Stokes v Ragless - [2019] SASCFC 31

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court: Civil)
STOKES v RAGLESS
[2019] SASCFC 31
Judgment of The Full Court
(The Honourable Justice Blue, The Honourable Justice Parker and The Honourable Justice Lovell)
4 April 2019
DEFAMATION - ACTIONS FOR DEFAMATION - COSTS - INDEMNITY COSTS
APPEAL AND NEW TRIAL - APPEAL - GENERAL PRINCIPLES - INTERFERENCE WITH DISCRETION OF COURT BELOW - IN GENERAL - WRONG PRINCIPLE - PARTICULAR CASES - DECISION AS TO COSTS
APPEAL AND NEW TRIAL - APPEAL - PRACTICE AND PROCEDURE - SOUTH AUSTRALIA - POWERS OF COURT - FURTHER EVIDENCE
The appellant successfully sued the respondent for defamation and applied for an award of indemnity costs pursuant to section 38 of the Defamation Act 2005 (SA). The respondent who was unrepresented opposed an award of indemnity costs on the basis he had already incurred considerable costs relating to the proceedings. The primary Judge found that it would not be in the interests of justice to award the appellant indemnity costs as the appellant was represented and had not informed the unrepresented defendant of the implications of accepting or rejecting filed settlement offers.
Whether the primary Judge erred in finding that a represented party has an obligation to inform an unrepresented party of the implications of accepting or rejecting filed settlement offers - whether the appellant was denied procedural fairness by the primary Judge proceeding on a basis not raised or relied upon by the respondent or the primary Judge before the court handing down its reasons.
Held, per Lovell J (Blue and Parker JJ agreeing):
1. The appellant was denied procedural fairness as he was denied an opportunity to contest a fundamental factual matter ultimately determined against him by the primary Judge.
2. The primary Judge erred in finding that a represented party is under an obligation to inform an unrepresented party of the implications of accepting or not accepting filed settlement offers in order for it to be in the interests of justice to award indemnity costs.
3. The appeal is allowed and the matter remitted to the primary Judge to reconsider the costs orders made on 17 April 2018.
Defamation Act 2005 (SA) s 38; Supreme Court (Civil) Rules 2006 (SA) rr 188, 286, referred to.
Stokes v Ragless [2017] SASC 159; Stokes v Ragless [2018] SASC 56; Jones v National Coal Board [1957] 2 QB 55; Stead v State Government Insurance Commission (1986) 161 CLR 141; Seltsam Pty Ltd v Ghaleb [2005] NSWCA 208; Chaina v Alvaro Homes Pty Ltd [2008] NSWCA 252; Pantorno v The Queen (1989) 166 CLR 466; Sullivan v Department of Transport (1978) 20 ALR 323; Victims Compensation Fund Corporation v Ngyuen & Anor (2001) 52 NSWLR 213; Re Association of Architects of Australia; Ex Party Municipal Officers' of Australia (1989) 63 ALJR 289; Fox v Percy (2003) 214 CLR 118; Lesses v Maras (No 3) [2017] SASCFC 154; Howley v Ghan [2019] SASC 4; Eicas v Dawson [2016] SASCFC 124, considered.

STOKES v RAGLESS
[2019] SASCFC 31
Full Court: Blue, Parker and Lovell JJ

BLUE J: I agree with Lovell J.
PARKER J: I agree with the reasons of Lovell J and the orders he proposes.
LOVELL J: Mr Stokes (‘the appellant’) successfully sued Mr Ragless (‘the respondent’) in the Supreme Court for defamation. Pre-trial the appellant filed four separate settlement offers, none of which the respondent accepted. The respondent also filed an offer to settle the proceedings. The appellant applied for an award of indemnity costs pursuant to section 38(2)(a) of the Defamation Act 2005 (SA) (‘the Defamation Act’). The primary Judge, exercising her discretion, declined to award the appellant indemnity costs. The primary Judge found the appellants’ solicitors had not informed the respondent, who was unrepresented, of the consequences of accepting or rejecting filed settlement offers. The primary Judge held that it would not be in the interests of justice to award the appellant costs on an indemnity basis, and instead ordered that the appellant have his costs of the action on a party/party basis. This appeal relates solely to the primary Judge’s cost order and whether the primary Judge erred in her discretion not to award costs on an indemnity basis. Permission to appeal was granted on 19 June 2018.
