Poniatowska v Channel Seven Sydney Pty Ltd (No 5) - [2017] SASC 32

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
PONIATOWSKA v CHANNEL SEVEN SYDNEY PTY LTD & ANOR (No 5)
[2017] SASC 32
Judgment of The Honourable Justice Parker
16 March 2017
DEFAMATION - ACTIONS FOR DEFAMATION - COSTS - GENERAL RULE - COSTS FOLLOW THE EVENT - COSTS OF ACTION
DEFAMATION - ACTIONS FOR DEFAMATION - COSTS - INDEMNITY COSTS
Application for the award of costs following the successful defence of defamation proceedings. The plaintiff submitted costs should not be awarded to the defendants and if costs are to be awarded the court should make a lump sum order not exceeding $50,000. The defendants submit they are prima facie entitled to the ordinary principle that costs follow the event and that by virtue of s 38 of the Defamation Act 2005 they are entitled to costs on an indemnity basis. The defendants also submit that they should be awarded interest on the costs calculated from the end of the trial or in the alternative from the date of judgment.
Held, per Parker J:
1. The plaintiff unreasonably failed to accept a settlement offer.
2. The interests of justice do not require that indemnity costs not be awarded.
3. The defendants are awarded costs on an indemnity basis.
4. The defendants are not awarded interest on costs calculated from the end of the trial or the date of judgment.
Defamation Act 2005 s 38; Supreme Court Act 1935 s 40, s 114; District Court Act 1991 s 40; Supreme Court Civil Rules 2006 r 263, r 264, referred to.
Machado v Underwood (No 2) [2016] SASCFC 123, applied.
Cornes v The Ten Group Pty Ltd (No 2) [2011] SASC 141; Cornes v The Ten Group (2012) 114 SASR 46; De Poi v Advertiser - News Weekend Publishing Company Pty Ltd (No 2) [2016] SASCFC 45, discussed.
Australian Guarantee Corporation v De Jager [1984] VR 483; Briginshaw v Briginshaw (1938) 60 CLR 336; Colgate-Palmolive v Cussons Pty Ltd (1993) 46 FCR 225; Davis v Nationwide News Pty Ltd [2008] NSWSC 946; De Poi v Advertiser - News Weekend Publishing Company Pty Ltd (No 2) [2015] SADC 25; Jones v Dunkel (1959) 101 CLR 298; NMFM Property Pty Ltd & Ors v Citibank Ltd (No 2) (2001) 109 FCR 77; Osborne v Kelly (1999) 75 SASR 392; Public Trustee as Litigation Guardian for Pinter v Newman [2012] SASCFC 18; Ragata Developments Pty Ltd v Westpac Banking Corporation (1993) 217 ALR 175; Yates Property Corp Pty Ltd v Boland (No 2) (1997) 147 ALR 685, considered.

WORDS AND PHRASES CONSIDERED/DEFINED
"Settlement offers", "financial positions of applicant", "interests of justice"

PONIATOWSKA v CHANNEL SEVEN SYDNEY PTY LTD & ANOR (No 5)
[2017] SASC 32
Civil:

Parker J: This is an application for the award of costs following the successful defence of defamation proceedings. The defendants submit that by virtue of s 38 of the Defamation Act 2005 they are entitled to costs on an indemnity basis. In the alternative, the defendants also submit that the Court should exercise its general discretion to award indemnity costs. For the reasons that follow I will order costs on an indemnity basis in accordance with s 38 of the Defamation Act.
The defendants also submit that they should be awarded interest on the costs calculated from the end of the trial. I have declined to make such an order and also declined to order the payment of interest from the date of judgement.
After I had heard submissions on the costs question the Full Court published its reasons for judgment in Machado v Underwood (No 2).[1] The defendants sought permission to make further submissions referring to that authority. I granted permission and invited Ms Poniatowska to respond. I have taken into account the submissions made by both parties relating to Machado.
[1] [2016] SASCFC 123.
