addressed under subsection 38(1) and the general costs discretion.
Thirdly the discrete rules only apply when the court has already determined that costs are to be awarded in favour of the successful party. This is a precondition to their operation.
Fourthly the discrete rules have a very specific operation: they prescribe the scale of costs as indemnity costs when they operate.
Fifthly the discrete rules operate when the unsuccessful party failed to agree to/accept a settlement offer proposed/made by the successful party that was reasonable when it was made. The rule in respect of a successful plaintiff also operates when the unsuccessful defendant failed to make a reasonable settlement offer.
Sixthly the court may take into account under subsection 38(1) the parties’ conduct in relation to settlement in circumstances not covered by subsection 38(2) such as a reasonable offer by a defendant not accepted by a successful plaintiff.
Seventhly section 38 must be understood in the context of the other provisions of the Act. Part 3 Division 1 creates a regime enabling defendants to make offers to make amends. Section 18 creates a defence to a defamation action if the defendant made a reasonable offer to make amends as soon as practicable after becoming aware that the matter may be defamatory and was ready and willing to carry out the terms of the offer. Section 18 changes the common law in a fundamental way by making an offer to make a retraction and apology a complete defence and thereby precluding the plaintiff from obtaining judgment or recovering damages for the defamation. It follows that a defendant is not obliged to offer to pay damages as part of an offer to make amends.
Finally, the policy evident in section 38 is to broaden the relevance to the award of costs of the reasonableness of the parties’ positions in and in respect of settlement negotiations. In a passage referred to with approval by this Court in Cornes v The Ten Group Pty Ltd (No 2),[15] McLellan CJ at CL in Davis v Nationwide News Pty Ltd[16] said:
Furthermore, the intention of the legislation was to promote a “speedy and non-litigious method of resolving disputes and to avoid protracted litigation wherever possible” (Second Reading Speech, Legislative Assembly, 12 November 2002)…
Section 40(2) obliges parties to defamation proceedings to take a reasonable approach to negotiations for the settlement of those proceedings. A party who unreasonably fails to make or accept a settlement offer may be ordered to pay costs on an indemnity basis. The amount of the offer is relevant for the purpose of assessing the reasonableness of a party’s conduct. The section contemplates that an order for costs on an indemnity basis may be made even if a party making an offer does not do better in the proceedings than the offer which he or she has made.[17]
[15] [2012] SASCFC 106 at [14] per Kourakis CJ, Gray and Blue JJ
[16] [2008] NSWSC 946.
[17] At [36]-[37].
Discussion
In the subject case, special rules apply to some settlement offers which were made. The statutory provisions relate solely to the claims in Defamation.
I turn to the plaintiffs’ submission that the Court ought not embark on a separate examination of the costs on each of the multiple causes of action pleaded by them against all of the defendants at the commencement of the action.
This approach is generally consistent with the case law. In Waters v RG Henderson (Aust)[18] the Court of Appeal in New South Wales noted that ‘where proceedings involve multiple issues it may cause hardship where a party succeeds on some issues yet fails on others. Nevertheless, unless a particular issue or group of issues is clearly dominant or separable it is ordinarily appropriate to award costs to the successful party without attempting to differentiate those particular issues on which it was successful and those on which it failed’.
[18] [1994] 1 NSWCA 338.
In the subject case, however because different cost regimes apply to some of the causes of action, I will proceed to examine each claim separately.
·The costs of the claims by the first plaintiff against the second and third defendants
Those claims were compromised as between those parties upon the terms of the Deed of Settlement which made no provision for costs. The formal order of the Court for dismissal of those claims was made on 24 September 2015.
While the fact of the settlement remained relevant to the question of quantum in the claims against the first defendant, and indeed to the plaintiffs’ conduct, by not disclosing the terms of settlement, any order for costs against the first defendant cannot include the costs involved in the action involving the second and third defendants.
See Aretzis v Larwood;[19] and Dimas v Willetts.[20]
[19] [2002] SASC 367.
[20] [2000] VSCA 154.