Issues
Two issues arise in this appeal:
1Was the appellant denied procedural fairness?
2Was the primary Judge correct in finding that there is an obligation on a represented party to inform an unrepresented party of the implications of failing to accept an offer of settlement?
Background
In 2012 the appellant and respondent were active members of the Southern Branch of the South Australian Field and Game Association (‘SAFGA’). The two men clashed over the management and planning of the Branch’s clubhouse renovations. In October 2012, the respondent’s firearms license and membership of SAFGA were suspended due to his “aggressive, erratic and irrational” behaviour.[1] The suspensions would have undoubtedly been devastating for the respondent who was described to have “lived and breathed” for clay shooting.[2] The respondent published defamatory material (as found by the primary Judge) concerning the appellant and the Southern Branch.
[1] Stokes v Ragless [2017] SASC 159 at [3].
[2] Stokes v Ragless [2017] SASC 159 at [2].
In October 2013, the appellant commenced proceedings against the respondent for defamation. It was alleged that between 30 October 2012 and 24 June 2014 the respondent defamed the appellant in 132 publications via a website, emails and on Facebook. After a 14-day trial, the primary Judge found in favour of the appellant. The primary Judge ordered that the respondent pay $70,000 in general damages and an additional $20,000 in aggravated damages. A permanent injunction was also ordered to prevent the respondent publishing any further defamatory material.
On 12 April 2018, the primary Judge heard submissions on costs. The appellant submitted that he was entitled to costs on an indemnity basis pursuant to section 38(2)(a) of the Defamation Act. Section 38(2)(a) provides that where costs are to be awarded to a successful plaintiff in defamation proceedings, these costs are to be assessed on an indemnity basis subject only to “the interests of justice otherwise requiring”. The appellant filed comprehensive written submissions. At the close of the appellant’s oral submissions, counsel for the appellant indicated:
I’m not certain that I need to put much more before your Honour. I’ll endeavour to answer any of the matters that your Honour might wish to put to me, but I rest on my submissions.
The issue of the respondent’s knowledge of the consequences of accepting or not accepting a filed offer was not raised during submissions. The next day the appellant’s solicitors received a request from the primary Judge’s chambers to provide “copies of the letters sent to Mr Ragless serving each of the offers of settlement”. [3]
[3] Case Book page 351.
The appellant’s solicitors complied with the request. No further information was requested by the Court nor were any further submissions made by the parties.
On 17 April 2018, the primary Judge refused the appellant’s application for indemnity costs, awarding him costs only on a party/party basis. The primary Judge stated:
Other than the period 20 October 2014 to 9 February 2015, the defendant was self-represented. The plaintiff filed four offers of settlement. At each time the offers were served on the defendant, the defendant was unrepresented. Each letter enclosing the offer of settlement did not explain to the unrepresented defendant the implications of accepting or not accepting each offer. Whilst there is no rule obliging a party represented by solicitors to inform an unrepresented party of the implications of accepting or not accepting a filed offer, in my view where this is not done the interests of justice require that costs are not awarded on an indemnity basis. It cannot be assumed an unrepresented defendant would be aware of the Supreme Court Rules regarding filed offers and s 38 of the Defamation Act such that the court can conclude the defendant unreasonably failed to make or agree to any settlement offer.
(Underlining added)
Grounds of appeal
There are four grounds of appeal but it is only necessary for me to consider grounds 1 and 2.
Ground 1 contends that the primary Judge erred in finding that a represented party has an obligation to inform an unrepresented party of the implications of accepting or not accepting a filed settlement offer, and that the failure to do so must lead to an application for indemnity costs being dismissed.
Ground 2 contends that the appellant was denied procedural fairness by the primary Judge proceeding on a basis not raised or relied upon by the respondent or by the primary Judge at any time prior to handing down her reasons.
It is convenient to deal first with Ground 2.
Was the appellant denied procedural fairness? (Ground 2)
The appellant submitted that the question of the state of mind of the respondent as to the consequences to him of accepting or rejecting the offers of settlement filed by the appellant was not a matter argued before the primary Judge. The appellant submitted that the request from the primary Judge to the appellant, requesting copies of the letters sent to the respondent, did not alert him to the issue. The appellant was therefore denied the opportunity to put before the primary Judge evidence relevant to this issue.