Background
Ms Poniatowska sued Channel Seven Sydney Pty Ltd and Channel Seven Perth Pty Ltd for defamation in relation to a story included in the Today Tonight television program broadcast by those two entities in New South Wales, Western Australia and elsewhere. The story was also republished on the internet, albeit the evidence was that few persons accessed it.
Ms Poniatowska pleaded that the Today Tonight story gave rise to a series of defamatory imputations. In essence, those imputations were that she was guilty of fraud, was a cheat and dishonest and had taken money from taxpayers without paying it back. The Today Tonight story was published on the same day as the High Court delivered judgment dismissing an appeal by the Commonwealth Director of Public Prosecutions against the decision of the Full Court of the Supreme Court to set aside the conviction of Ms Poniatowska for Centrelink fraud.
Counsel for Ms Poniatowska had indicated in his opening submissions that she was seeking loss and damages in the sum of $750,000 plus costs. In his closing submissions counsel sought an award of $1.1M plus interest.
I found that the material referring to Ms Poniatowska in the Today Tonight story was defamatory. I also found that the defendants had made out each of the several defences upon which they relied. In particular, I concluded that the defence of justification had been made out as Ms Poniatowska had acted fraudulently in her dealings with Centrelink.
The basis for the latter finding was that Ms Poniatowska had received notices from Centrelink advising her of the obligation to declare her income or changes of her income to that agency. I rejected the explanations she provided as to why she had not fully and accurately declared her income to Centrelink. I also did not accept her evidence that she had initially pleaded guilty to the Centrelink fraud charges because her legal advisers had bullied her and acted contrary to her instructions.
I noted that the trial took longer than was necessary because of the fact that, at times, Ms Poniatowska’s answers to questions were non-responsive or argumentative or amounted to a speech.
Settlement offers
The defendants made a number of settlement offers to Ms Poniatowska. They were as follows:
a)On 25 September 2013 a written Calderbank offer was made offering to settle her claim for a payment of $20,000 plus costs to be taxed or agreed. At that time the defendants already had costs orders in their favour. The effect of the offer by the defendants was that they would bear their own costs and release her from liability under the subsisting orders. On 30 October 2013 Ms Poniatowska rejected that offer. She did not make any counter-offer but invited the defendants to increase their offer by reference to the fact that another unrelated defamation matter had recently settled for $4.3 million. She also proposed that any further offer should include the sum of $20,000 to cover her costs during the period when she was self-represented. I note that during this period any entitlement to costs would have been limited to the recovery of disbursements.
b)On 18 December 2013 the defendants reiterated their earlier offer to pay $20,000 plus costs in settlement of Ms Poniatowska’s claim. They also noted that they were willing to discuss an all inclusive settlement if that was her preference. The letter from the defendants’ solicitors referred to both Calderbank and s 38 of the Defamation Act 2005. Ms Poniatowska did not respond to that offer.
c)On 8 April 2014 (14 days prior to the commencement of the trial) the defendants made a further written offer to pay Ms Poniatowska $50,000 plus costs to be taxed or agreed by way of settlement. Once again, the effect of the offer was that the defendants would waive their right to enforce multiple costs orders made against Ms Poniatowska. The letter also referred to Calderbank and s 38 of the Defamation Act. Ms Poniatwoska did not respond to that offer.
Each of the offers made by the defendants included conditions that the settlement would be confidential, that a discontinuance would be filed with the Court and there would be no order as to costs.
On 10 April 2014 Ms Poniatowska, through her then solicitors, offered to settle her claim upon payment of $200,000, inclusive of costs. The defendants did not respond. They contend that, because the claim for economic loss was baseless and could not be attributed to the publication by the defendants, this was not a genuine or reasonable offer of compromise.
Ms Poniatowska’s financial position
Because Ms Poniatowska’s submissions concerning the costs application were substantially based on her poor financial position I granted permission for her to file an affidavit setting out her current financial position. She had previously filed an affidavit in support of her successful application to waive transcript fees. However, that affidavit had not been disclosed to the defendants and was now well out of date.