It is common ground that if an order for costs is made for the first plaintiff or the plaintiffs against the first defendant, a direction must be given to the taxing Master to exclude any costs which relate to the claims against the second and third defendants.
·The costs of the claims by the plaintiffs against the first defendant in Private Nuisance and/or Harassment
These claims were compromised on the second day of the trial on the terms detailed to the Court.
Those terms included the disposal of the claims, save for the question of costs, upon the first defendant undertaking not to make complaints to the specified authorities; and not to carry out any surveillance of the plaintiffs’ home or its occupants.
Save for any Rules of Court remedies, the usual starting point for determining the costs, where there has been no trial on the merits, is that each party should bear its own costs on that issue. See Gribbles Pathology Pty Ltd v Health Insurance Commission.[21]
[21] (1997) FCA 1414.
In that case, Finkelstein J explained that in the absence of a hearing on the merits ‘it is difficult to see how any other order could be made’. That principle has not been however universally applied,
In Ex parte Lai Quin,[22] while McHugh J did accept this as the starting point, he did say that in ‘an appropriate case, a Court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action … in some cases the Court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action’. In addition, some Courts have held that parties who reasonably engage in litigation, but compromise them, ought not be discouraged by such a principle, from an award of costs.
[22] [1997] 186 CLR 622.
Champagne View Pty Ltd v Shearwater Resort Management Pty Ltd.[23] involved some similar facts. Gillard J considered the costs of proceedings in a case involving a nuisance claim. After the institution of the proceedings the defendants took steps to ameliorate the nuisance, and the plaintiff decided not to proceed further. No agreement was reached on the question of costs.
[23] [2000] VSC 214.
The plaintiff sought its costs on the basis that had it prosecuted its claim it would have been successful.
In that case His Honour had undisputed evidence which would have established nuisance against the defendants. He concluded that the remediation work undertaken by the defendants inevitably meant that the defence was bound to fail. He allowed some of the costs sought by the plaintiff.
In Ann Street Mezzanine Pty Ltd v KPMG[24] , Kenny J considered a question of costs in a case where a cross-claim for contribution had been discontinued. At issue was whether one party had surrendered to the other party in which case there would be an award of costs to the successful party.
[24] [2011] FCA 453.
In Fitch v S & A Gallo Pty Ltd,[25], Blue J said at [34]:
[25] [2013] SASC 144.
The mere fact that a party enters into a compromise does not mean that the party is conceding that the other party would have succeeded if the matter had proceeded to trial. The Fitch’s did not adduce any evidence of any concession by Gallo independently of the fact of compromise.
Counsel for the plaintiffs in the subject case submitted that an order for costs ought to be made in favour of them because the first defendant in effect ‘had fallen on his sword’; and had submitted to undertakings, which substantially would have satisfied the plaintiffs’ claim in nuisance, had it been offered before.
In my opinion, the submission that the first defendant had ‘surrendered’ cannot be accepted. His counsel had cross-examined the first plaintiff at length before the compromise was reached.
It was plain that this issue of ‘nuisance’ was hard fought between the parties. It was in the interest of both parties to resolve the nuisance claim, and to concentrate on the defamation claim.
I do not accept that by entering into the compromise of the nuisance claim the first defendant was conceding that the plaintiffs would have succeeded in that course of action against him.
In my opinion, there is in the circumstances no proper basis for the court to award costs to either party or parties in respect of the causes of action in Private Nuisance or Harassment.
·The withdrawal of the additional 4 Publications allegedly defamatory of the First Plaintiff
In the subject case, the first plaintiff claimed against the first defendant damages and injunctive relief in respect of 7 pleaded allegedly defamatory publications.
In Hockey v Fairfax Media Publications Pty Ltd[26], the plaintiff had sued on 15 publications but had succeeded only on 3 of them.
The Court adopted the approach that if a successful party has failed on important issues he may not only be deprived of the costs of those issues but in addition be ordered to pay the other party’s costs of them.
In that case the plaintiff had succeeded on 3 relatively minor publications, which were less significant than the other 12. He was awarded only 15% of his costs.