The general principle is that everyone is entitled to a fair trial or hearing.[4] But not every departure from the rules of natural justice at a hearing will entitle the aggrieved party to a new hearing. An appellate court will not order a new hearing if it would inevitably result in the making of the same order as made by the judge at the original hearing.[5]
[4] Jones v National Coal Board [1957] 2 QB 55.
[5] Stead v State Government Insurance Commission (1986) 161 CLR 141.
The judicial obligation relating to procedural fairness is concerned with a reasonable opportunity to present or meet a case. Such an opportunity is vital both to the reality and the appearance of justice.[6] Although the basis on which the parties conduct a trial or hearing does not bind the judge, if the judge contemplates determining the case on a different basis he or she must inform the parties of this prospect so that they have an opportunity to address any new or changed issues that may arise. Economy in submissions is promoted by such an assumption and an expectation that if the judge considers some material or legal principle is likely to affect the outcome, but is not being addressed in argument, that fact will be identified.[7]
As Mason CJ and Brennan J said in Pantorno v The Queen: [8]
When the parties to an adversarial proceeding agree on a proposition of law and conduct their cases on that basis, their agreement does not bind the trial judge. If the judge determines the law to be different, he may apply the law as he determines it to be, but he must inform the parties of the view he has formed when that is necessary to give them an opportunity to address new issues arising from the judge’s departure from the proposition of law on which the case was conducted. Otherwise both parties are taken by surprise.[9]
[6]    Seltsam Pty Ltd v Ibrahim Ghaleb [2005] NSWCA 208.
[7]    Chaina v Alvaro Homes Pty Ltd [2008] NSWCA 353 per Basten JA (Giles JA agreeing).
[8]    (1989) 166 CLR 466.
[9]    Pantorno v The Queen (1989) 166 CLR 466, 473.
Fairness is not an abstract concept and the concern of the law is to avoid a practical injustice.[10] It must be remembered that procedural fairness requires only that a party be given “a reasonable opportunity to present his case” and not that a tribunal ensure “that a party takes the best advantage of the opportunity to which he is entitled”.[11] A relevant enquiry is whether a party or his legal representative should reasonably have apprehended that the issue was or might become a live issue.[12]
[10] Re Minister for Immigration and Multicultural Affairs and Anor; Ex parte Lam (2003) 214 CLR 1 at [37].
[11] Sullivan v Department of Transport (1978) 20 ALR 323, 343; see also Victims Compensation Fund Corporation v Nguyen & Anor (2001) 52 NSWLR 213, 219-220.
[12] Re Association of Architects of Australia; Ex parte Municipal Officers of Australia (1989) 63 ALJR 289 per Gaudron J.
The primary Judge requested the letters of offer sent to the respondent but did not identify the purpose behind the request. The appellant only provided the information requested. The primary Judge, relying on the information sent, found that “the letters enclosing the offer of settlement did not explain to the unrepresented defendant the implications of accepting or not accepting each offer”. This was a fundamental finding.
There is nothing in the transcript of the hearing, or in the request made by the primary Judge after the hearing, that suggested the issue of the state of mind of the respondent as to the consequences of accepting or rejecting a filed offer was a “live” issue. The respondent himself did not raise his state of mind as an issue. The appellant has been denied a reasonable opportunity to contest a fundamental factual matter ultimately determined against him by the primary Judge. In my view, the appellant has established a breach of procedural fairness.
The question then is whether to order a new hearing. An appellate court will not do so if it would inevitably result in the making of the same order as made by the primary Judge at the original hearing. Where the breach of procedural fairness affects the entitlement of a party to make submissions on an issue of fact, it is more difficult for an appellate court to conclude that compliance with the requirements of procedural fairness could have made no difference.
To support the application for a new hearing, the appellant relied on material which he submitted would have been made available to the primary Judge had he been put on notice that it was relevant. A number of documents were said to be relevant; two were particularly relied upon namely:
1. An email attaching a letter and schedule from David Deakin Davies & Co to Mr Ragless dated 24 June 2014 providing information with regards to Mr Stokes’ filed offer and associated costs.
2. An email from David Deakin Davies & Co to Mr Ragless (responding to a request from the respondent) dated 24 March 2015 attaching a copy of Supreme Court Rule 188.
On appeal, counsel for the appellant Mr Frayne SC, emphasised the following passage from a letter sent from Davies & Co to Mr Ragless on 24 June 2014:
You will note that the filed offer provides that “this offer relates both to the principal relief and costs. The Defendant may only accept the offer relating to the principal relief if he also accepts the offer as to costs”.