Ms Poniatowska filed an affidavit dated 11 November 2016. She deposes that since 2003 she has been the single parent of two children and the sole provider for her family. She has not been able to work since January 2012 due to illness that she attributes to the publication of the Today Tonight story and the conduct of these proceedings. Her psychiatrist, Dr Czechowicz, had advised that she will need two years after the finalisation of the proceedings to stabilise her health. She relied upon a report from Dr Czechowicz dated 23 November 2012 that had been received as evidence at the trial.
Ms Poniatowska receives a Newstart allowance from Centrelink of $543.70 per fortnight and holds a pensioner concession card. She has no other income or financial resources. She owns her home at Glen Osmond. The property is subject to a mortgage securing a housing loan debt of $487,812.92. The repayments on the housing loan are approximately $1,700 per month. Until recently, she had been using a line of credit to meet her loan repayments. However, that source is now exhausted and she is unable to make further loan repayments. At the time of the affidavit the arrears on the loan repayments were $3,398.04. She had negotiated a temporary deferment of the repayments with her bank.
The defendants submit that the affidavit provided by Ms Poniatowska has not deposed fully to her current financial position. They point to the fact that the value of her home has not been stated and nor has her net equity in that property been disclosed. In addition, they have pointed to the fact that there is no information as to the balance of the line of credit, its nature and source and whether it is secured by mortgage over her home property or subject to any other form of security. They also refer to the fact that there is no evidence about what costs order she could or would pay, what she owes her various solicitors and counsel by way of fees and disbursements and her other liabilities. They have also suggested that it appears inevitable that she will lose her home in any event regardless of any costs order.
While I agree generally with the various observations made by the defendants about the shortfall in the financial information provided by Ms Poniatowska, I am satisfied that she is in a parlous financial situation.
The defendants’ submissions
The effect of the defendant’s submissions is as follows. As they completely succeeded in defending Ms Poniatowska’s claim, they are prima facie entitled to the benefit of the ordinary principle that costs follow the event. Before trial they made reasonable offers which were not accepted that would have produced a more favourable outcome for her than the result at trial. Her pre-trial behaviour, her failure to accept the defendants’ offers of settlement and her conduct during the trial were all unreasonable. In these circumstances, and because the interests of justice do not require any different approach, the defendants submit that the Court is bound by s 38 of the Defamation Act to award costs on an indemnity basis.
The defendants also submit that quite apart from s 38 of the Defamation Act the Court should exercise its general discretion under s 40 of the Supreme Court Act 1935 and rules 263 and 264 of the Supreme Court Civil Rules 2006 to award indemnity costs. They submit that the discretion to award indemnity costs against an unsuccessful plaintiff may be exercised where they have proceeded without regard to serious deficiencies in the evidence.[2] They further submit that the discretion to award indemnity costs may be exercised when justified by special circumstances.[3] Special circumstances that may warrant an order for indemnity costs include: the fact that proceedings were commenced or continued in wilful disregard of known facts or clearly established law; the making of allegations which ought never to have been made; the undue prolongation of a case by groundless contentions; and an imprudent refusal of an offer to compromise.[4]
[2]    Yates Property Corp Pty Ltd v Boland (No 2) (1997) 147 ALR 685.
[3]    RagataDevelopments Pty Ltd v Westpac Banking Corporation (1993) 217 ALR 175, Davies J at 177.
[4]    Colgate-Palmolive v Cussons Pty Ltd (1993) 46 FCR 225 at 233.
The defendants have pointed to the many adverse findings made in relation to the evidence of Ms Poniatowska. It is unnecessary to refer to those matters in detail but the essential points include the finding that Ms Poniatowksa had received notice from Centrelink informing her of the obligation to declare her income or changes in her income and that the various explanations she put forward for her failure to do so were recent inventions.
While the defendants accept that it is the conduct of a party as a litigant rather than their underlying or background conduct that is relevant when deciding whether to award indemnity costs, they submit that the party’s knowledge, including that about their own prior conduct, may be relevant when assessing their conduct as a litigant.[5] Thus, the defendants submit that the behaviour of Ms Poniatowska before trial and during trial is relevant when determining whether indemnity costs should be awarded.[6]
[5] NMFM Property Pty Ltd & Ors v Citibank Ltd (No 2) (2001) 109 FCR 77 at [56].