In Hardie v The Herald and Weekly Times Pty Ltd[27], the Court of Appeal in Victoria said that:
While there are many cases where due to parties enjoying mixed success on different issues, an apportionment of costs is appropriate, in our view this is not such a case. The real substance of the appellants case was to be found in the imputations upon which she succeeded. The appellant having succeeded on those imputations has enjoyed substantial success in the proceedings. Defamation cases often involve mixed success in relation to different imputations given this complex area of the law. Moreover we are not persuaded that the lack of success on the issues ….. by the respondent was productive of additional cost and expense, such as to justify any reduction of the appellant’s costs.
[26] [2015] FCA 750.
[27] [2016] VCSA 130.

The first defendant sought an order that he receive the costs thrown away by the abandonment of the 4 defamatory claims, on a party/party basis.
The first plaintiff submits that the 4 publications remained in the proceedings because the first defendant had failed to make discovery of relevant documents until shortly before the trial. In any event the 3 successful claims were the substantial issues. In my opinion as and from 22 February 2016, the first defendant had admitted the 3 publications, and the 1 republication. He knew that there was nothing in the other 4 publications because he had not attended upon those named persons.
In my opinion, it must have been apparent to the first defendant at the time of publication of the 3 conceded defamatory statements that the first plaintiff had been defamed by him and accordingly a reasonable offer would have included an offer of apology at that time. See Sands v Channel Seven Adelaide (No2).[28] See also De Poi v Advertiser-News Weekend Publishing (No2),[29] in which the Full Court noted that in light of the offers in that latter case, the fact that the respondent was successful in defending some of the pleaded matters, is of little importance in determining whether the respondent had acted reasonably, overall.
[28] [2009] SASC 365.
[29] [2016] SASCFC 45.
The Court did however say it was a relevant factor, as to costs. In my opinion, the additional 4 publications did not lead the first defendant to incur additional costs. They involved minor matters and were abandoned at the commencement of the trial. Each party should bear its own costs of those matters.
Conclusion
In light of the above findings, the only claim which proceeded to judgment was the first plaintiff’s cause of action in Defamation against the first defendant. Had it been the only cause of action it would have been necessary to concentrate upon the effect of s 38(2) of the Act, supra; the offer filed by the plaintiffs against the first defendant; and the multiple informal offers of settlement made by the plaintiffs to the first defendant pursuant to the Rules of Court.
While the plaintiffs maintain that they had an entitlement to solicitor and client costs for all of their claims, with the exception of those costs incurred in the claims against the second and third defendants, this depends upon the Court’s assessment of the offer filed under Rule 188(6) of the Rules of Court then in force.
Neither counsel made detailed submissions about the effect of Rule 188(6) in light of the parties conduct in the action.
I assume that the plaintiffs concentrated upon the award of costs to the first plaintiff alone pursuant to s 38 of the Act, because it was the only cause of action which was the subject of the judgment.
By contrast, in his outline, counsel for the first defendant referred to the decision of the Full Court in Shaw v Jaldorn.[30]
[30] (1999) 76 SASR 28.
That Court affirmed that this Court has an unfettered discretion to displace the ordinary effect of Rule 188(6), but only in cases where there is good reason to do so.
It made it clear that the displacement in the exercise of the discretion will only occur in rare circumstances. It did however say that ‘circumstances which may give rise to the exercise of the discretion include material non-disclosure by a plaintiff; significant changes in the manner in which the plaintiff’s case is presented or substantial amendment of pleadings after the time when the offer may had been capable of acceptance under the Rules’.
This matter was not addressed further by counsel, as I assume the claim under s 38 of the Act was regarded by the first plaintiff as more favourable to him.
In the absence of submissions from the first plaintiff, I will not reach any final view. It is however at least arguable that the facts of the subject case prima facie fall within the circumstances envisaged by the Court in Shaw’s case.
Since the offer was filed, the plaintiffs had compromised their claim against the second and third defendants; the plaintiffs had not made disclosure of the terms of that compromise to the first defendant; the plaintiffs had eventually not proceeded on 4 of the pleaded defamatory publications; they were not successful in the nuisance claim; and the trial proceeded as an assessment of damages.