You should be aware, however, that the Plaintiff has incurred costs and disbursements in relation to these proceedings which exceed the quantum of the Plaintiff’s offer in relation to the principal relief i.e. the sum of $75,000 and that he expects that if those costs were adjudicated, they would be assessed at an amount at least equal to the last mentioned sum.
It was submitted that this last passage amounted to an “indicative assertion” by the appellants’ solicitors that if the respondent failed to accept the offer and the action succeeded at trial, the respondent would likely be liable for costs in excess of $75,000.
Further, on 24 March 2015 following a request from the respondent, the appellants’ solicitors emailed to the respondent a copy of Rule 188 (in force at the time but since substantially amended) of the Supreme Court Civil Rules (‘former SCR 188’). This rule dealt with the consequences of accepting or not accepting an offer of settlement. Rule 188(6) addressed the potential cost implications that might arise for an unsuccessful party who failed to reasonably accept a settlement offer which proved to be more favourable than the costs as adjudicated at trial. In the email the author, Mr Davies, correctly in my view, informed the respondent that it was “not appropriate” for him to “provide advice in relation to the offer”.
The appellant submitted that the evidence sought to be adduced was “fresh evidence” and the Court should receive it on that basis. I do not consider it is necessary to resort to the rules regarding “fresh evidence” although in the circumstances it is understandable why the appellant considered the application necessary.
Rule 286 of the Supreme Court (Civil) Rules 2006 (SCR) governs the hearing of an appeal to this Court. Pursuant to R 286(3)(a), the Court may have regard to evidence that was before the primary Judge or exercise its discretion to admit further evidence relevant to a question of fact.[13] The appellant did not have to establish that it was “fresh evidence” as that expression is commonly understood. The submission here is that the evidence was available and could have been produced if appropriate notice had been given.
[13] Subject to the usual advantages enjoyed by the primary Judge and constraints imposed on an appellate court in accordance with the principles in Fox v Percy (2003) 214 CLR 118.
The appellant must show that the denial of natural justice deprived him of the possibility of a successful outcome.[14] The further evidence proffered by the appellant goes directly to that issue. I would admit the evidence on this appeal.
[14] Stead v State Government Insurance Commission (1986) 161 CLR 141.
The respondent, on appeal, was not represented. His earnest submissions, which largely revolved around the history of the matter, did not touch upon the issues on appeal. Mr Ragless put before the Court an affidavit, sworn by him and dated 4 November 2018. The Court accepted the affidavit but subject to the objection of the appellant on the basis of relevance. The Court indicated it would rule on its admissibility in due course.
The content of the affidavit is irrelevant to the issues on appeal and I would reject its tender.
The appellant has established a breach of procedural fairness. There was available to the appellant further material directly relevant to the issue of concern to the primary Judge. The appellant was denied the opportunity to put that material before the primary Judge. The appellant was deprived of the possibility of a successful outcome. I would allow the appeal on this ground.
What is the obligation of a legally represented party to an unrepresented litigant when filing a settlement offer? (Ground 1)
Section 38 of the Defamation Act deals with the question of costs to be awarded to a successful party in defamation proceedings:
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.

Paragraphs 38(2)(a) and 38(2)(b) create two discrete rules that are mandatory subject only to the “interests of justice otherwise requiring”. The policy underpinning s 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. However, these discrete rules do not otherwise limit the generality of the very broad discretion conferred by subsection 38(1).[15]
[15] Lesses v Maras (No 3) [2017] SASCFC 154.
The primary Judge found:
Whilst there is no rule obliging a party represented by solicitors to inform an unrepresented party of the implications of accepting or not accepting a filed offer, in my view where this is not done the interests of justice require that costs are not awarded on an indemnity basis. It cannot be assumed an unrepresented defendant would be aware of the Supreme Court Rules regarding filed offers and s 38 of the Defamation Act such that the court can conclude the defendant unreasonably failed to make or agree to any settlement offer.
To put that another way the primary Judge found that although there was no rule requiring a solicitor to advise an unrepresented party as to the consequences of accepting or rejecting a filed offer, a failure to do so means a plaintiff will be precluded from obtaining indemnity costs. That is, if the primary Judge’s finding stands, it is now a rule that to obtain indemnity costs against an unrepresented litigant the solicitor representing the other party must advise the unrepresented party of the consequences of accepting or rejecting a filed offer. In my view, the expression “interests of justice” cannot be so confined.