[6] Australian Guarantee Corporation v De Jager [1984] VR 483.
In that context the defendants also refer to the rejection by the Court of Ms Poniatowska’s assertions that her legal advisers, Ms Geraldine Davison[7] and Mr Michael Lutt, had ignored her instructions, made sentencing submissions that they knew to be false and pressured her to plead guilty. The defendants also rely upon her conduct in alleging that either Ms Patsy Rowe[8] or others had concocted or altered evidence. These allegations had required her counsel to cross-examine Ms Rowe and Ms Davison. They have also referred to the conduct of Ms Poniatowska in not informing her treating psychiatrist, Dr Andrew Czechowicz, that she had made 149 job applications at a time when she had told him she could not work.
[7] Now Judge Davison of the District Court.
[8] An employee of a publisher.
The defendants also refer to the observations that I made about the conduct of Ms Poniatowska as a witness and submit that her conduct had increased the length of the trial and resulted in them incurring unnecessary costs.
Ms Poniatowska’s submissions
Ms Poniatowska submits that costs should not be awarded to the defendants and if costs are to be awarded the Court should make a lump sum order that does not exceed $50,000. She contends that this is required in the “interests of justice” pursuant to s 38(2) of the Defamation Act.
Ms Poniatowska contends that the confidentiality requirement attached by the defendants to their settlement offers had the result that they were not settlement offers within the meaning of s 38(2)(b) of the Defamation Act. She further submits that because of those confidentiality requirements it was not reasonable for her to be expected to accept any of the offers.
Ms Poniatowska relies upon the principle that the reasonableness of a settlement offer must be considered at the time of its making.[9] She notes that certain of her evidence was not rejected by the Court. She refers to such matters as the fact that she was aware that the Australian Taxation Office (ATO) and Centrelink shared information, that she had made full disclosure in July of each year of her actual income to the ATO, that she had disclosed her estimated income for 2006/07 and had not been advised by Centrelink as to what steps she should take in respect of declaration of income or her benefit entitlement following the declaration she had made to the ATO.
[9] Davis v Nationwide News Pty Ltd [2008] NSWSC 946.
Ms Poniatowska has also contended that it is relevant when assessing the reasonableness of her conduct that she did not know what evidence was to be called by the defendants. She has observed that she was not aware that they would not call a Centrelink officer and nor an employee from the relevant post office. On that basis she suggests that she was entitled to assume that the failure by the defendants to call such witnesses would enable inferences to be drawn in her favour.
Section 38 of the Defamation Act
Section 38 of the Defamation Act establishes a specific regime for the award of costs in defamation proceedings. It provides as follows:
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.
Consideration
In Cornes v The Ten Group Pty Ltd (No 2) Peek J held that s 38(2) of the Defamation Act requires that indemnity costs must be awarded in the circumstances referred to in that provision unless the interests of justice require otherwise.[10] The approach adopted by Peek J was approved by the Full Court on appeal in Cornes v The Ten Group.[11] The Full Court observed in De Poi v Advertiser - News Weekend Publishing Company Pty Ltd (No 2) that insistence upon a confidentiality obligation will usually be considered unreasonable in defamation proceedings.[12]
[10] [2011] SASC 141 at [6].
[11] (2012) 114 SASR 46 at [123]–[126], Gray J with Kourakis and Blue JJ agreeing.
[12] [2016] SASCFC 45 at [20].
There are two requirement that must be satisfied under s 38(2)(b). First, the plaintiff must have been wholly unsuccessful in the defamation proceedings. Second, the Court must be satisfied that the plaintiff unreasonably failed to accept a settlement offer made by the defendant. If those two requirements are satisfied then the Court must order costs on an indemnity basis unless it is satisfied that the interests of justice require otherwise. The effect of the provision is to reverse the ordinary approach that the award of indemnity costs is exceptional.