The compromise of the claim against the second and third defendants occurred well after the filed offer. Until that time the first defendant could have expected some assistance from them in defending the claims against him.
At the very least there was a risk that the Court may not permit the Rule of Court offer to have its effect under Rule 188(6). I do not need to consider whether there was any added risk from the form of the offer. See Basbuild v Hall,[31] in respect of a differently worded rule.
[31] [2014] SASC 44.
In Hardie v H & WT (No2)[32] the Court of Appeal in Victoria did note that where a party serves a filed offer of compromise in accordance with the Rules of Court or indeed a Calderbank offer without adverting to the prospect that reliance will also be placed upon the provisions of s 38 of the Defamation Act, then that party is at risk of a Court determining that the interests of justice require an order otherwise than in accordance with s 38.
[32] [2016] VSCA 130.
In the subject case, it may have been open to the first defendant to submit that he was only aware of the risk of a solicitor/client award of costs. No such submission was made.
In any event I proceed on my assumption that the first plaintiff sought costs under s 38 of the Act by way of indemnity only in respect of the claim in Defamation.
It is trite that s 38(2) does not operate to entitle either party to costs of the action on an indemnity basis. However, the conduct and attitudes of the parties in settlement negotiations are matters that can be taken into account more generally. See Lesses v Maras (No3),[33] supra at [81].
[33] [2017] SASCFC 154.
Pursuant to s 38(2)(a), the Defamation proceedings brought by the first plaintiff were successful. There can be no doubt that the first plaintiff provided a number of settlement offers to the first defendant which were on any view entirely reasonable. In each case the first defendant unreasonably failed to agree to those settlement offers. Those offers included the filed offer of settlement dated 2 April 2015 seeking the sum of $15,000 by way of damages and an additional sum to be taxed or agreed in respect of the plaintiffs’ costs. It was not conditional upon any apology or undertaking being given by the first defendant.
On 9 April 2015, the plaintiffs’ solicitors informally offered to settle for the total sum of $25,000 inclusive of costs together with an apology and an undertaking not to repeat defamatory publications nor harass the plaintiffs.
On 28 September 2015, a further informal offer was made by the plaintiffs to settle their claim against the first defendant for the sum of $30,000 inclusive of damages, costs and interest but in addition to the apology and the undertakings.
In my opinion on any view the offers of settlement by the plaintiffs were patently reasonable and ought to have been accepted by the first defendant. I repeat that it ought to have been apparent to the first defendant at the time of publication that the plaintiff had been defamed by him. At the very least a reasonable offer at that time would have included an offer of an apology. See Sands v Channel Seven Adelaide Pty Ltd (No2).[34]
[34] [2009] SASC 365.
The defamatory publications upon which the first plaintiff succeeded were outrageous. It is no excuse not to offer amends, because other claims were in dispute.
The first defendant did make ‘offers’ to settle the plaintiffs claim firstly on 12 October 2015 for the sum of $5,000 inclusive of costs together with a limited form of apology to be kept confidential. On 14 October 2015, the first defendant offered to settle the plaintiffs claim for the sum of $10,000 all inclusive. By 26 November 2015 the first defendant had offered to settle the plaintiffs’ claims for the sum of $10,000 all-inclusive of costs and damages together with a restricted written apology to be kept confidential.
In my opinion, none of those ‘offers’ constitute a ‘settlement offer’ within the meaning of s 38 of the Act. In order to constitute a ‘settlement offer’ it must have been a reasonable offer at the time it was made. None of them were.
The first defendant’s ‘offers’ were unreasonable because of the absence of vindication for the first plaintiff. Further they were far below the damages as assessed by the Court. See Hyndes v Nationwide News Pty Ltd.[35] I repeat that those offers, in the absence of a published apology, would provide no vindication for the plaintiff.
[35] [2011] NSWSC 1443.