The lack of knowledge of an unrepresented defendant of the consequences of failing to accept an offer may be a factor to be considered when deciding the question of the “interests of justice” but it cannot be a “hard and fast” rule.
When considering the question of an unrepresented defendant’s knowledge of the court rules including those as to costs it should not be assumed, as it appears the primary Judge did, that they have no obligation to familiarise themselves appropriately with the rules of court. Self-represented litigants are, for example, required to comply with rules as to pleadings. The rules of court on settlement offers should not fall into a different category. Although dealing with an appeal from the Magistrates Court, Hinton J in Howley v Ghan observed:[16]
Applying and enforcing the rules to promote the expeditious, economical and just conduct and resolution of an action or proceeding in a high volume jurisdiction where very many matters are prosecuted by unrepresented litigants with no legal training demands a greater degree of tolerance and patience than litigants in this Court may expect. Nonetheless, it is essential to the administration of justice that any self-represented litigant in the Magistrates Court inform themselves as to the requirements under the rules and use their best endeavours to comply. [17]
(Underlining added)
[16] [2019] SASC 4.
[17] [2019] SASC 4 at [38].
Self-represented litigants in the Supreme Court have an obligation to inform themselves in relation to the court rules. To simply excuse a self-represented litigant from familiarising themselves and therefore complying with the rules would be manifestly unfair on a represented party and contrary to the general administration of justice. That does not mean that the court is relieved of providing as much assistance as it can to an unrepresented party in relation to the rules of court (without giving advice).
Further, it cannot be assumed that, in the absence of evidence that a solicitor representing a party has positively assisted a self-represented litigant, the self-represented litigant has therefore not understood the rules, and in particular, the rules on costs. If relevant, a court should hear evidence and submissions on the point. Depending on the circumstances, the knowledge or lack of knowledge of an unrepresented litigant may be a relevant factor in the exercise of the discretion. Here it is relevant that the respondent filed an offer to settle the matter.
In my view, the primary Judge erred in finding that indemnity costs should not be awarded where the solicitor for a party has not informed a self-represented litigant of the consequences of accepting or rejecting a filed offer.
I would allow this ground of appeal.
I would remit the matter back to the primary Judge for further consideration. The exercise of the discretion under s 38 requires the court to have regard to the way in which the parties conducted the proceedings. The primary Judge is in the best position to assess that aspect.
I do not need to consider the other grounds of appeal. However, I add the following remarks.
The appellant before the primary Judge had argued that if the application for indemnity costs were to be rejected the primary Judge should award the appellant solicitor/client costs pursuant to former SCR 188. The primary Judge applied the same reasoning to the filed offers as she did to s 38 of the Defamation Act. Although it is not clear it appears that the primary Judge applied the “interests of justice” test to filed offers.
The appellant filed four offers pursuant to former SCR 188. The terms of each offer were slightly different. The last offer is the most relevant. The respondent failed to better the terms of the offer. The appellant was entitled to solicitor/client costs for the whole of the action subject to the Court's discretion to order to the contrary.
As discussed in Eicas v Dawson,[18] the purpose of the former SCR 188 (which applied in that case and applies in the present case) was penal. The Rule expressly contemplated that a defendant who did not do better than an offer made by a plaintiff would suffer retrospective cost consequences. The Rule obliged parties to consider realistically the prospects of success and the likely outcome of the litigation. That prima facie rule that solicitor/client costs should be awarded is a strong one and not easily displaced.
[18] [2016] SASCFC 124.
Further, while the court retains a discretion in relation to the question of costs, the fact that a costs order will impose financial hardship on the losing party is not a factor to be taken into account when exercising the discretion. The operation of the rule itself cannot be a reason to “order to the contrary”.
Both former SCR 188 and s 38 (which also operates retrospectively) can be described as penal. They are similar in that they require the parties to consider settlement of the action if an offer is made. Both confer a discretion on the court to depart from the penal nature of a costs order. The discretions are expressed differently and therefore must be exercised individually and according to the express terms of the discretion. There is likely, however, to be considerable overlap in the factors to be weighed and the weight given to any particular factor.
Orders
I would allow the appeal.
I would remit the matter to the primary Judge to reconsider the costs orders made on the 17 April 2018.