Because Ms Poniatowska was wholly unsuccessful at trial it is necessary to consider two issues before deciding the application for indemnity costs made by the defendants. First, did she unreasonably fail to accept a settlement offer. Secondly, do the interests of justice require that indemnity costs not be awarded.
Whether unreasonable failure to accept settlement offers
Before determining whether Ms Poniatowska unreasonably failed to accept the settlement offers made by the defendants it is necessary to consider her contention that the confidentiality requirement attached by the defendants to their settlement offers had the result that they were not settlement offers within the meaning of s 38(2)(b) of the Defamation Act.
The settlement offers contained in the letter dated 25 September 2013, 30 October 2013 and 8 April 2014 each proposed that the terms of the settlement, as distinct from the fact of the settlement, were to remain confidential. There was no suggestion in any of the three letters sent on behalf of the defendants that there would be an apology or correction.
Because the definition of “settlement offer” in s 38(3) includes an offer to make amends, Ms Poniatowska submits that a settlement offer cannot include a confidentiality clause. That submission misstates the effect of the definition. The words “includes an offer to make amends” operate to clarify and provide certainty to the definition by making clear that a settlement offer includes an offer to make amends. The definition does not impose a requirement that a settlement offer must include an offer to make amends. I consider that the offers were a “settlement offer” for the purposes of s 38(3).
Ms Poniatowska also contends that it was not unreasonable for her to refuse to accept the settlement offers because they were subject to a confidentiality requirement. Thus, acceptance of the proposed settlement would not serve to vindicate her reputation.[13] Ms Poniatowska also submits that the proposed confidentiality obligation was contrary to the object of defamation proceedings. Such proceedings are intended to vindicate the reputation of the plaintiff. A settlement offer that included a confidentiality obligation would not allow for the making of amends by way of the publication of a reasonable correction and, where appropriate, an apology. Thus, an offer to settle on that basis would not be reasonable.
[13] Cornes v The Ten Group (2012) 114 SASR 46 at [119] – [122].
The Full Court held in Ten Group v Cornes[14] and also in De Poi v Advertiser - News Weekend Publishing Company Pty Ltd (No 2)[15] that insistence upon a confidentiality obligation was generally unreasonable in defamation proceedings. However, in those cases there had been found to be a defamation liability. I consider that the view expressed by the Full Court is distinguishable where, as here, the plaintiff failed entirely at trial.[16]
[14] (2012) 114 SASR 46 [119] – [122].
[15] [2016] SASCFC 45 at [17] – [20].
[16] De Poi v Advertiser - News Weekend Publishing Company Pty Ltd (No 2) [2015] SADC 25 at [12].
In my view a defendant should not be held to have acted unreasonably because they have attached a confidentiality requirement when they offer to settle an unmeritorious claim on a pragmatic commercial basis. If such claims could not be settled in confidence that may potentially have the effect of encouraging other plaintiffs to advance unmeritorious claims against that defendant.
I therefore consider that the attachment of a confidentiality requirement to the offers of settlement did not, of itself, make them unreasonable in circumstances where the defendants succeeded with all elements of their defence. The several offers made by the defendants to settle the proceedings indicated a reasonable and pragmatic commercial approach.
I accept that the reasonableness of a settlement offer must be considered at the time of its making.[17] However, at the time Ms Poniatowska considered the settlement offers she would have been aware of the facts that led to the adverse findings. Amongst other matters those adverse facts included her use of the PO Box and redirection orders, the collection of mail from her former address, the receipt of notices from Centrelink, the instructions that she provided to her legal advisers about her dealings with Centrelink and her dealings with Ms Rowe. Accordingly the matters referred to by Ms Poniatowska do not provide a basis to find that she had not acted unreasonably in failing to accept the settlement offers.
[17] Davis v Nationwide News Pty Ltd [2008] NSWSC 946.
I reject the contention by Ms Poniatowska that it is relevant when assessing the reasonableness of her conduct that she did not know what evidence was to be called by the defendants. A plaintiff must proceed on the basis that a defendant will call all relevant and available witnesses to support their defence.