The purported apology based upon a confidentiality obligation, did not assist the first defendant. In my view, they confirm the ‘offers’ as being unreasonable. See Cornes v The Ten Group Pty Ltd.[36] De Poi v Advertiser News Weekend Publishing Co,[37] and Hardie v H & WT Pty Ltd, supra.
[36] [2012] 114 SASR 46 at [119]-[122].
[37] [2016] SASCFC 45 at [17]-[20].
It is of course plain that by 22 February 2016 the first defendant had intimated his intention to amend his defence so that he would no longer dispute the 3 defamatory publications and the 1 republication. While I will take that into account in respect of the first defendant’s conduct generally it is of little moment because the first defendant still maintained that the first plaintiff had suffered no loss, and the proceedings had to proceed to assessment. In my opinion, it does no more than confirm that the first defendant at all times knew that those publications were defamatory of the first plaintiff.
As to the apology dated 14 May 2016, one day before the commencement of trial it is plain that it was too little, too late.
Had the first plaintiff’s defamation proceedings been the only cause of action in my opinion, the appropriate order for costs would have been an order that the first defendant pay the first plaintiff’s costs of action on an indemnity basis pursuant to s 38 of the Act. Serious allegations had been made by the first defendant as to the character of the first defendant. I repeat that I have no doubt that the first defendant knew that they were defamatory, at the time they were made.
However, as I have noted there were a number of other causes of action involving other parties in addition to the first plaintiff and the first defendant. I have found that no costs will be awarded against the first defendant in respect of the first plaintiff’s claims against the second and third defendants. I also found that no order for costs ought to be made against either the first plaintiff or the first defendant in respect of the resolved nuisance claims nor in respect of the abandonment by the first plaintiff of the 4 additional alleged defamatory publications.
The fact that I have made no order for costs in favour of the plaintiffs or any party on those other matters does not mean that those matters and the conduct of all parties ought be excluded from the proper exercise of my discretion as to whether there should be some reduction in the award of costs, under s 38 of the Act. In particular there was a delay between 22 February 2016 and the date of trial before the first plaintiff agreed to abandon the 4 other alleged defamatory publications.
In Lesses v Maras (No3), supra, the Court said:
Where there had been mixed success at first instance a court in appropriate circumstances may reduce the costs ordered in favour of the overall successful party … and when the court considers that the discretion should be so exercised it would usually make an order for payment of a proportion of one parties costs by the other party reflecting a broad axe assessment.
In my opinion, it is inevitable having regard to all of the above matters that I should exercise my discretion and use a broad axe approach to fix a percentage reduction, which should also to take account of the issues upon which the plaintiffs did not succeed having regard to the significance of those issues and the time devoted to them by the parties.
In my opinion, the order for costs should relate solely to the first plaintiff. I repeat that the bulk of the costs in the action would, on any view, relate to the first plaintiffs claim in the Defamation proceedings. In my view, even if the plaintiffs had elected to claim costs on the whole of the causes of action, and succeeded under Rule 188(6) it is not clear to me that the quantum of those costs would exceed the claim for indemnity costs in the defamation proceedings. The first defendant, albeit late in the piece did make admissions about the defamatory nature of the 3 publications and 1 republication such that it did reduce the length of the trial, as did the compromise of the nuisance claim.
Using a broad axe approach, in my opinion it is appropriate that the first defendant pay 85% of the first plaintiff’s costs of the action on an indemnity basis, save and except for the costs of and incidental to the plaintiffs’ claims against the second and third defendants which costs must be excluded. If agreement can’t be reached on the quantum then that issue will be determined by the Taxing Master.
Formal Orders
1.   The costs of and incidental to the plaintiffs’ claims against the second and third defendants are to be excluded from these orders and are to be determined by the Taxing Master in the event that there is no agreement as them as between the parties.
2.   The first defendant is to pay 85% of the first plaintiff’s costs of action in the defamation proceedings on an indemnity basis.
3.   Those costs are to be taxed if not agreed.
4.   Save for the above orders and those which had already been made in interlocutory proceedings, no further order is made in respect of the costs of the plaintiffs or the first defendant.