A central element of the defence case was the documentary evidence contained in the file of the Legal Services Commission and the oral evidence of Ms Geraldine Davison. That evidence became available and admissible because Ms Poniatowska had waived her legal professional privilege by pleading that she had relied upon poor legal advice. Other important evidence called by the defendants was provided by the witnesses Patricia Hope and Katharine Hope concerning the collection of mail by Ms Poniatowska. Each of these witnesses simply gave evidence about matters of which Ms Poniatowska had prior knowledge. The fact that she may not have foreseen that they would give evidence does not assist her to establish that she did not act unreasonably in commencing and maintaining these proceedings.
The suggestion by Ms Poniatowska that she was entitled to assume that a failure by the defendants to call witnesses from the post office and from Centrelink would lead to an inference being drawn in her favour is not correct. While the defendants did not call a staff member from the particular post office, they did call a senior employee of Australia Post to explain the meaning of the relevant records about use of PO boxes and the making of redirection orders. His evidence was accepted. I also found that Centrelink officers could not be regarded as being in either the plaintiff’s or the defendants’ “camp” and therefore declined to draw a Jones v Dunkel inference against either the plaintiff or the defendants.[18]
[18] (1959) 101 CLR 298.
I also note that the suggestion discussed in the preceding paragraph is not consistent with the principle that the reasonableness of a party’s conduct in declining a settlement offer must be assessed by reference to their knowledge at the time of the offer. At the time Ms Poniatowska received the several offers she would not have known the witnesses to be called by the defence.
For the several reasons referred to above I do not accept that Ms Poniatowska acted reasonably in failing to accept the settlement offers.
Interests of justice
Ms Poniatowska submits that the award of costs against an unsuccessful plaintiff with limited resources would have a stultifying effect. The risk of a substantial adverse costs order would deter persons who have been wronged from pursuing a remedy. That was contrary to the interests of justice. Accordingly, if any costs are to be awarded they should be limited to a lump sum order for $50,000.
Ms Poniatowska contends that an order that she meet the defendants’ costs other than by way of a limited lump sum payment would inevitably result in the loss of her home. The defendants say that her financial position is such that she is likely to lose her home regardless of any adverse costs order.
In Machado the Full Court considered submissions by an appellant concerning the “interests of justice” provision in s 38(2) of the Defamation Act. In Machado the appellant submitted that the court should have regard to his parlous financial circumstances and the fact that he had believed he was acting in the public interest in publishing the defamatory material.
In response to that submission Kourakis CJ and Nicholson J stated:
The Courts regularly find themselves having to make orders concerning the costs of very expensive litigation where an unsuccessful non-professional litigant has been swept along a litigation path that, if unsuccessful, might prove financially ruinous to the litigant. Ordinarily, impecuniosity will not justify failing to exercise a costs discretion adversely to such a litigant where the judicial exercise of the discretion requires the making of an adverse costs order. In this case, for the reasons we have set out concerning the appellant’s conduct throughout, it would be manifestly unfair to the first respondent to rely on the first appellant’s impecuniosity to refuse to make what is, according to the relevant principles, the proper costs order. Finally, given the findings as to the first appellant’s state of knowledge and mind, little, if any, weight can be placed on the continued assertion that he was acting in what he believed to be in the public interest.[19]
[19] [2016] SASCFC 123 at [45]. Gray J did not decide this point.
I consider that the observations made by the Full Court in Machado are directly applicable in the present circumstances. Because of the finding that Ms Poniatowska had defrauded Centrelink, and that as a result each of the defences relied upon by the defendants had been established, it would be manifestly unfair to the defendants to rely on her impecuniosity to refuse to make an indemnity costs order.
Ms Poniatowska has submitted that Machado is distinguishable on the basis that the case involved two private citizens while here the defendants are part of a major media organisation. There is nothing whatsoever in the reasons of Kourakis CJ and Nicholson J in Machado to suggest that the status or financial position of a party is a relevant consideration in determining whether or not to award costs or the type of costs order. The reasoning of the plurality is clearly to the contrary.
Ms Poniatowska has also contended that there is a public interest component in her case. The basis for the public interest is said to be that it should not be open to a media organisation to use the occasion of a successful High Court ruling to disparage a private citizen. That contention must be rejected as it is fundamentally inconsistent with the finding that the defendants had made out the various defences upon which they relied upon, including the plea of justification. I found in light of evidence not before the several courts in the Centrelink prosecution (including the High Court) and after applying the Briginshaw principle that Ms Poniatowska had in fact defrauded Centrelink.
For completeness I also note that Ms Poniatowska has complained that the defendants unnecessarily chose to instruct two counsel, when only one was required, and both are now senior counsel. That complaint relates to the quantum of costs rather than the making of a costs order. In any event, due to the very large volume of documentary evidence and the factual complexity of the issues, I consider that it was appropriate to instruct two counsel. While Mr Sam Abbott SC was appointed as senior counsel during the trial, he has informed the Court that he continued to bill at junior counsel rates in accordance with the usual custom.
Interest on costs
The defendants submit that because the trial occurred in 2014 they should be awarded interest on the costs calculated from the end of the trial. They seek that the Court exercise its discretion under r 264(7).
Rule 264(7) provides that the Court may include in an award of costs an amount representing interest. Section 114(2)(b) of the Supreme Court Act 1935 provides that interest on taxed costs may be computed from the date of the certificate of the taxing officer or from some earlier time.
In Osborne v Kelly the Full Court considered the exercise of the discretion conferred by s 114(2)(b) to award interest from some earlier time.[20] Doyle CJ held (with Mullighan and Wicks JJ agreeing) that s 114 confers a wide discretion to award interest on costs from the date of the judgment or some earlier date and not just from the date of the taxing certificate. That discretion is to be exercised by reference to all relevant facts. Doyle CJ concluded:
…Parliament has conferred on the taxing officer a broad discretion. That discretion is to be exercised by reference to the relevant circumstances of the case. It is a question of whether there are proper grounds to compute interest from a date earlier than the date of the certificate. [21]
[20] (1999) 75 SASR 392.
[21] Ibid at [22].
Doyle CJ held that the fact that a successful plaintiff had actually paid costs before the taxation, or had agreed to pay interest on unpaid costs, was a relevant circumstance to be taken into account in deciding whether to award interest from the date of the judgment or some earlier date.
In Osborne v Kelly Doyle CJ also held that it would not be proper to exercise the discretion by reference to the fact that the defendant had had the use of the money until it was paid over to the plaintiff (or vice versa). The Parliament had chosen not to establish such a general rule and left the matter to the discretion of the court.[22]
[22] Ibid at [42].
In Public Trustee as Litigation Guardian for Pinter v Newman the Full Court considered an appeal relating to an application under s 40(2)(a) of the District Court Act[23] for the award of interest from the date proceedings commenced.[24] The plaintiff had no liability to pay interest to his solicitors. If interest were to be awarded from the date proceedings commenced, he would make a windfall gain. The Court declined to award interest on that basis. The Court also noted that the defendants had not acted in a way that justified a special order.
[23] The analogue to s 114(2)(b) of the Supreme Court Act 1935.
[24] Public Trustee as Litigation Guardian for Pinter v Newman [2012] SASCFC 18.
There is no information before the Court concerning the arrangement between the defendants and their solicitors as to the timing of fee payments. However, for present purposes I will proceed on the assumption that the defendants would have paid periodically as the matter proceeded and they would not make a windfall gain if interest were to be awarded from the date of the judgment. Nevertheless, as the plaintiff has not contributed to the delay in delivery of judgment, I do not consider it appropriate to award interest from the date that the trial concluded. For the same reason, I also do not consider it appropriate to award interest from the date of judgement.
Conclusion
I have found that Ms Poniatowska unreasonably failed to accept a settlement offer. I have also found that the interests of justice do not require that indemnity costs not be awarded. Accordingly, I will order that Ms Poniatowska must pay the costs of the defendants on an indemnity basis in accordance with s 38(2)(b) of the Defamation Act. Due to that finding it is unnecessary to consider the alternative contention advanced by the defendants that an indemnity costs order should be made in the exercise of the general discretion of the Court.